11 Critical Points You Must Consider Before You Purchase Any Domain Name As An Investment

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As a domain investor, I constantly see most people in our industry losing money. We need to constantly remind ourselves that in domain investing we make an important part of our profits when we buy the domain names. So the following article is written particularly for new domain investors. Do your own due diligence and learn extensively about the topic, before making any investment decisions.
 
So here are 11 critical points you must consider before you purchase any domain name as an investment:
 

1. Register meaningful, 1 word domain names in most cases, like

Example of 1-word domain name: bring.love.

Example of 2-word domain name: pleasebring.love or dobring.love.

Chances of selling 2-word domain names in the new gTLD space are still pretty small. The safest bet is to avoid such domain names in most cases, particularly when you just start with domain investing.

Why? Because chances of selling 2 word domain name in new gTLD space is pretty small (consult namebio.com). Do not think you can outsmart someone with your word1word2.gTLD combo…in most cases you will not outsmart anyone, and usually you will be dropping such names after 1 year. There are exceptions from this rule of course, but safest bet is to avoid it in most cases, particularly when you just start with domain investing.

2. Register names with not many cheap alternatives in other domain extensions, like:

This rule simply means that your potential buyers can not find (cheap) alternatives for your name in other domain extensions. Particularly when you ignore point no.1 and register a 2-word domain name, you will usually find that your string exists in dozens of other extensions. This subsequently means that you will have almost no leverage when it comes to negotiations with end-users. So if you buy a domain name like candy.express for investment, you need to check what some close alternatives to your name costs (domain names like candy.store or candy.shop, for example). If they are expensive, great for your domain name as well! If they are cheap, you probably should give a second thought to your domain name and look maybe for something different.

3. Register names with large pool of potential end users, like:

You can have a perfect new gTLD name, but if there are only a few suitable end users who can use your name, it will usually take a long time to sell it. If you buy a name where millions of potential end-users exist (so something pretty broad, generic, and likable, like enjoying.life), you will be getting many more offers, and you will be able to close much more sales.

4. To be first is not always better…sometimes it is better to be second.

When registering new gTLD names, consider this: when the extension is brand new, there is almost zero awareness about it among end-users (unless there is a huge marketing campaign for it you know about).

It can take years for awareness to be created. This also means that for many extensions there is almost 0 aftermarket in early times. Usually only fellow domain investors. This is natural — if something is very new, almost no one knows about it.

So if you want to be first to get the best names, fine, but budget for your investments accordingly — it is not wise to expect that you will buy something new for USD 10, and you will be able to flip it to end-user for USD 10k in next few days. It happens, but rarely. Patience is key in domain investing.

5. Make sure renewals of your domain names are sustainable.

The second most important thing in new gTLD domain investment (after the quality of the name) is to make sure you understand renewal fees for your domain names. In order for you to be in a long term game, renewal fees of your domain names must be sustainable (aka low). Even some great domain names like deals.live can have ultra-low renewal yearly fee — but to effectively find them, deep knowledge is required.

6. Make proper landers for your names

Do not just let your domain names without proper landing pages after you purchase them. When somewhere type names like fitness.ninja into their browser, they should be led to the webpage where they will get additional information about its price and renewal fee, so they can make an informed decision whether or not to purchase your domain name.

Due to GDPR legislation, most records from the WHOIS database are now masked. This means that when you have bought your domain name, your details will be masked in most cases. Buyers thus have no way how to contact you. Clear landing pages are a must in 2020.

7. Do not follow the herd. Otherwise, you can end up in …

zombie.zone. Just because all domain investors are registering .tiger(just as an example), it does not mean you also need to register .tiger. Most people are not profitable and are actually losing a lot of money — so if you will do the same thing as most people, you will have the same results as most people….

You need to find your niche/extensions/areas of expertise and go from there. The most lucrative way is still to buy domain names from fellow domain investors, but almost no one is doing it. Typical newbie domain “investor” will rather spend USD 2000 on 200 bad names and will not sell even 1 of them, prior to dropping them all, then to pay USD 2000 for 1 great name they which can sell for great profit. Which leads to:

8. Get 2-3 great names (like realty.rentals) instead of 200-300 bad names (which you will drop anyway).

Buy only top-quality, category-defining domain names like realty.rentals, as only the highest quality sells for great ROI. You know that you have a great new domain name if people you tell it about will say “wow”, and you have a good feeling of renewing it years in advance. This should be always your test: am I confident enough for this name, so I have no problem paying years in advance for its renewal fees? Now to critics which would tell you that you are blocking unnecessarily your capital by paying renewals in advance, I would like to remind:

  1. a) renew your name years in advance if there is a great renewal promotion (you can save sometimes 90% of the total cost, as some renewal promotions for new domain names are simply amazing)
  2. b) when you renew your new domain name 9 years in advance, it tells your potential buyers something about your commitment.

9. Get to social media and make a lot of connections, this can immediately transport you to…

1st.place. Do not be a secret seller. Have your portfolio clearly visible to anyone, and go to Twitter, Linkedin, Instagram, Youtube, and Facebook at least. People with the most success have a great online presence and professionally looking marketplaces.

10. Price your domain names properly, and maybe 1 day you will be able to retire to…

If you have managed to get a great new investment domain name, something like paradise.world, renew it for years in advance and do not let it go for cheap — as one day you might be able to retire on it.

11. Do not listen to “voices of past” with “ONLY .com is a good investment” mantra. The new generation of domain names is not some sort of …

… alien.life anymore. And while .com names are still absolutely amazing, we now see massive adoption of a new generation of domain names among leading global businesses as well. Invest in both, wisely.

Good luck with all your investment decisions!

Invest in domain names which bring great ROI.

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