The Biggest Myth in Domaning
You Can Make Money by “Buying” Domain Names
So I’ve fallen prey to this many times, so its time to get real. I’ve said it before, domaining is a delusional business sometimes because you can buy a domain name, tell yourself you bought it at a discount to its true value, and go home that day booking mental profits, thinking you made money. Walking tall, feeling good. Your Up!
But you make money buying and selling domain names, and hopefully selling for more than you paid to buy, both in the case of each name – and in total.
But the temptation when your starting out, and the offers aren’t coming in. is to buy more. You need money, you’ve got to make some net worth in domains, and what do we do.. we buy. We buy more names, we make list and end up buying everything on the lists. We buy new tlds, we buy the latest cctlds, we buy drops, we buy premiums, we buy off newsletters, BUY BUY BUY BUY…and then we hope we sell. Its like we are in a grocery store, we act as if the grocery store will empty out, and we throw everything in the cart, check out and then see what we have. Oh thats ok if i make a couple mistakes, my big sales will make up for them. Why be selective, just get it all its easier. Ill sell them to and end user if i need to.
You hear you sell 1 % a year, so buy buy buy, You race to get up to 1000 domains, then 1% of that number is selling 10 a year, but a year is 12 months, so i sell a name now, this month – you need to buy 1000. Want to feel good and have a sale, keep buying up until 1000 to see your first “Your name just sold” email. Then you can rest, then you can stop. But when you were ramping up were you being selective enough, or did you cave and buy buy buy.
Keep reading in Part II – Oh No I need to sell. 😱😱😱.
So back to feeling good, you found a nice 2 word category killer, outbid some others and paid $110, and your sure an end user will pay $10,000. But………… from a cash flow statement, your out money when you buy.. yes even if on a credit card you still owe the money. You may think you have a a great asset, and before you bought the name, it was illiquid and after you bought the name its illiquid. You wait a day or two, you list it on Namepros and no one has bought it from you for 5-10x. Now what to do. .. hey buy more!
So lets go slowly and unpack buying and selling in a marketplace a bit. Warren Buffet used to talk about Mr Market, the idea there was a person who summed up everything happening in the stock market, you can consider him or her (Mrs Market if it helps) your adversary…and in domain name investing Mr. Market owns every good domain already, and bids against you in every market until you drop out.
And Mr Market in domaining doesn’t let us sell to him, in the domain name space he only lets us buy. We see others selling. We see names like our selling in the NameBio and DnJournal reports. We want to make money, so we buy some names to flip… the buy part is easy, boom boom, done..now try to sell them. Its tough, so put them in the closet, and buy some more. You rationalize…I think if i could just buy the right name..I can make money. That next name, that next buy.
Even if you slow down, then you hear a hot trend, you wade in and buy, so your hoping your smarter than everyone, and no one else saw the trend, and somehow you can buy, and then everyone else will pay you more..tomorrow… than they would today when the name was for sale every day up until today?
Typical Domain Name Investor Portfolio
So your portfolio is made up of a few themes, a few keywords where you went overboard and bought 40 names with the same word, and few good names, but you had yo outbid everybody on earth to get them; and some .nets and org of names that would be good in.com Thats what i see out there.
So you need cash. Can you get cash form selling in the marketplaces?, today right now? They can just play the odds, list 20,000,000 names and some will sell. Unless your at the top of the food chain, LLL and NNNN and one words you would sell for 20-50% of wholesale value, there no place to to cash-out. There is no cashiers windows to lay your chips down, and take back cash.
Liquidity from the brokers? They can get 5,000,000 names on landers and someone will there be after names each day. So they are busy if someone inquiries on a name from their entire group, but they aren’t looking out for your names. What are the chances you have an inquiry?
The landing page companies see nothing but successes, Get 1000 leads a day, follow up every two days for 3 years and someone will buy. But from a bottom-up perspective that doesn’t help me sell my names. I want leads on my name, how can i make that happen, i cant – so what to do, buy some more names. Many beginning investors find themselves buying until they make a sale, buy buy buy.
And discipline doesn’t always help. You can start to feel like its a rigged game. To get a good name you have to pay up. And to sell a name I have to discount price. So i never buy, and i cant sell. You cant win. Add to that all the feeling all the good names are taken, and what i’m offered i don’t want.
But thats what should happen in a market, everything good is taken. And whats available, you shouldn’t want…unless you have an edge. Do you know an industry well enough you know whats going to sell, then its ok to over-invest. Are you buying in an area, AND SELLING, do you have sales in a theme that underappreciated by other investors. Then you can own more. Otherwise wait until you know whats selling to buy.
It short be frustrating. Do you feel like that, GOOD! keep that mindset, it should be tough. You should earn your way to a good buy, and sales are part luck…..even if you make your own luck, sometimes luck is just that lucky. And don’t be afraid to do nothing, not winning is not losing.
But if you have been buying, and need some cash. You then need someone else to buy our names, please please buy my names. Why – because I need to sell them. You jump into the forums as if they were waiting for you. You email an inquiry from 3 years ago, and say I’ve decided to possibly sell the name for low 5 figures. But can you get cash this way.. just by deciding you are ready to sell, no!
The fact you have decided to sell is not enough of a reason to get a deal done. I get emails asking me to appraise names, ie buy them all the time. Many time i may not have even registered but one out of 10, or 1 out of 100.
But don’t lose hope, the good news is most of my sales are at 10-50 times what i paid so it only takes 1-3 a week to keep the batteries charged. If you have a good stable of names.
But the next time you think the thing you need to do is BUY, step away. Let the moment pass… get clarity on what you should be buying first – buy seeing what sells. Have a talk with yourself or join our community and our live chats. There’s money to be made, but just not from always buying what happens to come to mind at the very moment your domaining, have some extra cash and want to buy your way to profits.
Every domain name “could” sell for 100x after you buy it, but which ones have the best chance. Keep following this blog and i will try to guide you to be a better domainer, to improve your odds of selling your way to success.
So ask yourself this, I do. What you didnt buy the weakest 30% of your portfolio, and had instead spent 2 hours or more a week on sales, instead of buying. What if you had Brokered other investors names, and got to talk to buyers. See what they say. Then your a better buyer.
So its easy to buy, you look, you search.. pay the credit card.. and feel good. Now selling or improving your odds to sell takes some work..
Read our next post if you have a portfolio, and are not sure what to do.