Leasing Domain names, has anyone done or considered it?

[mathewka010]

Hi Npr's,

I'm in a situation whereby I have the opportunity to lease a domain for $1000usd (month) to an end user who is interested in building a website on my domain name. I received an offer of $5k (usd) for the domain however my valuation puts it at a higher price.

I would also like to eventually develop the domain myself however at this present time I'm not in a position to do so.

I'm yet to draw up any legal agreements and just wanted to float the idea to all npr's out there.

I'm not prepared to disclose the name publicly, if you really need to know send me a PM. In short the domain is Alexa ranked at approx 500,000 (parked setup as a survey), has over 400 links, is a generic niche domain and offers now are slowly coming through.

I have also viewed these links and are subsequently interested in any new updates:

http://www.namepros.com/domain-name-discussion/140792-leasing-or-selling-domains-whats-best.html

http://www.namepros.com/domain-name-discussion/612757-leasing-your-domains.html

Look forward to your ideas and feedback.

Cheers Mat

 

[snicksnack]

$1000 a month sounds much better than $5000 as a purchase price. Why not lease the domain for a year or two. If the person devlops the site, the traffic and thus the value will increase.

 

[Ms Domainer]

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I agree with Snicksnack. Too good to pass up.

In your case, definitely go for it. 1k a month is awesome.

One thing to watch (and I am just being overly cautious): if your lessee builds a brand on your domain and TM's it, make sure that you have built in a clause that he/she can't turn around and UDRP you. I know that this sounds a bit paranoid, but anything can happen in this biz.

I am working on a similar plan for some of my generic domains and have thrown up This Domain is for Rent [dot] com (no spaces). I am going to specialize in domains that end users need only short term (1-12 months). Right now, I have just voting domains but could branch out.

Good luck and let us know how this plays out for you. I am very interested in the leasing/rental market (I actually like "rent" better than "lease" because "rent" means just that, with no option to buy).

*

 

[glaxxon]

Definitely a great offer. But be sure to make a detailed contract. Would appreciate if you could share the clauses you add.

 

[Domagon]

Leasing domains is risky, and can have an adverse effect on their future value.

A contract that just covers the leasing aspect isn't enough...

Ms Domainer is spot on about the risk of brand building / TM issues. In addition, there are issues regarding usage: Products / services offered, web content, email addresses / lists, permissible seo methods, etc...

Other details include severability - what happens if they don't pay? Ok, that one is likely going to be covered even in a basic lease contract. But what if they, for example, post questionable content? What is the criteria for determining a "violation" and how is it handled?

Where do DMCA complaints, lawsuits, etc go? ... remember, you'll still be listed as the registrant - you're responsible for dealing with that stuff ... sure you can shift that liability to the person / company leasing, but if they don't have money and/or insurance that specifically covers a leased domain (doubt there even is such an insurance product), such issues are going to boomerang back at you.

Rambling on ... despite all of those potential issues, domain leasing is common, and often goes just fine. However, in my view, domain leasing is best suited to highly generic domains being used as redirects to larger sites and/or temporary promotional mini-sites to complement an existing brand.

You mention getting a $5K offer ... was that recently? If so, then it's possible the person / company seeking to lease may be the one who made that offer to begin with, especially if they're seeking a very long term lease. Something to research.

Lastly, go back through the offers you've received lately, and counter with a "hard" number (assuming you really want to sell), such as $100K (realistic starting point based on the info you've provided) and see what happens. You may be happily surprised.

Ron

 

[cache]

make sure the user does not use it for phishing or any other questionable activity. If he uses it for proxy server or spam, your domain can be black listed etc.

 

[Wuoshi]

Take the offer! Can be positive for a future sale. If the domain is developed and starts receiving alot of traffic it's likely that the person renting it will be willing to pay alot more later to buy it. If not you still have a domain with free traffic.

 

[mathewka010]

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One thing to watch (and I am just being overly cautious): if your lessee builds a brand on your domain and TM's it, make sure that you have built in a clause that he/she can't turn around and UDRP you. I know that this sounds a bit paranoid, but anything can happen in this biz.
*

Ms Domainer, yes I agree, hence once we have agreed on all the nuts and bolts I will approach a solicitor and draw up an agreement. I have built up a relationship with the interested party and in fact we have talked about working together however my current position does not allow this.

Leasing domains is risky, and can have an adverse effect on their future value.

A contract that just covers the leasing aspect isn't enough...

Ms Domainer is spot on about the risk of brand building / TM issues. In addition, there are issues regarding usage: Products / services offered, web content, email addresses / lists, permissible seo methods, etc...

Other details include severability - what happens if they don't pay? Ok, that one is likely going to be covered even in a basic lease contract. But what if they, for example, post questionable content? What is the criteria for determining a "violation" and how is it handled?

Where do DMCA complaints, lawsuits, etc go? ... remember, you'll still be listed as the registrant - you're responsible for dealing with that stuff ... sure you can shift that liability to the person / company leasing, but if they don't have money and/or insurance that specifically covers a leased domain (doubt there even is such an insurance product), such issues are going to boomerang back at you.

