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advice Domain Name Investment: Dos and Don’ts

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In response to a NamePros Blog article a few week’s ago, Arslan Nawaz asked that I write an article on Domain Investing Dos and Don’ts.

The following is an amalgamation of my own ideas along with views expressed by many other people over a number of years. Near the end is a list of articles related to the topic.

I hope NamePros community members will contribute in the comment section to improve these lists.

Starting in Domain Investing? Consider These Dos

Do Have A Plan I think everyone can benefit from having a domain investing plan that you review at least once a year. At the outset, the plan could be as simple as filling in the blanks in something like the following:
Image-InvestmentPlan.png

When you get to more sophisticated planning, something like a Domain Prospectus for your portfolio may be a useful idea. It turns out that @Robbie just published a much more complete domain prospectus document: Mastering the Art of a 2024 Winning Prospectus.

Do Focus On The Name Before you consider how aged a name is, or what some appraisal tool says about worth, or how many extensions the term is registered in, or even how many businesses use a similar term, first simply focus on the name. Is it a great name? Why? The article What Makes A Good Name? can help you get started.

Do Stress Quality Over Quantity It isn’t just that higher quality names sell a little more frequently, lower quality names often will never sell at any price. If someone is investing in a business, do they really want to buy a second best name? Does the name pass the test: ‘Would I really use this name to build a business myself?’ Acquire fewer, but better, names.

Do Ask What Businesses Would Use This Name Some names are clever and interesting, but they really are not that interesting for business or serious organization use. Make sure there are multiple realistic users for any name. See Will Anyone Really Use This Domain Name?

Do Consider the Competition Someone acquiring a domain name potentially has the choice of every name they can think to register, plus all 40 or 50 million domain names that are actively for sale. Before you decide on an acquisition, research what similar names are listed for sale, and their prices.

Do Use Key Tools While instincts and qualitative aspects of a name are important, you will more consistently make better choices if you also consider metrics such as number of registered businesses that use the term, prices similar names have sold at, how many extensions the term is developed in, search volume, and how many extensions the name is registered in. As a starting point consider domain name research tools, followed up by 21 Useful Sites for Domain Name Investors.

Do Develop A System There is no one right way to do domain investing, but having discipline and a system, and doing research, will help. Your system might be to seek expired names that meet a certain set of characteristics that you set in a saved filter on ExpiredDomains, check each day, and perform tests to rate possible names. Part of your system will be developing lists of keywords – see Making A List…And Updating It Often.

Do Consider Reasons NOT to Acquire This Name I can’t remember where I first saw this, probably on NamePros, but try to talk yourself out of each name you are considering. It is easy to be blinded by reasons to get the name. Make sure you carefully consider negatives as well.

Do Use Your Unique Position Each of us bring a certain set of skills, experience, knowledge and connections to domain investing. Make the most of those by investing primarily in what you know well. See the article Domain Name Superpowers.

Do Have Reasonable Expectations If you manage to break even in your first year, you will do better than the majority who try selling domain names. Because those who are successful tend to stick around and share their success, one can sometimes have the wrong impression on how hard it is simply to be marginally profitable.

Do Understand Sell-Through Rate Don’t consider investing in names without understanding what a sell-through rate is, and knowing typical values. If you sell 2 domains out of a portfolio of 100 during one full year, your annual sell-through rate (STR) is 2%. Industry wide, probably the STR is less than 1%, even if we only look at .com. This article on domain name sell-through rates provides an introduction.

Do Apply Probability Domain investing should not be like gambling or wild speculation, but understanding ideas of probability and likely outcomes is important. The article Probability for Domain Investing is a good place to start.

Do Estimate Selling Price and STR Before You Acquire Any Name None of us will be able to know these with certainty, but you should be clear on the retail price you plan to list the name, and have an estimate of its STR, prior to any acquisition. Why? Without this information you can’t know if your acquisition price makes financial sense.

Do Price Right I agree with the suggestion many make that names less than $20,000 should have buy-it-now prices. How to price is challenging, but important. While at some point you may want to moon-shot price a few names, don’t do that with your entire portfolio, especially at the start. Pricing too low might cause loss of respect for the name. This article on How Are Investors Pricing Their Names may be helpful, or this one on the Minimum Domain Price for Profitability.

