Borrowing against a strong name

[Dividendable]

We own a strong three-letter domain (a working site), among others -- and would be interested to borrow against it (as collateral). How to find bona fide lenders (apart from Domain Capital)?

 

[draco]

Does the site make any money? You would probably get a much better deal and have a lot more options as a revenue generating business as opposed to just borrowing against a domain name.

FG Capital Advisors mentions domain name loans. Just found them in a Google search. I don't know anything about them.

 

[Dividendable]

Yes, the site serves our company, which makes a profit. We'd communicated with FG Capital -- they are a broker, and are not responsive to simple questions (poor service).
Strong domains are assets (not much different than real estate), so I'm not sure why almost no one is doing this business of lending against them (seems very strange). In case of default, probably much easier to deal with than real estate...

 

[draco]

The value of real estate (barring market collapse) is fairly stable and normally goes up, not down. If I put my home on the market, my broker will suggest a price based on a LOT of comps, supply and demand, interest rates, etc. If I decide to sell my home to one of those 'we buy your home' companies, they're not going to offer WAY under market value.

Domains don't have any of that. They're not as liquid as real estate. If you do want to liquidate, you'll get pennies or dimes on the dollar unless you get really lucky. There's a giant gap between what an investor will pay vs. what an end user MIGHT pay.

Think of what goes into a real estate loan. Now imagine it's a lot riskier.

 

[Dividendable]

All this is true for weaker names; but a very strong three-letter domain/site will always receive some bids. Even if investors offer only a third (or even less) of the $200k or such that it appraised at, there is no risk that it is completely illiquid. ...And dealing with such an asset (repossession, etc.) is much less cumbersome and time-consuming than with offline real estate.
DomainCapital has been in business for many years, so they prove the concept works.
It is strange indeed that NamePros doesn't have a page where such lenders and borrowers meet (or another specialized niche P2P platform).

 

[draco]

Whose appraisal? Most 3 letter domains don't sell for $200k. Yes, there are some. But they're usually exceptional domains with clear end buyer(s). Sometimes they may be on the market for years.

https://www.namepros.com/forums/domain-brokers-and-financiers.208/

most of the activity is broker related though.

 

[Dividendable]

Yes, understood. Appraisal by Aftermarket.com.
I am referring to such a case; and a low/conservative LTV (to minimize the risk). Statistically, there exist enough strong names out there (with working sites) to warrant such ABL activities. We are not the only one such borrower -- this market niche does exist and remains almost untapped by prospective lenders looking to safely/risklessly receive 15% per annum or more (probably because there is no proper P2P platform bringing them together. ...I would invest into such a business.
I made an experiment: tried to buy a real strong three-letter name for $40k -- and was not able to find such for that price. So the actual/real market price for such must be above $50k (if not higher)...