discuss What % of the domain worth (estimated by you) are you willing to spend on a domain as an investment?

[pb]

Let's say you find a cool domain on the expired domain auction (I decided to narrow it down to expired auctions so that the results are comparable). You want to buy it purely as an investment (not for yourself, not to develop etc.) and you already have an estimate of the price you'll be listing it for if you win. Given all that, how much of that amount are you willing to spend on the auction?

 

[Name Trader]

Depends on the domain, how quickly it can be re-sold, your finances.

 

[bmugford]

It largely depends on liquidity. The more liquid, like lll.com, the higher the % I would be willing to pay.

Brad

 

[Mike Goodman]

Define investment in the specific context of domain names.

For instance, @pb you appear to want to bind it into tight specifics. But would you consider buying a run down house or vintage car with the intention of rebuilding it as other than investment? So why not domains?

So, you obviously have to be more specific in your language usage so as not to confuse your audience. I don't see auctions as definitive in this context. The method of purchase is irrelevant.

I have a few with potential that will need work before they can realise it. I consider them to be investments. The fact of the matter is, I couldn't give a twopenny fig if others wish to describe them as otherwise.

On the other hand, I have some others which I know can be great brands. I paid around the estimated values for them in the belief I can get their true value, which is good multiples higher. Are these my investments? As with those that need work I consider them too to be investments and have a similar response to naysayers.

Are either of these ideas wrong? Well, only in the fact that both could also be described, accurately, as speculative purchases.

 

[pb]

On the other hand, I have some others which I know can be great brands. I paid around the estimated values for them in the belief I can get their true value, which is good multiples higher.

I specifically asked what percentage of *your* estimate (the price *you* plan to sell the domain for) you are willing to pay. What "estimated values" are you referring to, if you plan to sell the domains "good multiples higher"?

Actually I was mainly wondering how the answers would be distributed and I see that for now all the answers are within 3-40%, which makes me curious, since what I've read in many places on this forum that the average sell-though rate is believed to be around 1%, and yet nobody chose 1% or even 2%. I you buy domains for ~20% of their value (on average) and you sell 1% of them every year (on average), even for your estimated value (of which you paid 20%), how are you making money?

Oftentimes the amounts paid for some domains at auctions leave me scratching my head. Sure, many times these are end-users but often enough the auctions are run up by domain investors. Sure, paying $400 for a $2000 name might seem like a good idea, but if you buy 100 such domains and sell 1 (1% STR), you're $38k in the red, ouch...

 

[Mike Goodman]

Actually I was mainly wondering how the answers would be distributed and I see that for now all the answers are within 3-40%, which makes me curious, since what I've read in many places on this forum that the average sell-though rate is believed to be around 1%, and yet nobody chose 1% or even 2%. I you buy domains for ~20% of their value (on average) and you sell 1% of them every year (on average), even for your estimated value (of which you paid 20%), how are you making money?

Now that is a much better and more meaningful question. It is, sad to say, the story of every "new thing" which comes along as "easy money". I remember in the 1980's, now get this, all the rage in London was "Multi-Level Marketing" aka MLM and, of all things, piped-in water filters. i.e. permanently inserted into the mains piping.

During the so-called "noughties" (2000-2010) each and every unemployed salesman was a "consultant" of some imaginary "discipline" or other.

It is a sad fact that all too many people with either or both of two disadvantages enter every new fad. They are either ignorant of what is required to succeed in this new "profession" even though they work very hard indeed. Or they are not prepared to put the work in to learn what is required, want results now and drop out after losing an initial amount.

The real tragedy is that most of the new entrants enter during periods of economic recession and can ill afford to lose anything at all. They are losing money which would be much better spent on keeping their rent payments up to date..

Domaining is fantastically profitable, but only for those either prepared to do the "apprenticeship" which takes a lot of time and an open mind, or can afford to drop lots of money before returns are achieved. It is no different in that respect from any of the other "now" things of the past, and there will be more of them in the future.

 

[pb]

Can't edit my post, but the median result is actually 6-10%, so I should have used 10% or even 8% in the above examples, but it's still in the red.