discuss Buying only good names and the ROI

[abstractdomainer]

Having spoken to a number of investors, read through a number of threads, and seen it firsthand, I have now realized that a good domain is multiple times better than 100 average names.

If you have a good name that you are willing to renew and hold for 5+ years for the right price, you somehow just know that it is going to give a handsome return - the only thing that you don't know in that case is when.

From a cash flow perspective, this is not a good strategy but from an individual investment perspective, you just know that if you invest say $300 in this name + 10 renewals of say $15 each, you would be investing $450 over a period of 10 years with a potential return of $5000 (taking an example), thereby giving a massive 900% plus return in 10 years. That's more than most investments would pay you.

From now on, I have started seeing domain names as individual investments rather than portfolio investments. I don't want to sell 10 out of 400 names in one year at an average price. Rather, I would aim to sell 10 domains in 10 years at great prices.

Expanding the horizon of the hold and knowing that individually, that particular name is going to pay off big time.

 

[enterscope]

It applies to just about anything in life. Wealthy people buy low to hold and sell high to win.

Ideally, you never sell ever because you have so much cash flow you don't need to. Good luck!

 

[Recons.Com]

Having spoken to a number of investors, read through a number of threads, and seen it firsthand, I have now realized that a good domain is multiple times better than 100 average names.

If you have a good name that you are willing to renew and hold for 5+ years for the right price, you somehow just know that it is going to give a handsome return - the only thing that you don't know in that case is when.

From a cash flow perspective, this is not a good strategy but from an individual investment perspective, you just know that if you invest say $300 in this name + 10 renewals of say $15 each, you would be investing $450 over a period of 10 years with a potential return of $5000 (taking an example), thereby giving a massive 900% plus return in 10 years. That's more than most investments would pay you.

From now on, I have started seeing domain names as individual investments rather than portfolio investments. I don't want to sell 10 out of 400 names in one year at an average price. Rather, I would aim to sell 10 domains in 10 years at great prices.

Expanding the horizon of the hold and knowing that individually, that particular name is going to pay off big time.

You, again, have no clue what you are talking about.

Great names are priced accordingly. And they also have STR of 0.5% to 2%. Hence, if you have 10 great names, in 10 years you will end up selling just 2-3 names, not 10 (mathematically, possible, but odds of that would be similar to winning a jackpot in lottery).

The only correct way to think of domains is as portfolio. You can further divide it into sub-portfolios, if you like more granularity.

Cheaper names (still good quality) -> hold more names, cheaper to build portfolio, sell at lower prices, have higher renewal cost as % of your overall sales

More costly names -> hold less names, more expensive to build, sell at higher prices, renewal cost as % of your overall sales is way lower.

Since the latter category has less of supply and they are easier to recognize by many investors, there is steeper competition and investors have to sacrifice lots of upside. So ROCE could be lower.

 

[bmugford]

You, again, have no clue what you are talking about.

Great names are priced accordingly. And they also have STR of 0.5% to 2%. Hence, if you have 10 great names, in 10 years you will end up selling just 2-3 names, not 10 (mathematically, possible, but odds of that would be similar to winning a jackpot in lottery).

The only correct way to think of domains is as portfolio. You can further divide it into sub-portfolios, if you like more granularity.

Cheaper names (still good quality) -> hold more names, cheaper to build portfolio, sell at lower prices, have higher renewal cost as % of your overall sales

More costly names -> hold less names, more expensive to build, sell at higher prices, renewal cost as % of your overall sales is way lower.

Since the latter category has less of supply and they are easier to recognize by many investors, there is steeper competition and investors have to sacrifice lots of upside. So ROCE could be lower.

Yep. I have said this endless times - you need quality + quantity.

Ideally you need a mix of sellable domains in different price ranges to generate cash flow.

My goal is always to sell enough domains to pay for renewals, turn a nice overall profit, and invest in new domains. This allows me to hold my best domains for strong offers as good domains (especially .COM) continue to increase in demand over time.

Brad

 

[Recons.Com]

Yep. I have said this endless times - you need quality + quantity.

Ideally you need a mix of sellable domains in different price ranges to generate cash flow.

My goal is always to sell enough domains to pay for renewals and turn a nice overall profit, while at the same time holding my best domains for strong offers as good domains (especially .COM) continue to increase in demand.

Brad

You and I often share similar views. Mainly, because logic is a universal concept and if you think logically you should arrive at same conclusions.

I have over 20 000 domains. Only around 500 of those would be in the costly category and absolute majority of those were acquired in 2015-2019 when the auction prices were more adequate. I am mostly growing now on the cheaper gems that fall through the cracks sacrificing time to look for those. My analysis also showed that the return on those is better than on the costly ones which is, again, intuitive. It doesn't take a lot of brain power to figure out that Data/Cube is an amazing brand so it could fetch five figures even at GD auction among investors. It is harder to identify gems like itisourgame/gingerandmoss/showuniversity/originee/botld/100pourcent/ lifeworthloving/bycreativity/ etc. (recent sales).

In all, I'd say I make 25%-40% return on costly names and 50%-100%+ on the cheaper ones.

 

[bmugford]

Cheaper names (still good quality) -> hold more names, cheaper to build portfolio, sell at lower prices, have higher renewal cost as % of your overall sales

More costly names -> hold less names, more expensive to build, sell at higher prices, renewal cost as % of your overall sales is way lower.

Since the latter category has less of supply and they are easier to recognize by many investors, there is steeper competition and investors have to sacrifice lots of upside. So ROCE could be lower.

This is a good example of why the portfolio is far more relevant than any individual domain.

You are going to have a much higher ROI on cheaper names if they sell, but higher quality domains have steady value you can always cash in on.