Rambling on ... despite all of those potential issues, domain leasing is common, and often goes just fine. However, in my view, domain leasing is best suited to highly generic domains being used as redirects to larger sites and/or temporary promotional mini-sites to complement an existing brand.

You mention getting a $5K offer ... was that recently? If so, then it's possible the person / company seeking to lease may be the one who made that offer to begin with, especially if they're seeking a very long term lease. Something to research.

Lastly, go back through the offers you've received lately, and counter with a "hard" number (assuming you really want to sell), such as $100K (realistic starting point based on the info you've provided) and see what happens. You may be happily surprised.
Ron

Hi Ron, no you weren't rambling on, you have highlighted some important points. Yes I agree it can be risky but like anything if you do your research and due diligence it is more a calculated risk and not a gambling risk.

My other concern is the interested party lives in the US and I Australia, obviously the laws can and are very different, of which the points you made could pose a complex and lengthy agreement.

The domain is a generic term and receives a good amount of unique visits. With the interested party we recently set up a squeeze page asking basic questions on the topic, which has helped in many ways.

The $5K offer was made by the same interested party in leasing it, and also the same person I have had contact with for over 4 months. Another bonus to leasing the domain is I will include my followers on twitter which are purely targeted followers as I have not attempted to increase traffic via any of the twitter marketing schemes.

My goal will be to ensure the lessee is successful.

I have had so many low ball offers and attempts to convince me why I should sell it. In saying that whenever I mention my desired amount I funnily enough don't receive a negative response, its more along the lines "I thought you would say that."

Thanks Mat

 

[Ms Domainer]

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Good luck, and let us know how it works out!

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[glaxxon]

Let us know what is finally done. Sounds interesting. Also if i am not wrong i remember someone earlier offering .re domain leasing. I have seen the contract. Maybe you could pick up some stuff from similar places. But looking at the kind of offer it would probably be better to get it done by consulting a lawyer.

 

[ixex]

All of this information is very beneficial! As I brought up this question just yesterday regarding shoes.tv and the ideas about my .tv sites for future leasing etc.

 

[Domagon]

...The $5K offer was made by the same interested party in leasing it, and also the same person I have had contact with for over 4 months. Another bonus to leasing the domain is I will include my followers on twitter which are purely targeted followers as I have not attempted to increase traffic via any of the twitter marketing schemes...

Ok. That confirms what I thought.

IMHO, their numbers don't jibe ... they're only willing to offer you $5K to buy and yet they're willing to pay $1K per month to lease. Even for a short-term promo site those numbers don't make sense. I suspect they're going to try building a brand on your domain for cheap.

Some questions - you don't need to answer them here, if you don't want to, but are important to consider nevertheless.

How long are they seeking to lease for? Just a month or two? Or longer?

Are you dealing with a large company or a small mom&pop operation?

What is the position of the contact person(s)? An "owner"? "Marketing Dept"?, "PR person"?, Attorney?

If it's an attorney, you're, in my view, already easily into $100K+ territory based on their persistence (4 months of correspondence with you) the type of domain, and the numbers mentioned.

Leasing has the big advantage that you get to keep the domain, which is appealing, especially to a domainer.

However, the downside of leasing is that the domain can potentially lose value / utility as a result. Lost opportunity costs.

And as the real estate market has illustrated, values don't always go up - they can fall, and significantly; even more so when one adjusts for inflation, which is something to account for when making long-term projections of your domain's potential future value. You might do better to simply sell now for a nice lump sum and put that money into something else. Something to consider when determining how to proceed. There's no right answer - do what you feel is best for your needs.

Ron

 

[DubDubDubDot]

$1,000/mo to rent, yet only $5,000 to buy.

Seems as if they want it for a pump & dump ad campaign that lasts a few months.

One would think that if they wanted it for serious development, this would be a rent to own deal (and it could very well turn into such an offer).

 

[glaxxon]

Now that you mention it, it does sound weird. I think you should ask them for how long they will be leasing it and for what? Looking at the numbers it seems they are probably going to do a quick 6 month campaign or some promotion.

 

[richrf]

At one time I considered leasing Links.com but dropped the idea as I considered all of the potential issues and the legal costs in attempting to negotiate a contract that might address all of the issues - not to mention the legal costs should the contract be breached. It would be a nightmare and the domain name would probably be locked up during the period of time of a legal battle. The money sounds good but the potential grief (negotiation as well as any legal proceedings) deter me.

Rich

 

[RealName]

Mat, domain name licence to use is my heart of business, I send you PM with download link to my contract you could use/modify for yourself.

 

[JamesDavid]

be sure what they are using the domain for during the lease... for example someone may want to lease meds.com from you to send spam emails across the world from what seems like a reputable domain. If you domain gets blacklisted everywhere or illegal stuff is on it then the domain is useless to you later..

 

[DnEbook]

Lease Try .... BUY

seems to be one solution