When is it okay to take a huge leap?

[Domainate.com]

I'm not talking about for instance getting a name that you can easily afford or even barely afford. I'm talking about figuring out a way to get a name you pretty much CAN'T afford because you are SO SURE of its potential for resale or development.

It's safe to say we all sometimes see names way outside our limits and go "man, if I had the money, I'd get that in a heartbeat". So I guess the question is, what if you could via credit/loans/VC/quick sales of your domains/etc. get that money to get that name and while you'd have to put up with maybe some fiscal discomfort or possible regret of quick sales or whatnot for a while, you'd have this amazing name that would either net you an amazing quick profit OR be the foundation for a successful developed website you want to make. How would YOU determine whether or not to make that leap?

It's one thing if it was a million dollar name and you didn't even have $100,000 total in money and liquid value in your domains because that's pretty much a pipe dream, but what if you had $100k total in money and liquid value in your domains and were eyeing a $150k - $200k domain?

 

[Name Trader]

Interesting thoughts. I did this on a MUCH smaller scale about a year ago. Spent 12K on a domain which is still languishing in my account with little traffic. I think I made a mistake.

If you are spending that kind of money, then I'm not so sure you could make a quick flip. You'd probably need to develop the domain (more money) and hold.

 

[Domainate.com]

Interesting thoughts. I did this on a MUCH smaller scale about a year ago. Spent 12K on a domain which is still languishing in my account with little traffic. I think I made a mistake.

See, I've done that kind of leap. I mean really, any time you spend more money than you've ever spent on a domain, it's a leap because it's more risk than you've ever taken on. Poker.in was a leap for me, more than twice what I had spent on a domain up til that point. Granted it took 2 years to finally get it sold, but 2,000% in that 2 years. That kind of leap vs. what I'm talking about are 2 different beasts altogether. I mean I know this kind of thing can work out (i.e. the GolfCourses.com guy putting a mortgage on his house to buy that name), but you never hear about the cases when it doesn't. :O

 

[Spade]

Steve,

I hear your plight, and am experiencing something on the same level. I dont have the capital or the stability to attack a $100,000 + domain name, however I am looking at targeting a low xx,xxx domain name.

I took out a loan (thanks to good credit!) and extended the payments out to the max, giving me nice expendable capital, with a very small monthly payment. My hope, to acquire a domain name that generates at min, the same amount of rev per month, it is costing for the loan....

Justin

 

[cache]

Since the domain business is not as liquid, you should not take that big gamble and
wait for many years.

 

[Michael]

You seem to have good instincts... I would trust them.

 

[James]

I think you need to have the guts to pull off the huge leap in the first place.

you shouldn't go in full speed but you should have 85%+ confidences that this is the right move and be able to live it tough.

Personally i'd buy a big revenue name and hold onto it and then sell it and look into another or afew more names. You got to make sure you can cover it if something goes wrong though. you don't want to be left trying to scrap up pennies to pay the bills for the month.
Its all about planning and making sure you got a back-up plan

 

[Smiler]

I think you need to have the guts to pull off the huge leap in the first place.

you shouldn't go in full speed but you should have 85%+ confidences that this is the right move and be able to live it tough.

Personally i'd buy a big revenue name and hold onto it and then sell it and look into another or afew more names. You got to make sure you can cover it if something goes wrong though. you don't want to be left trying to scrap up pennies to pay the bills for the month.
Its all about planning and making sure you got a back-up plan

I definitely agree with knivesforapro. You've got to have plan B and C before approaching plan A. You know you can actually put that money on a down payment for a nice house in San Diego right now. Its just a suggestion. Well, good luck with your decision and I hope that it all work out for you.

 

[Michelle]

Ok first off Steve Ive seen your posts around and your comments and... nobody knows everthing but you appear to have a solid knowledge and good gut feeling about the domain world..

I have got a feeling that if you are not already a profitable full time domainer, ... you will be

 

[James]

I definitely agree with knivesforapro. You've got to have plan B and C before approaching plan A. You know you can actually put that money on a down payment for a nice house in San Diego right now. Its just a suggestion. Well, good luck with your decision and I hope that it all work out for you.

Well if you look at it as a income you could pay off the domain loan, still work and still put down a payment for a nice house, you just need to think every aspect over before jumping into it

 

[Lenz]

My 2c: With the rapid appreciation of domain names we see these days (and have seen for several years) you can't go wrong. Now or never. In ten, fifteen years the 100%+ yearly appreciation may be over.
If it won't mean financial problems on a day-to-day basis and if you have a foundation (income from parked / developed websites) you can fall back upon, don't hesitate.

 

[VirtualT]

IMO theres a difference between taking out a loan for a good name, and liquifying most of your portfolio to do so.
Ive got too much blood sweat and tears invested in mine

 

[Michael]

It is definitely good to have a diverse portfolio, so I'm not sure if I would sell off most of my names to get one. I would probably go the loan route instead.

 

[SharonTucci]

Or take on a partner

 

[RogueWriter]

Cash flow kills more businesses than one can count. Key thing is not to get to a point where one event, such as an unplanned medical bill, accident, etc., can disrupt your cash flow and knock the dominoes over.

It's okay to take sane chances, but save enough bucks back to cover 'issues'.

 

[Domainate.com]

You know you can actually put that money on a down payment for a nice house in San Diego right now.

FYI Smiler, I already did that. :P Have been living in the new place for a few months now and the money down helped me get a ridiculously good loan on it.

I guess the tough part about getting increasingly more expensive names is that it's being part of the mix on them vs. being on the sidelines. It's easy to say that I've seen how they do in sales and whatnot and would KNOW when something is too good to pass up, but I haven't dealt with 6+ figure names, so there's that added risk. That market is wholly different than low 5-figure and lower. Like JP said, the market is greatly limited by the level of money.

 

[john645]

Nametrader, I know this might be weird for you since we don't know eachother, but I do have the capital to invest, and would consider going halves or even 60/40 if you have any interest. Of course I'd need to know the domain name. Pm me if you have any interest at all.

 

[accent]

Do you really think the % ROI is much better for this name than for smaller price names that you can buy without disrupting so much?

Leverage and:
"you can't go wrong. Now or never. In ten, fifteen years the 100%+ yearly appreciation may be over."
thinking are signs of a bubble. I have not seen a lot of that up to now, but it is a concern.

A year from now I bet you could buy at this level with stability.

 

[cache]

this is a good question. I would think the mid-level names are better
than high-priced ones.

Do you really think the % ROI is much better for this name than for smaller price names that you can buy without disrupting so much?

Leverage and:
"you can't go wrong. Now or never. In ten, fifteen years the 100%+ yearly appreciation may be over."
thinking are signs of a bubble. I have not seen a lot of that up to now, but it is a concern.

A year from now I bet you could buy at this level with stability.

 

[Spade]

Or take on a partner

If only such a partner existed?.... =)