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Small Scale Domain Investment Model for 2016

Labeled as discuss in General Domain Discussion, started by DANEYAL, Mar 6, 2016

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  1. DANEYAL

    DANEYAL Top Contributor VIP

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    These days liquid & numeric domain names have gained quite a lot of attention and in fact lots of investments and buyouts. It seems like currently they are more popular than some good two word domain names. However I am convinced and firmly believe that "Words will Never Lose Value".

    I was thinking what should be the best investment approach keeping in mind the current scenario, for small scale investors, who normally invest somewhere between $500-$1500 every year. //Or the investors who have just started investing in domain names, what should be the preferred business model for them, and where should they focus this year in 2016, specially the first half.

    Please share your valuable opinions for all of us.
     
    Last edited: Mar 6, 2016
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  2. garptrader

    garptrader Top Contributor VIP ★★★★★★★★★★

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    The Chinese are providing liquidity for short numeric and LL/LLL/LLLL type domains. While very short .COM domains make sense as potential brands, ultimately if there is no end user willing to pay for a particular domain, the run-up in pricing is merely a speculative bubble which will eventually correct and leave many participants in longer strings, six and seven-digit numerics and random letter combinations in exotic extensions holding the bag.

    Domains are not stocks and keyword domains need an end user who finds that domain relevant to their business. Yes, outbound marketing can result in faster liquidity but the best pricing is normally obtained by an end user who approaches you rather than the other way around. If you contact an end user about a domain you just acquired, they were doing just fine without it even if they are operating on a reg-fee quality domain or have no website and just use social media accounts as their web presence. If an end user is launching a new business, they are more motivated to pay a premium for your domain.

    One positive aspect of the mania in numerics, hyper-short characters and new TLDs is that investors are not competing as aggressively for two and three-word .COMs at Namejet and Godaddy Auctions. They are either chasing the latest new TLD release or competing in auctions for numerics and what they believe are CHIPS. Even in a casino there are winners, but without end user participation in these market segments, there will ultimately be far more losers than winners in new TLDs and all the numeric and LLL buyouts over the long term.

    If you are buying domains merely because other domain investors are also buying numerics and CHIPS and new TLDs then really you are just gambling. Unfortunately there is a fine line between domain investing and gambling and it seems to me that many comments I read about recent registrations seem to have the mindset that domains are lottery tickets.
     
  3. JayT

    JayT Restricted (85-100%)

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    Making new number domains is foolish IMO. I don't think Chinese end-users are going to be using numbers as much as they have been. I'm expecting IDN.IDN to catch on in china. It's hard to explain to people that buying more numbers isn't the best idea, when practically EVERYONE is doing it. It's a lot easier from them to see the present and believe it will continue on forever than it is to imagine change.

    I made a broad post about it the other day: https://www.namepros.com/threads/i-...er-domains-is-the-answer.926363/#post-5368037
     
  4. DANEYAL

    DANEYAL Top Contributor VIP

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    Yes it looks weird buying 50-100 pattern domains, numeric ones, they apparently don't make sense, other than that people are buying them as lot. When I see signatures here at namepros I find a lot of 7Ns also, whereas an year back, there were only words, words generally make sense to me actually.

    In this scenario, how can small investor plan there investment, I personally am not buying numerics, neither the 5Ls kind of things. However the question still remains, what would be the ways to utilize an investment of $500-1500 this first half of 2016, this would specially be useful new domain investors, visiting these pages.
     
  5. Brandon.Domains

    Brandon.Domains Successful Internet Entrepreneur Since 1998

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    Exactly. If there is no end user value, it's a bubble fueled by domain name speculators / investors. Resellers are only part of the chain and eventually domains need to be bought by end users who actually use them.

    Otherwise, it's just reselling for reselling's sake and the card house will cave in pretty quickly (historically: .com bubble, sub-prime mortgage crisis).

    You can play along and hope to cash out at the right time, or you can shorten the market.