Do Learn to Use ExpiredDomains.net Get started with this article on Using ExpiredDomains and then extend your skills through the techniques covered in Getting More from ExpiredDomains.

Do Keep Records and Reflections Many wise folks have said “you make money on the buy.” That involves both not over paying, and registering only quality names. Make brief notes of your thought process at the time of acquisition, and then look back later.

Do Treat This Like A Business Even if you are in this as a side hustle or a hobby, I think it still makes sense to view it like a business. Have a plan, keep records, be professional in interactions, build skills, evaluate progress, and strive to constantly improve.

Do Get That First Sale Domain expertise builds slowly for most, and it can seem really frustrating. I see merit in a focus on getting that first sale, even if it is not at a price you will ultimately seek for that sort of name. The first sale will validate your efforts, but importantly also provide a source of funds to invest in other names, or renew your best names.

Do Learn From Mistakes The best way to do this is to periodically reflect and note the acquisitions you now regret and why.

Do Take Periodic Breaks From Acquisitions Domaining can be addictive, and it is easy to acquire too many names. It helps to every now and then take a break from even looking at potential acquisitions.

Do Network and Learn We are all fortunate to be part of this incredible community. Make the most of NamePros to learn new things and to communicate with others. Many members have been very successful over long periods, and are willing to help you become successful too. The diversity of interests can also open your eyes to new approaches and opportunities.

What To Avoid? A List of Don’ts

Don’t Rush In In countless NamePros discussions members caution new investors to not acquire too much too fast. Learn first, then slowly acquire.

Don’t Invest Money You Need Domain investing is not easy, fast or assured. There is no guarantee that any name will sell. Do not use money that you need for living expenses or other obligations. Be cautious, especially during early years.

Don’t Look At Only One Characteristic Many poor choices are due to the investor focussing too much on a single aspect of the name, such as it is a dictionary word, or the same word in another extension sold for a lot, or the robotic evaluation estimates are high, or it is very aged. Take a multi-faceted approach for each domain name you consider.

Don’t Be Impulsive It is easy to regret a flurry of hand registrations or increasing an auction bid beyond what you planned to spend. Pause and be disciplined. Occasionally you will miss possible acquisitions, but also avoid many mistakes.

Don’t Make Mistakes By this I mean actual errors. It is so easy to be confused by a misspelling, or a repeated letter between two words, a capital I and a small L, two similar by different words, etc. Copy and paste into Google the name you are considering acquiring just to be sure. See the article Avoiding Costly Mistakes.

Don’t Acquire Trademark Infringing Names If this name is mainly valuable because of a well known company, you are acquiring it in bad faith. You don’t want the stress of potential legal or UDRP cases.

Don’t Invest in an Extension Without Studying What Sort of Names Sell in that Extension Many types of name sells in .com, but for most other extensions only a certain type of name will sell. The type of name that sells in .io or .xyz will be different than what sells in .us. Be sure to research that before investing in other extensions. Over the years the NamePros blog has done in depth analyses for a number of extensions.

Don’t Have Unreasonable Expectations I know the stories of people who hand registered a name and weeks later sold it for 5-figures. Sure it is possible. But that seldom happens. Don’t base your investing on someone else’s outlier sale.

Don’t Invest Primarily in Names That Would Appeal To Only A Few I honestly believe that most names have someone that might be interested in them, but that doesn’t mean they will likely ever sell. The test on a name needs to be more than you can think up a user for it. You want names that obviously would appeal to multiple users.

Don’t Waste Money Make sure you get competitive rates by using resources like TLD-list (although also check experience of others if considering a registrar you are not familiar with), and don’t pay for extras that you don’t need. Don’t waste money by acquiring low quality names that will never sell. Try to have sufficient cash flow to be able to renew prior to price increases. Keep track of renewals, and don’t auto renew names you don’t want to, or let names you plan to keep slip into redemption.

Don’t Start With This As A Full-Time Job It takes time to get good and have consistency. Keep your full-time job, and gradually build up your portfolio and skills. It is fine to have hopes of going full-time eventually, and a number of NamePros members have done that, but don’t start at that.

