Are domain names a store of wealth

[Kuffy]

Nearly all the posts on name pros seem to relate to buying and selling names. This is fine, but I think it misses one major aspect of domain names. I believe that they are a revenue earning store of wealth.

 

[EmotiveDomains]

Yes, the right type of quality .com domains should only go up in value over time. If you can also generate revenue through type-in traffic, even better.

 

[garptrader]

Let's take a few scenarios of a 100-domain portfolio and average industry turn of 1% or one sale per year and a sale of $500 (after marketplace commission) which is more realistic than the high-profile sales which are always touted on industry blogs:

1) Portfolio #1 generates $25 in annual parking per domain and average renewal cost is $10 per year
Revenue $25 x 100 domains + $500 = $3000
Renewal cost $10 each x 100 domains = $1000
Cash flow $3000- $1000 = $2000 a portfolio worth holding

2) Portfolio #2 generates zero in annual parking but average renewals are still only $10 per year
Revenue $500
Renewal cost $1000
Cash flow $500 - $1000 = ($500) an expense - probably common but perhaps being more realistic with pricing could generate additional sales or dropping lower-quality domains could improve results by lowering the renewal bill. The danger is multiplying this losing portfolio by hundreds of additional similarly-performing domains (despite the one-off sale in aggregate a loss).

3) Portfolio #3 generates zero in parking revenue but average renewals are $30 average
Revenue $500
Renewal cost $100 domains x $30 each = $3000 renewals
Cash flow (negative) $500 revenue less $3000 renewals = ($2500) a considerable expense

This is likely common with new TLD portfolios packed with premium renewals and can become problematic if those 100 domains become 500 or more.

 

[Kuffy]

I'm going off the idea of using parking services, and switching to promoting a few selected sponsors. I'm hoping that this will give me a variation on the first model, but with extra profit. With a bit of pruning, and sales of names for a small profit, I'm hoping that this will build a useful store of wealth. It's a bit more complex though, as traffic seems to decay on some names if there isn't a developed site there.

I'm planning on renting a basic VPS, so that adds another $40 pa to the costs. Renewals are less than $10 though because I'm using Name Silo.