If you are new to the world of domain name investing, the notion can be confusing. If you are new to online income as well as domain name investing, the learning curve can be overwhelming! Add being a tad late to the game (I was 50 years old when I got started, I’m 53 now)… Well, my 16 year old has to keep explaining things to me!!! So I’m writing a few articles that will hopefully clear up some of the basics. Not all of us are lucky enough to have a teenager in the house!
What is Domain Name Investing?
It’s the same principle as investing in any other thing: you buy something you believe will either hold its value or increase in value. Then, you either hold it for a time, or sell it immediately (this is called “flipping”) or work on it to make it more valuable. If you choose the last, you can hold the name, reaping the rewards of your labor, or you sell it.
Common investment vehicles are stocks, bonds, art, gold, real estate, horses, cars, wine. And domain names, also known as “internet real estate.”
Why are Domain Names valuable?
In a word, traffic. High traffic to a domain name means you have thousands of visitors to that domain name’s website. Those visitors shop on your site: either clicking PPC ads or buying products listed on the site.
What are the Top 3 Methods of Domain Name Investing?
1. Flipping domain names: this is when you buy a domain name for as little as possible. Then put it right back on the market for more. If it’s a valuable domain name, it can be sold several times over. How much profit you can make by flipping a domain totally depends on the traffic attached to it.
2. Buy and hold: this is when you buy a domain name you believe will be valuable at some time in the future just by virtue of the name. A word of caution: if there is good traffic associated with this name, you will want to keep that traffic which means you will need to put up some kind of a website, even with just PPC ads to keep some traffic coming. Plus, you will make money on the PPC ads!
3. Buy and increase the value: this is when you buy a domain name to keep, to build a site around with articles, products and links in order to increase the traffic. Then you can keep that name/site, letting it generate passive income for you (not totally passive but once a site is set up, it requires little effort). Or you can sell it for a profit, depending on the level of traffic you’ve generated in the interim.
These three methods of investing are virtually the same in any investment vehicle. Except you are now doing it virtually! You never hold the domain name in your hand like a gold coin, but it can be just as valuable. And if you buy a good domain name “right” (cheap with good traffic), it can be more valuable than gold!