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Bob Hawkes

Domain Name Investing in Troubled Times

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By Bob Hawkes, Mar 24, 2020
?

Do you plan to take more money than usual out of your portfolio to cover living expenses?

This poll will close on May 25, 2020 at 3:02 PM.
  1. No. I put everything made back into more domain acquisitions.

    30 vote(s)
    13.4%
  2. Yes, I will take out a little more than in the past.

    36 vote(s)
    16.1%
  3. Yes, I will be liquidating part of my portfolio to cut expenses and meet living needs.

    46 vote(s)
    20.5%
  4. No. In fact, I plan to put personal money into additional domain investments this year.

    47 vote(s)
    21.0%
  5. I am uncertain at this time.

    65 vote(s)
    29.0%
Total: 224 vote(s)
  1. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent VIP Gold Account Trusted Blogger

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    The headlines continue to be dominated by the health risks associated with the COVID-19 virus, along with the economic impact of pandemic mitigation steps.

    NamePros members have discussed the pandemic itself, the ethics of holding coronavirus domain names, whether the demand for domain names will change, and a multitude of other pandemic-related topics.

    In this article, I look at how an individual domain name investor might respond in these uncertain times.


    Assess Your Personal Financial Situation

    While some NamePros members are full-time domain investors, for many, their primary income sources are other businesses, jobs or investments.

    Businesses that were thriving just a month ago, may now be shuttered and in danger of failing. Jobs that seemed secure a few weeks ago, may have ended or be in danger. Investments in equities and bonds have lost, in just a few weeks, gains made over multiple years. Investments in real estate, are suddenly less liquid.

    This may mean that instead of putting domain name profits back into domain investments, some will be looking to take money out of their domain portfolio for basic living expenses. Also, whereas in the past there was a cushion of revenue from other sources to cover renewals and other costs, that may no longer be the case.

    The first step is to assess your personal financial situation, and decide what money, if any, needs to be taken out of your domain portfolio.


    Expected Domain Related Expenses

    Based on your sales in recent years, estimate probable domain sales revenue. Incorporate a safety factor for the uncertain business climate.

    Calculate the renewal costs, both in total for the year, and by month due. You may already be using a service that gives you this information. Also, include all other domain-related costs such as hosting, subscriptions, etc.

    Put in realistic, but conservative, estimates for any on-going revenue from domain-related activities such as monetized parking, affiliate relationships, consulting, advertising, etc.

    Considering all of this, decide whether you need to sell a portion of your domain name portfolio. If so, see the next section regarding setting priorities. If not, you may regard the coming year as a buying opportunity and a time to enhance your portfolio.


    Set Priorities

    I find it personally helpful to divide the portfolio into three groups: definitely renew, let go at end of year (or sell before), or uncertain.

    Factors that can be considered include number of inquiries, trends, number and value of offers, traffic, comparable recent sales, etc.

    Remember to look forward to what areas may be stronger in the coming years, as covered in the next section.

    Even a modest return from sales of unwanted domain names, may help you protect the names you definitely want to keep.

    Don’t panic and sell domain names that should be retained. However, an emphasis on the quality of your portfolio will help protect what is important.

    Don’t rush into this. Make your tentative priority list, set it aside for a few days, then return, perhaps after additional research, and see if your opinions have changed.


    What Areas Will Be Strong?

    Numerous articles have been written on the topic of what businesses will emerge stronger after the pandemic. For example, this article at TheConversation indicates that eCommerce, video conferencing, streaming, and delivery services will be among the winners, while travel, traditional retail, in-person entertainment and sports will be among the likely losers.

    Most agree that we will see more remote offering of services, such as education and training, medical, therapy, advising, etc.

    Additional possible shifts in domain demand are expressed in the thread started by Doron Vermaat on whether the coronavirus will increase demand for domain names.

    New Zealand business expert Dr. Michael Lee studied what types of business are likely to succeed or fail in the post-virus world. He considers each business according to its placement on two axes. One axis indicates how time synchronized is the product or service offered by that business. The other axis looks at how localized in place is the service.

    Sensitivity to physical distancing and personal health will probably live on long past the pandemic. Businesses that can serve customers at various places, including remotely, and on a flexible time schedule, will be more capable of ensuring appropriate distancing.

    Using this system, Dr. Lee rated each type of business into thrive, survive or dive. Venue entertainment and sports were placed in the dive category, since they are both localized and time-specific. On the other hand, online education and electronic commerce should thrive, due to no limits on time or place.

    Domain investors may find it helpful to categorize the niche represented by each of their domains as thrive, survive or dive. That should not be the only consideration on whether to retain the domain name, however.


    Your Time Resources

    Changes in personal circumstances may mean that you have additional time to put into presentation of your domain names, research and development. Last week Tom outlined how to view this as an opportunity, and what steps to take to make best use of your extra time.