    Brandon
     
  6. nlandu

    nlandu Account Closed (Disallowed)

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    You people are clueless. Domain name business/investment has always been like that since I was introduced to it in 2004. In this year, 2004, all dotcom short and dictionary domain names were already registered, and the far majority of them were unused, that is, no websites were developed on this domains, and despite that people were buying and reselling domain names (from/to speculators/investors) though a small fraction of domain were being bought buy end-users. And today, year 2004, people who entered this business this year will also see the same thing, that is, all premium domain names are already registered but the far majority are not used. When I say the far majority I mean hundreds of millions of domain names, they are registered but not used. As long as the world understand that to build a website you need a domain name and they can see it happening in reality and they can also see or are informed that some people made profit speculating domain names, no matter how many people need to build websites a day/month/year or made profit speculating domain names people will always be willing to try this business as it does not require many things to start it comparing to what other types of businesses require to start them. CONCLUSION: this business is based on hope, probability, possibility coupled with greed and easiness (I hope, it is probable, it is possible that someone, an end-user or speculator, will buy this domain name and I will make a profit, and it only requires $10 to $15 and access to the internet to create this chance to make money, so easy.. This is what is driving people to this business. This business will be around for many many years.
     
  7. inforg

    inforg Established Member

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    What model one uses really depends on a number of factors. Time available, capital, tolerance for risk, personality, and knowledge of the business to name but a few.

    Most people fail at this business. It attracts many people by the get rich quick, lottery type mentality. Most who are successful long term know that it doesn't work that way.

    There are many paths to success and most fall into these categories:

    1. Quick flipper, low value -if you have a good eye, you can buy hand reg or cheap names and flip in forums or eBay for small profits on each. For someone with a lot of time and little money this can work, but tough to maintain for long.

    2. Quick flipper, high value - if you have a good feel for the reseller market you can purchase commodity type names and flip quickly for a decent return. If you have less time and more money, this can work, but if you guess the market incorrectly you can be left holding the bag.

    3. Buy and hold, low value - takes a good eye and knowledge of what sells. Really need to understand your numbers to make it work. Doesn't require a ton of money, but not much liquidity either. Pricing needs to be at a point that covers costs even on a small turnover.

    4. Buy and hold, high value - same as above, but requires a larger investment. Higher quality should yield higher percentage, pricing is critical, renewal expenses less important than #3

    5. Developer - requires much more time and additional skill sets or more money to pay people. Still need a good eye for domains, but website quality and revenue can overcome even a lousy name.

    6. Mixed model - most people are technically mixed, but lean heavily towards one of the above. Again, knowledge of the market and knowing your numbers are keys.

    Any of the models above can be used by a hobbyist or full time.

    Some models I see used that I think are high risk or foolish:

    1. Large hand reg investments without any knowledge of what sells. "I thought it looked cool" is not an appropriate criteria.

    2. Chasing the latest fad or run-up. Big chance you are left holding a bunch of junk.

    3. All or most of portfolio in unproven extensions. Make it worse with high renewal cost extensions. Look at some archives and see how .mobi .tel and others worked out.

    Hope 2016 is a great year for everyone.
     
  8. JayT

    JayT Restricted (85-100%)

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    You keep on investing based on HOPE then. I'll invest in what makes the most sense to me. Everyone else that posted here think that numbers are not end-user friendly. Don't put $ on HOPE that this time will be different. Because that's what this would be, the numbers. Sure Chinese use number domains, but most of them don't!

    MOST Numbers were just a cheap way to name a site. Chinese thought they were being very clever OR understood numbers more than any English letter (associate it better with their natural spoken language). Now in light of the current market, it loses ALL of those appeals. People are trying to be unique, make a name or build a brand, which I don't think numbers do effectively.

    Some numbers might work very well in china, and of course the shorter the better. For the most part, they won't, and that's why it's a bad investment.
     
    Last edited: Mar 7, 2016
  9. DANEYAL

    DANEYAL Top Contributor VIP

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    I have read these points again and again, and it is definitely refreshing.
     
  10. Cdomains

    Cdomains Top Contributor VIP

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    Personally I mostly stay away from the chips and numerics. There is too much competition and it is not worth the risk investing in them.

    Some domainers do, but you have to keep a tight eye on the market and the values to make a profit and you must continually flip to make money.

    Holding these types of domains and waiting for them to skyrocket is a risky proposition.

    Stick with the tried and true one and two word dot coms.

    Invest in the new tld's at your own risk as well. I believe it is still too early to tell which, if any of the new tld's will make it.
     

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