Don’t Over Extend Yourself It is tempting after a sale to immediately put all of that money into new acquisitions. Resist that. You will need money for renewals, so reserve some for that. I find it useful to always stay renewed at least 6 months out. When I sell a name, I first renew any names coming up in the next 6 months that I plan to keep. A few names I feel very sure on I renew in advance for much longer periods. Then what is left I apply to potential acquisitions.

Don’t Become Emotional I know that domain investing can be stressful. A company treated you unfairly. Someone was rude to you. You disagree with something said. It does not help you, and definitely not the industry, to go off on a public rant. You set a minimum offer of $20. Someone offers $20 on a name that is worth $10,000. What exactly is gained by being rude to them in negotiations, or posting the offer on social media? When you let yourself become angry you will be less logical and focussed.

Don’t Fall In Love With Your Names When we create a name, or discover it, we see all of its positives, and tend to ignore the negatives. It is easy to really fall in love with that name. Odds are, we each think more highly about our own names than almost anyone else. This is natural and fine, but don’t let it stand in the way of making a deal when a legitimate offer comes along. Also, if all the signs are that a certain name has little potential, don’t keep renewing just because you already have so much invested in it.

Don’t Be Impatient Things happen so sporadically in domain names it is easy to become impatient. But if you are sure a name is of high quality and has many potential buyers, be patient, eventually one of them will come calling.

A Few Things Not Included

Many would add to the lists things like don’t hand register names, don’t invest in trends, or don’t invest in anything other than .com, at least until an experienced domain investor.

Others would suggest not to invest in an extension unless it already has a well-established sales record, diversify your investments, or always hold names multiple years. Some would say never invest in a domain with a premium renewal.

While I see logic behind all of these, some people have been successful without following them. I guess that returns to the central point that any list of Dos and Don’ts should be thought of as a starting point for consideration. Assemble a set that seems logical for you and your investing situation.

Further Reading

Much has already been written on NamePros related to this topic. These articles and discussions will be of interest:
Final Thoughts

Just as I was making the final touches to this article I came across the discussion started by @andrewwilliams54323 on the topic of mistakes in domain investing.

One of the replies in that thread really summarizes the important points so well. @GoKaizen, a long-term NamePros member who joined in 2012, wrote the following:
  1. Selling at the wrong time.
  2. Not sticking to my price.
  3. Buying at the wrong time.
  4. Holding domains for too long.
  5. Not accepting offers I should have.
  6. Buying into trends.
  7. Not keeping accurate records of domain financials.
  8. Needed to learn to drop domains.
Thank you @GoKaizen for the superb list.

In the comment section below please suggest additions that you would make to the Do or Don’t lists.

I might close with sharing that I am personally not much of a fan of Dos and Don’ts lists. That is partly because there are always exceptions and qualifications. Perhaps a simple list misrepresents something that is really more uncertain and complex. That said, I hope you find these lists of some help. After spending the time to put them together, I do see value as a checklist of points to keep in mind.

Oh, in case anyone is wondering, should it be Do’s and Dont’s or Dos and Don’ts, most grammatical experts say the second way is correct. It is the plural, not possessive, of Do, and the apostrophe is the contraction of Do Not to Don’t.
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
An excellent write-up @Bob Hawkes, as always. Thanks! 🌹

You've covered many important points.
As I'm still fairly new at domaining compared to many others here, I'll just add one point I think is very important:

Do: Have an alternative source of income :giggle:
 
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in case anyone is wondering, should it be Do’s and Dont’s or Dos and Don’ts, most grammatical experts say the second way is correct. It is the plural, not possessive, of Do, and the apostrophe is the contraction of Do Not to Don’t.
This piece of grammatical advice is a gem itself, thank you for it, too!

And for the enlightening article, as usual...
 
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Informative and insightful, thanks Bob for your great contribution.
 
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Thanks Mr Bob!!! I always appreciate your writings :)
 
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I’ve definitely dipped into some
Of those, appreciate these, so thanks!
 
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Great insights, as always, Mr. Bob. My sincere thanks!
 
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Thank you Mr Bob for your enlightenment, it's a wonderful write-up
 
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Many thanks Bob, thank you for taking time to write this and help us learn continuously
 
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