Categorized | Domaining Tips

You *Can* Become a Successful Investor by… Flipping

Posted on 18 May 2013 by Andrei

Earlier today, Rick Schwartz wrote a post I kind of disagree with in the sense that his strategy is the optimal approach for his specific financial situation but not necessarily the best approach for everyone.

Rick is probably the most talented domainer when it comes to extracting the highest value out of a sale but what I will try to explain today is that extracting the most value out of a sale is not always the best approach and that even if it sounds weird, you *can* be a successful investor by flipping under the right circumstances.


One of the statements from the post I linked to that I disagree with is this:

“MOST domainers would flip that domain for $5k in 24 hours. BAD MOVE!!!”

In my opinion, flipping a domain for $5k in 24 hours can be a very good move if and only if you allocate that $5k in a correct manner.

In other words, if you sell a domain at a quick $5k profit in order to allocate that capital in a way that you are convinced will generate more than by keeping it.

Maybe you will buy another domain, maybe you’ll invest in something else that you are convinced will generate a higher return.

You get the point.

Rick is a very well-funded domainer, so his strategy of extracting the most value out of each sale works best for his financial situation.

What I am trying to explain is that it’s not necessarily the best choice for everyone.

Let’s assume someone offers to buy one of your domains at a $5k profit and that at the same time, an investment opportunity you consider amazing presents itself.

If you already have enough capital to invest in that opportunity without selling the domain, then I agree with Rick 100%. Don’t just sell for the sake of selling. If you can invest in that great opportunity *and* keep your domain, do it, that’s definitely the best approach.

Unfortunately, most people cannot do that due to liquidity-related reasons.

For those people, in my opinion, taking the $5k profit by selling the domain in order to invest in something (maybe another domain, maybe another opportunity) that they are convinced will generate a higher return might be a better solution.

13 Comments For This Post

  1. Joe Says:

    Also, $5k couldn’t be worth the flip for a wealthy investor like him, but represent a decent amount of money for someone who might be in critical financial situation and in needs of funds.

  2. Anunt Says:

    if u paid $5k and getting $10k for the domain…sell it.

    but if u paid $100k and someone offering $105k…wait for better offer.

    i personally like overpaying for a good domain and then re-selling it at a lower price for a loss…that’s fun…

    these days in domaining, u have to take the money and run…

    good luck to all and dont follow my advice

  3. Andrei Says:

    @Anunt: but what you’d be able to invest the $105k in another domain or in a project that you are convinced would generate more than you’d make by waiting for a higher offer?

    As mentioned in the article: if you have enough money to invest in that new opportunity *and* keep the domain then great, that’s the best possible situation for sure.

    But if you don’t, selling the domain at a $5k profit in order to generate the liquidity you need to invest in the new opportunity is probably a better idea in my opinion.

  4. Gene Says:

    I completely ‘get’ that people need liquidity to pay their bills, and generally survive. But I’ve stated countless times on domaining blogs that flippers hurt overall asset values, which is why domain names have never yet reached their equilibrium prices (i.e., their true value).

    Any market – or security – that has non-stop, persistent selling will remain artificially low until the selling dries up.

  5. Andrei Says:

    @Gene: the thing is though, without flippers, we wouldn’t have a reseller market and without a reseller market, there would be no way to quickly liquidate inventory in case you need capital.

    People, from beginners to successful domainers, may need capital for various reasons at one point or another, not necessarily to pay the bills/survive.

    Maybe tomorrow, someone will offer you the best investment opportunity you ever heard of but in order to take advantage of it, you need more capital than you currently have at your disposal.

    I don’t know about you but in that case, I know I’d personally find the reseller market pretty useful :)

  6. Mike Says:

    What is everyone’s opinion of Rick’s example of Beep.me? What do you think its worth?

  7. wonay Says:

    I find it really funny that domain investors and a$$ lickers actually take anything that Rick (the prick) says seriously.

    If anything, Rick’s advice works best for people who are similar to him (leased whores and manipulating mongrels).

    His advice is dumb, his language is petty, and his whole personality stinks!

    Sell a domain or flip it silly whenever you are making at least double the amount you paid for it.

    Our company has sold over 2500 domains during the last 16 months using this method. Not asking you “experts” to take my advice on this but please never take Rick’s advice on this since he is a blood sucking, manipulating, cheating Prick.

  8. Andrei Says:

    @wonay: you’re being too harsh on him in my opinion.

    Think about it, he’s one of the few people who sold a domain for over a million dollars and he did it on more than one occasion, which is pretty impressive given the fact that there are only 74 reported seven figure sales out there if I’m not mistaken.

    When someone with his track record says something, it would be a mistake to look the other way. You don’t have to always agree with his opinions but not listening to someone who has such impressive sales under his belt would be a mistake.

  9. wonay Says:

    LOL@Andrei
    So, based on what you say I should probably take the word of every Millionaire very seriously. And, if that is the case then I am definitely going to take my own words more seriously than Rick (the Prick).

    Basically, it just goes to show how most domainers and domain bloggers just listen or read the crap dished out to them online without ever digging deeper into the reality of things. Sad but true!

    By the way, how many domains has Rick (the Prick) actually sold during the last 3 years??

  10. Andrei Says:

    @wonay: I’m not saying you should blindly believe everything he or anyone else says, I’m simply saying that at least listening to what the most successful people of an industry (in our case Rick, Frank and so on) have to say is a good idea.

  11. Alan Dodd Says:

    I think for most of us, we need to raise cash to keep domaining going – and also eat!

    In order to sell something, we stand a better chance of selling it where we give a bargain. Then, we sell.

    Having said that, I believe patience can be a big asset in negotiating a better price.

    If you sell beep.me for say – $1,000. Okay, so it’s a good deal for the buyer. But say the domainer goes out and gets three beep.me’s for this?

    Not a bad strategy.

    I guess you’ve got to know when to holdem, know when to foldem – as the song goes!

  12. Rick Schwartz Says:

    Just to be clear…As I also made this comment on Elliots Blog yesterday.

    Flipping is just short term investing. Nothing wrong with that at all. It’s a great way to make a lot of money.

    I just prefer the long term outlook because it is less work and I have the luxury of waiting and that was my approach from the get go so that’s how I roll.

    But even that does not always work out as I lose money on domains sometimes too. lol

    Plus there was no freakin’ people that would buy these silly things in the mid 1990′s.

  13. Andrei Says:

    @Rick: for you and generally speaking, for well-funded domainers who can afford to make new acquisitions without liquidating existing inventory, I definitely agree that your approach represents the optimal solution.

 
 
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