Let's say I buy a two word .COM for $500. If I sell it for $2500 I made quite the impressive ROI.

However, now let's say I bought a LLL.com for $15K. If I sold it for $20K sure my ROI is much lower, but the actual dollar amount is higher. Plus that asset has very limited risk as you can always sell it for around what you paid.

This is why you really need a mix of different types and qualities of domains IMO.

Brad

 

[Recons.Com]

This is a good example of why the portfolio is far more relevant than any individual domain.

You are going to have a much higher ROI on cheaper names if they sell, but higher quality domains have steady value you can always cash in on.

Let's say I buy a two word .COM for $500. If I sell it for $2500 I made quite the impressive ROI.

However, now let's say I bought a LLL.com for $15K. If I sold it for $20K sure my ROI is much lower, but the actual dollar amount is higher. Plus that asset has very limited risk as you can always sell it for around what you paid.

This is why you really need a mix of different types and qualities of domains IMO.

Brad

I am not concerned with the absolute amount made per name. I am concerned with ROI. So, if investing 15k into 1000 domains gives me a better return, then that is my priority. Which doesn't mean I won't go for a name like tekh/com when I see something like that in an auction ))

I also like the 1000 domain option because it gives me a steady flow of sales. For the year, I am at around 1 sale per 2.4 days, last year it was at around 1 per 3.4. I am determined in turning this into a "normal" business for myself where a daily sale should be a norm and the monthly cash flows should be more or less predictable.

 

[bmugford]

You and I often share similar views. Mainly, because logic is a universal concept and if you think logically you should arrive at same conclusions.

I have over 20 000 domains. Only around 500 of those would be in the costly category and absolute majority of those were acquired in 2015-2019 when the auction prices were more adequate. I am mostly growing now on the cheaper gems that fall through the cracks sacrificing time to look for those. My analysis also showed that the return on those is better than on the costly ones which is, again, intuitive. It doesn't take a lot of brain power to figure out that Data/Cube is an amazing brand so it could fetch five figures even at GD auction among investors. It is harder to identify gems like itisourgame/gingerandmoss/showuniversity/originee/botld/100pourcent/ lifeworthloving/bycreativity/ etc. (recent sales).

In all, I'd say I make 25%-40% return on costly names and 50%-100%+ on the cheaper ones.

Yeah, I acquired the vast majority of my domains several years ago. It was a very different market.

Factoring in a 1%-2% sell-through rate it makes sense to buy domains for low $XXX and sell in a $2500 - $5000 price range (over time). The same quality of domain is selling for more like mid $XXX - High $XXX now.

The math does not work. You either need a much higher sell-through rate or much higher average prices.

That is a big reason I am not as active of a buyer. If the opportunities are there I will take them, but I am not going to chase them.

I still pickup domains here and there -

I grabbed (4) .COM in the last week for $120, $149, $250, and $891. I am sure I will sell some marginal domain from my portfolio that covers the cost of those in short order, and my portfolio got stronger in the meantime.

Brad

 

[bmugford]

I am not concerned with the absolute amount made per name. I am concerned with ROI. So, if investing 15k into 1000 domains gives me a better return, then that is my priority. Which doesn't mean I won't go for a name like tekh/com when I see something like that in an auction ))

I also like the 1000 domain option because it gives me a steady flow of sales. For the year, I am at around 1 sale per 2.4 days, last year it was at around 1 per 3.4. I am determined in turning this into a "normal" business for myself where a daily sale should be a norm and the monthly cash flows should be more or less predictable.

Yeah, the return does not matter on a per domain basis.

If I own 1000 domains that I bought for $10 each, you could make one $20K sale and have 999 domains that yielded $0 and still have a strong portfolio ROI.

Or could also have one sale for $5K which is a great per domain return, but you are losing money overall.

All that really matters is the entire portfolio.

It might matter on a related group of domains when factoring in the return.

For instance maybe you are making no sales is a certain category, but doing very well in another. You might want to factor that in.

Brad

 

[Recons.Com]

Yeah, I acquired the vast majority of my domains several years ago. It was a very different market.

Factoring in a 1%-2% sell-through rate it makes sense to buy domains for low $XXX and sell in a $2500 - $5000 price range (over time). The same quality of domain is selling for more like mid $XXX - High $XXX now.

The math does not work. You either need a much higher sell-through rate or much higher average prices.

That is a big reason I am not as active of a buyer. If the opportunities are there I will take them, but I am not going to chase them.

I still pickup domains here and there -

I grabbed (4) .COM in the last week for $120, $149, $250, and $891. I am sure I will sell some marginal domain from my portfolio that covers the cost of those in short order, and my portfolio got stronger in the meantime.

Brad

I had a conversation with few investors that pay 20% to 50% of the expected end user sale price trying to understand the logic. Most just do this replacing names that sold. So if they had a 15k sale they might go and bid up to 5k on an auction for a similar name to replace in the portfolio. It is not rational from roi perspective but has its own logic.

And when many apply similar one, given how limited the quality names are in supply, the prices go crazy. GD auctions, the largest of its kind, probably get only few hundred of those every day for the whole planet to compete for.

 

[bmugford]

I had a conversation with few investors that pay 20% to 50% of the expected end user sale price trying to understand the logic. Most just do this replacing names that sold. So if they had a 15k sale they might go and bid up to 5k on an auction for a similar name to replace in the portfolio. It is not rational from roi perspective but has its own logic.

And when many apply similar one, given how limited the quality names are in supply, the prices go crazy. GD auctions, the largest of its kind, probably get only few hundred of those every day for the whole planet to compete for.

Well, if you try to make passive end user sales then I am not sure how that math makes sense at a 1-2% sell-through rate.

The only exception might be highly liquid domains where the reseller and end value might be somewhat close, like LLL.com for example.

Brad