7 Things You Should Know About Investing In Domain Names

Investment in a domain and hosting is the first step to start your dream blog. By blogging you can build your brand, share your hobby, or even make money.

An interesting topic blog is a value in itself. If you put a lot of work into your blog, you can have a lot of benefits from it, and blogging can become a cool way of life.

It is also worth realizing that apart from posts, photos, and videos – also the domain under which you present your blog can be valuable.

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Investing in domain names is a very interesting way to make money online.

The main topic of the smartaffiliatekit.com blog is affiliate marketing and email marketing. However, before this blog was launched, in 2011 I started my adventure with investing in domain names.

For those who want to start earning money in this way, I’m providing some advice and tips.

See for yourself that domains are internet properties that you can make good money on.

1. What Is Investing In Domain Names?

Investing in domain names is the purchase of a domain at a certain price with the intention of its later sale at a profit to the end client.

The end client can be a person who wants to use the address and build their website on it. It may also be another domain name investor.

Investing in domain names
Investing in domain names

To earn money on domains, it is necessary to define in advance the way of appreciation of the domain value. To put it simply, you need to determine why a cheap domain today will be worth more in the future.

This is similar to investing in real estate. The difference is that selling a domain can bring you a much higher rate of return on investment.

Investing in domains is an activity for patient people and sometimes you have to wait even a few years for a profit.

Invest in valuable domains

The quality of a domain depends on many factors. One of the most important is the length – short names are the most valuable.

This is due to the marketing potential – a shorter address is easier for user to remember. This makes it more likely that the user will return to the website.

The possibility of commercial use of the domain is also important. It is beneficial when the domain contains popular names such as bicycles, tablets, computers, etc.

When a potential client searches the Internet for a given product, they enter a specific phrase in the search engine. The domain containing the relevant keyword has a better chance of being displayed at higher positions.

An important feature is the extension of the domain. From among the available extensions, it is worth to choose global addresses. However, this does not mean that you cannot earn money on domains with other endings.

Read more: “How to choose a domain extension?”

It is also worth looking into the history of the domain. Whether a domain was empty or a website was placed on it also affects its value.

2. How to Check the Domain Quality?

For previously used domains, you can check how many pages drive to the domain and what is their quality.

In the past, the basic indicator of the domain rating was PageRank, expressed as a number.

Currently, this indicator is no longer important and is not updated.

How to check the quality of the domain when there is no PageRank value available?

Indexing status

Check the indexing status of the site – use the site:domainname.com command – this way you can check if the domain is indexed at all in Google. The higher the number of results, the more subpages the site has indexed. The zero number of results are related to the lack of indexation of the site in Google resources.

Quality of links

Check the quality of links – once the PageRank index has been withdrawn, you can use other equally useful tools to assess the quality of links leading to a domain: 

  • Domain Authority moz.com – Domain Authority is an indicator showing the authority of a domain on a scale from 1 to 100. The higher the number for a given domain, the higher the page is in the search results.
  • Citation Flow and Trust Flowmajesticseo.com – Citation Flow is an indicator showing the number of links leading to the site, while Trust Flow determines their qualityA good link profile is characterized by the fact that it has a high Trust Flow rate, which should reach values similar to Citation Flow. If both indicators are very low (less than 10-15 points) or Citation Flow (quantity) is much higher than Trust Flow (quality) then the link profile is very weak.
  • Domain Ratingahrefs.com is a popular tool for checking links to websites. Indicators that tell you about the quality of the site are Domain Rating and URL RatingIn this case, it is very simple – the higher the values of indicators, the better. It is also worth noting the number appearing at Referring Domains – if the number of domains redirecting to the site is quite high and at the same time maintains high URLs and Domain Rating, the site has a strong link profile.

Domain history

Check the history of your domain – an important clue in determining the quality of your domain is its history. If the domain has been active for a long time and there is an interesting website or portal at a given address – then you can be more confident that it has a certain quality. Sometimes on a given domain, back-link sites to another address are built. Such sites are usually of low quality, which makes the domain less valuable.
In this case, you can use the Wayback Machine, which allows us to check the history of changes in the domain.

3. What Domain Names Are Worth Investing In?

The most profitable domain types
The most profitable domain types

Of the many domains available, as a domain investor you should pay particular attention to three types:

  • descriptive domains – describing a given service or product. Their attribute is that a visitor coming to a website can deduce by the domain name what the company profile is or what will be presented on a particular website. Descriptive domains are well matched to the specific inquiries of Internet users entered in the search engine.
  • brandable domains – domains that can be used for branding purposes, creating a new brand. They do not exactly describe a specific product or service. Brandable domains can be neologisms, phrases, but also keywords. In the last case, these are keywords whose literal meaning is not a reference to valuable products. An example of such a name is “apple”. Keyword brandable domains can also be names of colors or animals, but also good-sounding adjectives and verbs. When registering or buying such a domain for investment, it is worth checking previously whether the name is not a protected trademark.
  • short domains – they are the most popular among investors and at the same time the easiest to sell. One- or two-character domains reach very high prices. Unfortunately, they have all been registered a long time ago. You can buy them at domain auctions, or directly from the owner.