    Think Like an End User

    Opinions vary significantly on the domain resale market outlook for the next 6 to 12 months. Some see a downturn in domain name sales, while others, such as Rob Monster, feel that there will be a boom as people have more digital lives and those who lost jobs start new online ventures.

    In a discussion about whether this is a good time for outbound, most expressed the view that it is not. Business owners are stressed about just having their business survive, and in most cases are not going to be receptive to a cold contact.

    Keep in mind that those who are purchasing domain names, perhaps for small digital service startups, will nonetheless be wary about the overall financial climate. With reasonable prices, and monthly payment plan options, or other forms of compensation, more sales may be completed.

    All of this can be summarized by think like an end-user, or at least try to consider the end-user perspective. Be sensitive to the financial pressures and uncertainty of your potential buyers.

    Finally, because of the rapidly changing business climate, it makes sense to close sales as expeditiously as possible. This may impact what payment options you accept and prefer.


    Share Your Views

    I also wanted to draw your attention to Keith DeBoer Domain Market Booms and Busts. Although written about a year and a half ago, this is the perfect time to read it.

    I hope readers will share in the comments section their personal views on the health of the domain business, how the pandemic has affected their domain name operations, and what changes in types of domain names they see going forward. While it is perhaps too soon to say, I would also welcome views on the change, if any, yet seen in recent domain demand.


    I would like to acknowledge numerous people from the industry, both NamePros members and others, whose views and ideas helped inform this article. Special thanks to Michael Cyger for the idea of starting with a look at ongoing expenses. This article is for informational purposes and should not be considered financial or investment advice.
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
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  4. Bob Hawkes

    About The Author — Bob Hawkes

    Domain analyst, writer and educator, with particular interests in domain name phrases and non-business uses for domain names. I am a risk averse domain investor who only invests modest amounts in a variety of extensions and niches. Don't hesitate to contact me - I like to help!

    This is Bob Hawkes's 31st blog post on NamePros. View all blog posts

    Home Page:
    https://namesthat.win
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  5. Comments (46)

  6. The Durfer

    The Durfer Top Contributor VIP Blue Account

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  7. Keith DeBoer

    Keith DeBoer Top Member PRO VIP

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  8. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    Another nice article and very timely. Thank you @Bob Hawkes (y)

    One of the good thing I do for my portfolio is to renew domains a lot in advance. As of now, all my domains which I tend not to drop are already renewed for this year. So for my domains, the renewals will be from starting 2021. As we reach the year end, most if not all of my domains will be renewed for another year. I try to keep this pattern in case of emergency which can be of anything.

    As far as the sales will be coming, I'll keep investing. I think the right time of more good opportunities be coming from next month when there will be more panic and less sales. People will want to take care of themselves and their families rather than to focus on renewing domains. Also some domain owners would want to sell for quick bucks.

    For my portfolio, I'll see any obvious change in April/May period.
     
  9. Zagalee

    Zagalee Established Member

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    Thanks for the information. Nice article.
     
  10. marijuanadomain

    marijuanadomain Established Member

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    What troubled times, what are you talking about?

    as long as you are healthy , life is peachy, there is nothing to B about!!
     
  11. Domains Ted

    Domains Ted Established Member

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  12. FolioTeam

    FolioTeam AMDB.tv VIP

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  13. Jimmysun

    Jimmysun Established Member

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    Good article as always. I chose 1st.
    Don’t lose patient and always have enough liquidity.
     
  14. lock

    lock FREE.MARKETING VIP

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    Already bombarded with domainers offering domains and not sure if we will even get much of a chance to liquidate as i have seen some bargains and junk. I am not about to grow my portfolio and would cull some renewals to pay for a bargain. I have renewed a lot early as didn't wan't to have to think about favorites more make crucial decisions on my medicre.
     
  15. marijuanadomain

    marijuanadomain Established Member

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    Domaining is my stress reliever hobby ,it is a BS hobby,
    My yearly expenses is just 2K/yr and the revenue is about $3K/yr, so what there to B about.
     
  16. lock

    lock FREE.MARKETING VIP

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    Some domainers might drop names others love etc I have seen almost every drop picked up as it is but feel things will change. I am still working and could still make all renewals but the rest of the worlds behavior is going to influence me on what i choose to keep.
     
    Last edited: Mar 25, 2020
  17. AYORich

    AYORich Established Member

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  18. DigitalRoar

    DigitalRoar Established Member

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    I'm buying liquidating domains but trying not to go overboard because I need money to live too!
     
  19. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent VIP Gold Account Trusted Blogger

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    Thanks for your comment, and I agree that health is the most important thing.

    To answer your question what troubled times, my intention (apologies if it was not clearly expressed) was that this part of my post dealt with that.
    I realize that some have secure jobs and don't depend on investment income, so economically troubled would not apply to them personally. I did not mean this to be at all B about anything :xf.eek: - if it came off that way, sorry. But I would argue that a number are impacted, and that is who the article is directed to. Sorry if that is not clear.

