One of the most common questions beginners have is something along the lines of:
“I have $x at my disposal, what next?”
A lot of people are tempted to invest their capital in lots and lots of registration fee domains and I’m not saying you can’t make money that way, not at all. What I’m saying is that investing your money in a handful of more valuable domain and investing your money in lots and lots of registration fee domains are two completely different things.
Let me explain why.
Let’s assume you have $8,000 at your disposal and decide to buy one very good domain.
Keeping that domain for 10 years will most likely cost about 100 bucks.
Let’s assume the renewal fee is a fixed $8 per year, so after 10 years, you’ve “invested” $8080. $8k to buy the domain and $80 to keep it.
Now let’s assume that instead of buying one domain at $8k, you buy 1000 registration fee domains at $8 each.
So you’ve invested $8,000 initially, just like in the previous example.
But that’s where the similarities stop.
To keep your portfolio, you have to invest $8,000 each and every year.
So after 10 years, you’d end up spending $88,000. $8,000 to buy the 1,000 domains and $80,000 to keep them.
There you have it, two situations which should make my point crystal clear.
In both cases, the initial investment is $8k but that’s the only similarity.
Again, I’m not saying you can’t make money in both cases, what I’m trying to explain is that you have to know exactly what the financial implications associated with both strategies are.
If you assume that spending $8k on a domain or on a handful of domains is the same thing as spending it on 1,000 registrations just because the initial investment is identical, you couldn’t be more wrong.
It seems obvious and it is but I’d say most domainers are guilty of, in one way or another, underestimating the impact renewal fees have on their portfolio.