What real estate investors do for decades, domain investors now do online: buying and selling online real estate is a big and very profitable market that only gets bigger year after year. But what is domain flipping really all about? Welcome to Domain Flipping 101.
Domain Names Explained
Before we jump into the details of domain investment and how to flip a domain name, let’s take a look at what domain names actually are. A “domain name” is the name of a website (in other words, wikipedia.org is the domain name of the website Wikipedia). However, because only one website can be registered under a single domain, it is also a digital piece of real estate. You can register any combination of letters, numbers, and/or certain symbols and choose from thousands of different domain extensions like .COM, .ORG, or .NET. The Million Dollar question now is—what makes a domain name profitable?
Domain Investment Basics
In 2018, roughly 348.7 million domain names across all top-level domains (TLDs) were registered, and the numbers in 2019 increased quarter after quarter. Thousands of domain names are bought and sold every single day, making domain investing and online real estate a very lucrative field.
The domain investment industry is very similar to investing in real estate. With traditional real estate flipping, you buy property because you think that it has a strong potential for growth within a certain period of time. Just like flipping houses or property for a higher profit, domain investors, or “domainers,” take a (mostly well-calculated) risk when buying rather cheap domain names with a profitable future value in mind.
Domain investing involves the purchase, ownership, management, and sale of online real estate for profit. Buying and selling domain names has become very popular over the last few years, but the world of domain investing is immensely competitive and often requires a lot of patience. Investing in domain names can make you a lot of money, but you can just as well lose it all. Like with every investment, the key is to be at the right place at the right time. A domain name is worth whatever the buyer is willing to pay for it. Generally, domains are considered valuable if they cater to a specific niche or if they are exclusive while fulfilling certain requirements. The most valuable names are mostly short (3 to 4 letters), single-word domains that can be easily branded or used by professionals.
Domain Flipping 101
Domain flipping means buying a domain name for a low price, and then turn around and sell it for a higher price. Investing in domain names may be an unfamiliar investment opportunity, but if you keep your wits about you and make some smart purchases, you can turn a very meagre amount of money into a small fortune.
Professional domain investors like Ali Zandi are known for buying and selling with high profit in a short period of time. Others, like Rick “The Domain Name King” Schwartz bought domains for $100 in the early 2000 and sold them after over a decade for more than a million. That being said, there is no one strategy. Some flips happen overnight; others take years and years to finally take off. As an investor, you must know the market in which you are searching for domain names.
How to Flip a Domain Name
0. Pre-Flip: Learn the business
Before you even start looking for domain names that are for sale, you should do your homework. A domainer knows the market inside out and can gauge the worth of a domain relatively accurately just from experience. Everybody can get lucky sometimes, but if you want to be successful in the world of domain investment, you need to master the art of domain flipping first.
1. Find a domain name
There are many different ways how to find domain names that are worth buying; sometimes all it takes is the right amount of luck. Well, luck and a lot of research and time. Domain investors spend hours and hours on online marketplaces to look for promising domains that are currently selling or analyzing market trends to find raw diamonds. You never know when the next opportunity to capitalize on an undervalued domain will appear, and before you buy a domain name, you should be able to judge the actual value.
Another strategy is to check for expired domains. The domain marketplace is very saturated, and many good domains are taken without the chance of ever acquiring it. But sometimes domain registrations don’t get renewed in time and after a certain waiting period, they become available for auction. There are dozens of popular marketplaces where you can find and buy expired domain names by yourself, or you can use one of the convenient drop catching services to help you secure a domain after it expires. Before buying expired domain names, you should always check the domain and page authority, any existing backlinks, the domain history, and possible Google AdSense bans.
2. Register a domain name
The first step after buying a domain name is to move it to your registrar. The process of registering a domain name with a domain name registrar like 101domain is the easy part and since you’re hoping to turn the domain around quickly, a one-year registration should be sufficient for your needs. If you wish to register a domain for personal use, it’s recommended to enable WHOIS Privacy to hide your contact information from the online WHOIS database. But when a domain is for sale, you want to make it as straightforward as possible for the person who is interested in your domain name to get in contact with you.
3. Find a buyer for the domain name
After acquiring and transferring your domain, you have several options for attracting the ideal buyer besides listing it for sale on an online marketplace:
– You could design a basic landing page that clearly shows that the domain name is for sale. This way, you can provide another way for the prospect to contact you.
– To generate additional income, you can also park your site, which sets up automated pay-per-click (or similar) advertising
-If you set it up for auction, you can redirect the domain to the page where the domain name is listed for auction and gain extra visibility.
– It’s also possible to reach out to potential buyers directly if you have a very specific and descriptive domain name.
4. Complete the transfer of the domain name
To complete the transfer, it is recommended to use an escrow service, so you don’t run the risk of being scammed. Once you receive the payment, the domain name can be transferred to the buyer’s registrar.
Tips to be successful
- Start with .COM domains. It is still the most looked after domain extension out there.
Always choose quality over quantity. Don’t forget about registration and auction fees.
- Make it easy to remember. This way, the domain is easier to market and promote.
- Make your sales description interesting. Make sure the description clearly explains why the domain is valuable.
- Be careful with trademarked domains. When in doubt, consulate the United States Patent and Trademark Office.
- Find keyword-rich domain names. A keyword-rich domain name contains the keywords matching the business or industry.