discuss Is domaining a portfolio game?

[Arpit131]

I have been thinking and reviewing things and I realised that a lot of times, domaining looks like a portfolio game to me - of course, a decent one.

Even a hand registered portfolio of say, a 250 domain name portfolio with 3% sale at $6 a name would have an investment of $1500 and 8 domain sale of say $700 each amounting to $5,600
Accordingly, the numbers may adjust as we scale up. But when I look at appraisals section with individual domains, a single domain may not make sense a lot of times.

Like say, a single decent .CO domain may not have value individually but if you own 200 of them, price it in $1000 range and expect a 2% sale, that may make more sense.

A portfolio game looks like a decent game in domaining.
What is your thought on this?

 

[Joe N]

Then there's the model where you're sure you've hand reg'd some pretty good names, but you haven't had the time or resources to market/sell them to your target. For instance, i hand reg'd a couple of pretty good domains recently; StealthLegal.com and StealthDivorce.com and I seriously doubt a National Law Firm is actively looking for my domains. However, applying the 80/20 rule to my hand reg portfolio's, I intend to renew 20 to maybe 30% annually while I drop the other 70-80%.

So your model is to register hundreds of names per year, not put any time into selling them, and then drop 80% of them?

Unless I'm misunderstanding, Rich, I believe that model is also known as burning money.

 

[Ntmt]

So your model is to register hundreds of names per year, not put any time into selling them, and then drop 80% of them?

Unless I'm misunderstanding, Rich, I believe that model is also known as burning money.

Regarding "not put any time into selling them" - do you mean outbound marketing? Or time to list them on marketplaces?

 

[Joe N]

Regarding "not put any time into selling them" - do you mean outbound marketing? Or time to list them on marketplaces?

You'd have to ask @ThatNameGuy... He insists that the only way to sell domain names is to do it proactively, but he doesn't have time to do that.

 

[boker]

So your model is to register hundreds of names per year, not put any time into selling them, and then drop 80% of them?

Unless I'm misunderstanding, Rich, I believe that model is also known as burning money.

I think that there are a few who are doing this at a pretty big scale, something like 30k domains or so. They use $1-2 to reg them, priced low xxx to low xxxx for fast sale and renew around 20% or so, just the ones with more views/inquiries or which could be more valuable in the future and drop the rest of them, sometimes even hand regging them again after couple of months. Like this you cut the expenses with acquisitions and renewals sell as much as you can in the first 13 months. It can be profitable if you know what are you doing and you are doing it at scale...over 5k-10k domains.

 

[bmugford]

I think that there are a few who are doing this at a pretty big scale, something like 30k domains or so. They use $1-2 to reg them, priced low xxx to low xxxx for fast sale and renew around 20% or so, just the ones with more views/inquiries or which could be more valuable in the future and drop the rest of them, sometimes even hand regging them again after couple of months. Like this you cut the expenses with acquisitions and renewals sell as much as you can in the first 13 months. It can be profitable if you know what are you doing and you are doing it at scale...over 5k-10k domains.

If we are talking about .COM, I believe the registry wholesale cost is $7.87.

Sure some registrars might run $1-$2 promos for a handful of domains, but I am not aware of any registrar that is offering anything on that scale.

It would not make a lot of sense for a registrar to take $1 for a .COM then pay Verisign $7.87.
Even on 10K domains they would lose almost $70K.

Brad

 

[boker]

I wish it was that easy. Regardless of the quality, names require aging within your portfolio. Most sales happen for names that have been in your portfolio for 3+ years. They need the same exposure over long time often.

What you can do however is to put the names in different baskets by acquisition cost.

For expensive names, it is higher sales price, less renewals, but also higher investment upfront. So your return on investment, if done right, will be similar to the ones cheaply acquired.

I could be wrong in my calculation, correct me if I'm wrong. If somebody will start now to build a portfolio of 25k, at least medium quality domains, it should be either closeouts or cheaper auctions, so a $30 on average could do it? So that means a 750k investment upfront+ 1st year renewal, 225k+2 year renewal, 225k +3rd year renewal, 225k, so that means something like a 1.75 million investment in the first 3 years without making any money or maybe just a small %. With the forth year, let's say you will make 1% STR , with 2k average, that means 500k minus 225k renewal, so 275K profit just for year 4, but overall over 1 million less, after 4 years. If you go ahead, the first year that you break even will be the 8th year and after 12 years or so you could double your money, not counting your time spent. I don't have 1.3 million $, but I don't think that I will be happy to double it in 12 years.