    I am glad that you consistently make a profit(y), view domaining as a hobby, make a small profit(y), and have no worries.:xf.smile: Best wishes for continued success.

    Bob
     
    Last edited: Mar 25, 2020
  20. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent VIP Gold Account Trusted Blogger

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    Thanks to all who have commented, and encourage others to do so. In the poll, now with 56 responses, it looks pretty evenly distributed across all of the responses. Many said they are uncertain, and I think that reflects that it is difficult to predict where this will be in three months time. I personally voted that way.

    I think that @AbdulBasit.com and @lock make good points about how it is wise to renew at least the most valuable part of your portfolio well in advance. Quite apart from pandemic-related circumstances, always good to be prepared for any lengthy emergency, as @AbdulBasit.com said.

    It will be interesting to see how the wholesale aftermarket changes, both in activity and in price levels. I may try to look at that using NameBio stats and looking at price ranges and venues that are likely wholesale.

    I was not very domain active at the time, but I am told that in the aftermath of the 2008 economic downturn there were some that liquidated holdings at lower than normal prices, in order to make up for financial losses outside the world off domaining, or just concern about the future.

    Thanks again to all who have voted and commented.

    Bob
     
  21. marijuanadomain

    marijuanadomain Established Member

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    Didn't they say---never put all your eggs in one basket??
     
  22. Pay.My.id

    Pay.My.id Established Member

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    Great polling @Bob Hawkes

    May be its best time to invest more when we had been strong plan last years. I cover all renewal fee based my passive income . Uncertain time is good opportunity to acquire some valuable domain with lowest price .
     
  23. sharastar

    sharastar Established Member

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    I always cover my renewals before 2-3 months at most but perhaps I should cover it like @AbdulBasit.com.

    Thanks for this wonderful stuff @Bob Hawkes :happy:(y)

    I Surely agree with @Pay.My.id and will be adding lots of awesome names to my portfolio this year and I already started it :sneaky:
     
  24. Bob Hawkes

    Bob Hawkes formerly MetBob NameTalent VIP Gold Account Trusted Blogger

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    I am not quite sure what your comment refers to, perhaps explain a bit more @marijuanadomain ?

    If you are referring to conventional investing, Ben Carlson just posted the following showing how portfolios with different amounts of diversification have held up in the recent downturn. So an equity only portfolio, but averaged over many equities as per the ETF package (I think a number of thousand) would be down almost 31% while a 40% equities and 60% bonds is only down about 12%. Here is reference to article the graph is from.
    [​IMG]
    If you were making reference to diversifying a domain portfolio, that is holding different application niches, and probably some mix of different extensions, I think that is a good idea, but just like the 40/60 does not totally protect you in big market fluctuations, nor would a mixed portfolio totally protect you from domain application changes that might come with an economic downturn. But that is a topic discussed elsewhere on NamePros, and worthy of its own thread.

    If your line meant that people should not depend only on a single job, which might be threatened now, I think that is being unfairly critical of people's circumstances and life choices. At the same time, I do agree that having a profitable side-gig in something, like domaining, does help cushion things if economic factors cause you to lose, or scale back, your main business or job.

    Bob
     
  25. topdom

    topdom Top Contributor VIP

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    Liquidate because of the virus? Even when it was not around, it was impossible to liquidate, now even more impossible, unless you are lucky. I made 15K from domains in the past 12 months, but there was another 20K+ which was not paid. So selling is not enough, because your name and address will be shown to the buyer, the buyer will say, hmmmm, I changed my mind. Marketplaces should stop allowing discrimination, and letting buyers get away with breaking promises. My last 4 figure sale at Sedo was not paid, and it became obvious that this was not a real buyer, and I want it be cancelled, but it can't be done. So I can't sell to someone else at Sedo...But we have to use Sedo and Afternic, because people directly search for domains at their registrar which are connected to these two, and they don't respect sellers enough, instead they work hard to prevent sales.
     
  26. domainexpert77

    domainexpert77 Established Member Epik.com Staff

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    Thanks for the well composed article Bob. Very detailed and informative
     
  27. Lavern Clardy

    Lavern Clardy Established Member

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    Thanks Bob for that great information. learn more, learn how.
     
  28. Lavern Clardy

    Lavern Clardy Established Member

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    Topdom. I like your post. give me the encouragement to move forward. Thank you.
     
  29. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    May be this is off-topic but certainly relevant to renewals in advance. I wanted to share another benefit of renewing domains in advance which is it makes clear to any potential buyer who's keeping an eye on your domain that you should no longer wait for the domain to be dropped and either contact the owner for buying or get some other alternative. I've seen fellow domainers selling their domains including myself after renewing our domains. Not immediately but quite quickly. So there are endusers who're watching your domains to be dropped.

    Thanks :)
     
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