4. Where to Buy a Domain?

Primary market

You can start investing in domains on the primary market and register a new address. However, I would like to inform you that finding an attractive one-word name will be rather impossible.

So you can focus on domains that are a combination of a few keywords. There are still some interesting domains of this type available. And as experience shows, such domains are also very profitable.

A common mistake made by beginner domain investors is to register a large number of free domains.

Remember that in investing in domains, quality is more important than quantity.

Where to register a domain?

You should register your domains with a verified operator. It is good if the company has been on the market for many years and has a good reputation.

Investing in domain names - address registration
Investing in domain names – address registration

I recommend Bluehost.com – registering a domain is fast and safe there. After paying for it you get access to a user-friendly panel from which you can manage your names.

You can read more about registering a domain in Bluehost here.

Domain Marketplace

Another way to get an interesting domain for the investment is to buy it on the aftermarket. This means that the domain is already registered and we can buy it from someone else. Usually, the seller is another domain investor.

The safest way to make a purchase is on the domain market, where you can find a lot of valuable names. Besides, you also have the opportunity to negotiate the price with the seller or purchase the domain in convenient installments.

Domain Auctions

There are also auctions on domain marketplaces, where you can buy an interesting address at a good price. The rule is simple – the winner is the one who offers the highest price.

Your goal as a domain investor is to purchase the domain at the best possible price for you and then sell it at the best possible profit.

One of the largest domain marketplaces is SEDO – for over 19 years the platform has been offering a variety of services related to Internet domain trading.

Expired Domain Auctions

Another way to get an attractive domain is to intercept. Every day hundreds of domains expire. If they are not renewed by their owners at the end of the billing period they expire and become free.

Unfortunately, but you have little chance of registering the expiring addresses yourself. Some companies use special software and register expiring domains in the second after they are released.

These domains are later exhibited at special auctions of captured domains, where you can sometimes buy them at an occasional price.

You can read more about the domain life cycle here.

5. How to Sell Your Domain?

After building your portfolio, it’s time to start earning money. One of the most important rules is never to hurry to sell your domain. Many beginner investors accept the first bid – this is a mistake.

You must be patient and negotiate the highest possible price. Sometimes waiting is very profitable and the return on investment can be several hundred percents.

Such rates of return are rather not found in other businesses.

You can wait even for several years for a very good offer. Therefore, the price of the domain sale must compensate you for your previous effort.

Domain marketplace
Domain marketplace

The safest way is to sell domains on one of the Internet marketplaces – you can try it on Sedo.com.
You can set in advance the amount of sale that you are interested in or choose a negotiable sale option.

The domains you are selling should be assigned to one of the available categories so that the buyer can find your offer faster.

Besides, you can put a short description of why this address is worth buying and how it can be potentially used. This sometimes encourages the buyer to make a purchase offer.

Of course, you can also look for buyers yourself by writing emails to potentially interested companies.

However, in my opinion, it is better when we get the first offer and can dictate our conditions.

During the sale transaction it may be necessary to transfer the domain name to a new registrar. You can read more about this here.

6. Is Investing in Domain Names For Me?

The most important feature of a successful domain investor is patience and negotiation skills.

Besides, if we make investments in domains seriously, it is worth analyzing current trends and news from various branches. New interesting words related to a specific niche can sometimes be registered as a domain.

Such a domain can become very valuable with time – and the cost of registration is only a few dollars.

As a good domain investor, you should: 

  • to have a clear strategy,
  • specify the budget you can spend on buying domains,
  • identify the competition and the potential of the industry concerned by the domain,
  • to define the selling price of a given domain,
  • actively search for customers willing to pay a defined price for the domain,
  • negotiate until a satisfactory price is achieved,
  • not act under the influence of emotions,
  • regularly check the expiration dates of attractive domains.

7. Investing In Domain Names – What Else Should You Know?

Remember that the final price of the domain sale is decided by you. You should also determine the amount you can spend on buying a particular domain.

The most interesting thing about investing in domain names is that they are unpredictable. Sometimes a freshly registered domain for a few dollars finds a buyer willing to pay even several thousand dollars with it.

In other businesses, it is difficult to make such a profit!

Register domains in proven companies – I recommend Bluehost, which has been providing this type of service for several years, and the domain management panel is user-friendly.

Also, remember to keep an eye on the expiration dates of your domains. Otherwise, they will be intercepted by someone else!

Start investing in domains

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