 

[ThatNameGuy]

So your model is to register hundreds of names per year, not put any time into selling them, and then drop 80% of them?

Unless I'm misunderstanding, Rich, I believe that model is also known as burning money.

Please give it a rest Joe....you know I'm way smarter than that....that's why you follow me

 

[boker]

If we are talking about .COM, I believe the registry wholesale cost is $7.87.

Sure some registrars might run $1-$2 promos for a handful of domains, but I am not aware of any registrar that is offering anything on that scale.

It would not make a lot of sense for a registrar to take $1 for a .COM then pay Verisign $7.87.
Even on 10K domains they would lose almost $70K.

Brad

It could not make sense, but some registrars are doing it. In the last years some registrars like: NS, dotster, domain.com, lcn, nettigritty were doing it with no limit in a certain time frame, and other smaller registrars were doing it with some limits. Also, I don;t think they are limiting themselfs at just .com, you can do the same with .co, .co.uk, .de, .cn ,eu and other cctlds, some of them with higher STR than .com, at least in this scheme.

PS: my biggest regret it's from 2016, when a smaller registrar was offering 0,31$ for a com with no limit and I've registered only around 70, because I didn't knew the registrar well enough and because I didn't had my lists ready(others have regged thousands that time). You can guess the profit from selling that 70 domains, 5 to end users, 40 to resellers, 15 renewed and 10 dropped. If I could have done it at scale, it could have saved me some years.

 

[ThatNameGuy]

Regarding "not put any time into selling them" - do you mean outbound marketing? Or time to list them on marketplaces?

Both

 

[ThatNameGuy]

You'd have to ask @ThatNameGuy... He insists that the only way to sell domain names is to do it proactively, but he doesn't have time to do that.

You and Ntmt may want to check this out....https://www.namepros.com/threads/saw-com-dialing-for-dollars-and-smile-and-dial.1172701/

 

[Indianad]

Thanks for your thoughts. As a newbie, I am always seeking knowledge and you have provided such.

 

[Joe N]

Please give it a rest Joe....you know I'm way smarter than that....that's why you follow me

By all means, elaborate then. In the context of this thread, how has your portfolio building model generated real financial results? How has your method led to profitability as a domain investor?

 

[Joe N]

I think that there are a few who are doing this at a pretty big scale, something like 30k domains or so. They use $1-2 to reg them, priced low xxx to low xxxx for fast sale and renew around 20% or so, just the ones with more views/inquiries or which could be more valuable in the future and drop the rest of them, sometimes even hand regging them again after couple of months. Like this you cut the expenses with acquisitions and renewals sell as much as you can in the first 13 months. It can be profitable if you know what are you doing and you are doing it at scale...over 5k-10k domains.

I acknowledge that the method can be profitable, but I also suspect that the hourly wage derived from the amount of work required is probably very modest in most cases.

Wouldn't it be a lot more profitable and efficient to only buy names that have a better than average chance of selling, hold them long term, and not burn hundreds or thousands per year on uninformed purchases?

 

[boker]

At $1-$2 purchase price, STR of 1% and close to no renewals at 30k domains sold at an average price of $600-$700, means around 50k expenses and around 190k revenue, the difference is profit. Modest for some, great for others. The one's who are doing it at scale, they have automated most of the work.

 

[ThatNameGuy]

By all means, elaborate then. In the context of this thread, how has your portfolio building model generated real financial results? How has your method led to profitability as a domain investor?

In the context of this thread I've already told you "Domaining is a Portfolio Game"
By all means Joe....how many times do I need to tell you to give it a rest You don't believe anything i tell you so why should i WASTE the key strokes

 

[Joe N]

At $1-$2 purchase price, STR of 1% and close to no renewals at 30k domains sold at an average price of $600-$700, means around 50k and around 190k revenue, the difference is profit. Modest for some, great for others. The one's who are doing it at scale, they have automated most of the work.

Okay, well if it's true that unlimited $1 domain deals exist, then I can see how this could work.

And if the process of finding and registering names is automated, it makes sense that you wouldn't want to renew most of them. You would just be compiling a massive list of available names based on pre-determined keyword combinations, and hoping you sell enough in the right range to make it worthwhile.

So yes, the model certainly seems feasible. And if you know people doing this successfully, then that's your proof of concept.

Personally, it doesn't sound that fun to me... but if you're netting six figures a year then I suppose fun is a relative term.

 

[Joe N]

In the context of this thread I've already told you "Domaining is a Portfolio Game"
By all means Joe....how many times do I need to tell you to give it a rest You don't believe anything i tell you so why should i WASTE the key strokes

I believe everything you tell me, Rich:

• "I don't share sales information."
• "I don't share details of my plans."
• "I think I'm revolutionizing all industries just by participating in them."

The issue is not your believability, it's your lack of ability to provide even a shred of empirical evidence to suggest that your methods work.

Check out @boker and his posts. @bmugford and I both challenged his suggested method, and he provided us with:

• Additional details on where to get cheap registrations
• Data from his own experience using this method on a smaller scale
• Confirmation that he knows people in the industry who apply the strategy with success, and some indication as to how they do it.

Can I personally confirm what he's telling me? Maybe to some degree, if I wanted to... but at least he shows credibility by willingly sharing this knowledge.

You contend that your methods are blowing the roof off the whole domain industry, and that you personally are proving to everyone how well they work. Please elaborate. Or fall back on the elementary schoolyard method of getting attention: "I have a big secret, but I can't tell anyone."

 

[Recons.Com]

You are rolling pretty good, sounds like you are building an empire, i love to see empires. are you domaining full time at this point??

what is yearly sales % if you don't mind me asking

Mike Mann has a very unusual strategic method, he has been doing do it a long time now, personally it scares the crap out of me lol, but mike has been so outstanding doing it. HugeDomains the same and they continue to stay on the course they have always been on, that minus the quality of names they are able to snag these days, but that goes for everyone pretty much.

I think i posted something like this earlier in this thread, but i will reiterate .

The domain name industry consists of many different niche markets, Webmaster, Seo, eCommerce, Broker, Journalist, Domain Name aftermarket owner, Design, Consultant, Domain Name Flipper, Large domain name portfolio holder.

As far as domaining being a numbers game, It simply isn't IMO, If you have more inventory are you more likely to make more sales?? I would hope so, but what is the year in losses. provided you have a large portfolio of tier 1 and tier 2 domain names, you should do very very well in selling, profits is the question. Tier 1 and Tier 2 domain names have risen in value and are expensive to acquire, so the hold time is obviously going to be longer if you are to make a respectable profit. these quality names are getting harder to purchase with a guaranteed profit that will substantiate the purchase IMO, the industry saturation wont allow for it these days IMO, Branching out into the industry offers more streams of income as opposed to just putting all your eggs into one large portfolio IMO.

for instance, if you sell a domain name to a startup or rebranding company, ask for 2% holdings in the company + your negotiated price, 2% may not sound like much, if the company prospers , you get $$$ on a residual basis. Just one example of how you can more assure your domain name investments are capitalized.

I would say the day anyone thinks any aspect of domaining is just a game, Liquidate, they are in the wrong business

I don't active track STR yet, it is definitely above 1% because the average holding for 2019 was under 3000 names and sold around 35 for that year. You need around 0.3% to 0.4% sell through to pay for renewals, shouldn't be hard to achieve.

With the launch of my marketplace, I expect to get to 2%-4% STR, but let's see about that.

 

[manpreet]

I have been thinking and reviewing things and I realised that a lot of times, domaining looks like a portfolio game to me - of course, a decent one.

Even a hand registered portfolio of say, a 250 domain name portfolio with 3% sale at $6 a name would have an investment of $1500 and 8 domain sale of say $700 each amounting to $5,600
Accordingly, the numbers may adjust as we scale up. But when I look at appraisals section with individual domains, a single domain may not make sense a lot of times.

Like say, a single decent .CO domain may not have value individually but if you own 200 of them, price it in $1000 range and expect a 2% sale, that may make more sense.

A portfolio game looks like a decent game in domaining.
What is your thought on this?

Quality over Quantity any time.

 

[Recons.Com]

I could be wrong in my calculation, correct me if I'm wrong. If somebody will start now to build a portfolio of 25k, at least medium quality domains, it should be either closeouts or cheaper auctions, so a $30 on average could do it? So that means a 750k investment upfront+ 1st year renewal, 225k+2 year renewal, 225k +3rd year renewal, 225k, so that means something like a 1.75 million investment in the first 3 years without making any money or maybe just a small %. With the forth year, let's say you will make 1% STR , with 2k average, that means 500k minus 225k renewal, so 275K profit just for year 4, but overall over 1 million less, after 4 years. If you go ahead, the first year that you break even will be the 8th year and after 12 years or so you could double your money, not counting your time spent. I don't have 1.3 million $, but I don't think that I will be happy to double it in 12 years.

Your profitability calculation is flawed.

If your investment generates annual income above its operational costs, then it is profitable.

For this type of portfolio the average cost should be under $20.

$20x25K=$500K investment.

1% sales x 25k = 250 sales.

250 sales x $1500 net after commissions = $375K.

Minus renewals and restocking at around $200k.

Profit before taxes = $175k

Annual return on investment $175k/$500k = 35%.

 

[boker]

Your profitability calculation is flawed.

If your investment generates annual income above its operational costs, then it is profitable.

For this type of portfolio the average cost should be under $20.

$20x25K=$500K investment.

1% sales x 25k = 250 sales.

250 sales x $1500 net after commissions = $375K.

Minus renewals and restocking at around $200k.

Profit before taxes = $175k

Annual return on investment $175k/$500k = 35%.

The calculation was based on your earlier reply, where you were saying that you need 3+ years on average for a domain to get sold at end user prices. So based on your calculation, you will sell 1% of the domains acquired in that particular year for end user prices, around 2k. Also, under $20 means closeouts, because I don't think that you can get average auctions prices at this average. Also, $20 at godaddy, if it's a partner registrar I think that you are paying something like $17 just renewal, so for $20 they should be only godaddy registered, so a limited amount, but I could be wrong.

 

[oldtimer]

One thing is for sure, there are different methods and strategies in domaining at all different levels that could lead to success, same way that there might be different ways to get to the top of a mountain, but if you recall some very experienced climbers got stranded when trying to reach Mont Everest recently because they weren't prepared and they hadn't planned for the changing environment as they had gotten higher and higher.

One thing to account for into your calculations in addition to the fact that your portfolio is going to become more diluted as it gets bigger ( like air getting thinner as you climb higher) is that you are going to need to have a team in place to help you with all the additional chores of finding and getting new acquisitions and managing all the optimizations, inquires, renewals, and pruning of a very large portfolio amongst other things that might only become apparent when your portfolio gets way up there as far as its size and its value ( such as having to deal with more UDRPs and other such legal and management expenses and headaches).

IMO

 

[Recons.Com]

The calculation was based on your earlier reply, where you were saying that you need 3+ years on average for a domain to get sold at end user prices. So based on your calculation, you will sell 1% of the domains acquired in that particular year for end user prices, around 2k. Also, under $20 means closeouts, because I don't think that you can get average auctions prices at this average. Also, $20 at godaddy, if it's a partner registrar I think that you are paying something like $17 just renewal, so for $20 they should be only godaddy registered, so a limited amount, but I could be wrong.

It is a bit empirical, I haven't quantified. Would need more data in coming years to really put numbers behind.

But, yes, you might be right that to reflect for that, I might use sliding scale of STR, like 0.8% first year, 1% second year, 1.5% third year. I expect however that the calculation might yield the similar IRR as the simplified calculation for a patient investor that knows what he is doing and what sells. Factors that contribute to slower 1st year might be that a) you lose some time from expiry to you getting the name, used to about 2 months, now around 1.5 months, plus there are 2 more months before it can show on fast transfer. Then it would take some time for potential end users to notice that the name is available at fixed price somewhere.

Under $20: closeouts and cheap auctions can yield that average. Closeouts can cost as little as $13.5, so if 80% of your names are bought like that, you have extra $150K or so to add to the purchase of the remaining 5K names and your average there can be in $40-50 range.

 

[.X.]

I don't active track STR yet, it is definitely above 1% because the average holding for 2019 was under 3000 names and sold around 35 for that year. You need around 0.3% to 0.4% sell through to pay for renewals, shouldn't be hard to achieve.

With the launch of my marketplace, I expect to get to 2%-4% STR, but let's see about that.

I like where you are going with diversification within the industry, Recons + RightBrand + Elix , You are covering territory, great job, you should be able push into 3% to 4% threshold in 2020. you have your eyes on the prize. Best of luck to you

 

[Recons.Com]

I like where you are going with diversification within the industry, Recons + RightBrand + Elix , You are covering territory, great job, you should be able push into 3% to 4% threshold in 2020. you have your eyes on the prize. Best of luck to you

Thank you very much! I am impressed that you figured out the implicit strategy. Not sure 3%+ in 2020, as there is so much ground work to take care off. Probably 100+ of small/large details to take care of. RB has not formally launched yet, still ironing out the kinks and prepping to upload the portfolio, but already gets hundreds of visitors a day that I was sending elsewhere before. Now the matter is making it smooth experience for them to find, buy, succeed )