Two of my readers asked me to write a post from the perspective of someone who has a decent budget (at the very least) and I’ve decided to do just that: your wish is my command 🙂
Where to Start?
First of all, you need to understand that you’ll have to control the “gotta invest NOW, gotta buy as many domains as possible NOW” impulse which will make its appearance. We humans always want things to happen yesterday and a lot of times, this way of thinking clouds our judgment.
First of all, you need to spend a bit of time reading (don’t go overboard though):
1) Check out a few forums and blogs in order to learn the basics
2) Analyze some portfolios and also as many past sales as possible (dnjournal.com, namebio.com and dnsalesprice.com are great resources: USE THEM)
3) Compile a list of blogs worth following and read them on a daily basis
4) Read forums once or maybe twice per week, bookmark the profiles of a few people who seem to know what they’re doing and read their posts from time to time
If you’re serious about learning the ropes, you’ll probably be able to understand how things work within a week or so. Now that you’re armed with enough knowledge in order to get started:
Keep Your Eyes Open
You just never know when you’ll come across an excellent opportunity. But again: don’t spend your entire budget right away, be patient and understand that no matter how smart you think you are, you’ll (probably) screw up royally at the beginning!
Ask anyone who currently makes a lot of money as a domainer how things were when he/she was just starting out. Everyone makes mistakes and at the beginning, I’d advise against giving your gut feeling too much credit. Having confidence in yourself is great and everything but that confidence should be backed up by experience and a decent track record.
And be careful whenever you’re involved in bidding wars: don’t get carried away. Always do your homework BEFORE the bidding war starts and determine how much you’d be willing to pay for a domain. If someone with deeper pockets takes over and you’re no longer comfortable with the price, let go and move on.
Strictly Buy and Hold?
At the beginning, selling a domain or two definitely doesn’t hurt. Not necessarily just because of the money, it’s important to let the market prove you right or wrong from time to time. If you’ve sold 4-5 domains at a loss in a row, what does that tell you?
Again: don’t go overboard with this self-confidence thing, don’t trust your gut feeling all that much until you have a decent track record. Someone who has been investing in domains for 8-10 years (for example) and who understands how things work is in a FAR better position to buy and hold. While you’re still a beginner, gaining experience should be your number one priority. You’ll make lots of mistakes and that’s perfectly natural, it’s all a part of the game. Learn from them, move on and gradually start trusting your instincts as well.
What about Flipping Opportunities?
You will definitely come across quite a few flipping opportunities and the fact that you have a decent budget will help a lot. I’d recommend only targeting expensive domains after you have some results under your belt.
Don’t be afraid to experiment. Use let’s say 5% or so of your budget as “experiment money” and make things happen: your main goal should be gathering as much data as possible. About the market, about how bidding wars work and so on.
The Big Picture
After you’re experienced enough in order to have confidence in your ability to come up with a long-term business model, take a few days off in order to THINK. Most people are convinced that putting together a business model is a formality and nothing more, WRONG!
Where do you see yourself 3 months from now?
Where do you see yourself 3 years from now?
Where do you see yourself 10 years from now?
What does “buy and hold” mean to you? Would you be willing to hold a domain which you think has long-term potential for let’s say 10 years?
What will you do if you encounter cash flow problems at one point or another? What impact would such a situation have on your portfolio?
The list could go on and on, never lose track of the big picture. If you have some results under your belt, if you’re confident in your ability to pick domains with long-term potential and if you’re willing to be patient, you’re in a great position to come up with a great business model. Sounds good? Alright, then go make some coin 😉
November 11th, 2009 at 3:05 pm
I wish I had to problem of lots of cash!
November 11th, 2009 at 3:20 pm
Thanks for listening to my suggestion Andrei, I think it’s great that you give your visitors what they want. Literally! Great article and we can only hope that more and more offline businesses will bring a portion of their capital online.
November 11th, 2009 at 3:54 pm
I had that same feeling you warned about, that I needed to buy everything until it’s too late and it cost me a lot of money spent where it shouldn’t have been. Sometimes I planned to spend a sum at an auction but found myself bidding until I ended up spending five times as much. That’s way more money than what I should have spent
November 11th, 2009 at 4:02 pm
Thanks for the responsive post, Andrei! I understand the education and patience parts of your post, but a couple other questions, please:
1. What are you suggesting one do with the 5% of “experiment money”? Buy less expensive names at auction?
2. For names one acquires, do you suggest simply buy & hold? Add AdWords? Do some simple development?
3. At current market rates, what could one expect for rate of cash flow from a domain that’s already been “optimized” for buy & hold? By “rate of cash flow”, I mean *net* cash flow divided by purchase price (e.g. 5%, 10%, 15%).
Thanks.
November 11th, 2009 at 6:03 pm
I agree somewhat with what you’re saying, but keep in mind that there are going to be once in a lifetime opportunities coming up because Afilias is about to distribute generic terms under the .info suffix. This is due to the fact that they were registered illegally in 2001.
http://nametalent.com/blog/?p=1270
Having said that, I believe they should invest in these generic terms now before it’s too late.
November 11th, 2009 at 6:30 pm
JT, this .info distribution seems pretty fishy to me. You have to pay $250 to submit an application and there will probably be thousands of applications for any domain on their list which is worth something. Only one person will win a domain out of all those applications. Seems fishy and I have a feeling that a few privileged individuals will get the best domains. And not because their plan to develop them was better.
November 11th, 2009 at 7:21 pm
The money burning a hole in my pocket is my biggest problem. I always feel like I need to get it working for me again instead thinking it out first
November 12th, 2009 at 7:46 am
@StanCharlotte: 1) When it comes to the 5% I’ve referred to, gathering data/gaining experience should be your #1 goal. The most valuable lessons are learned by putting your own money at risk, it would be great if we could gain experience without losing money but that’s unfortunately not how things work 🙂
2) At the beginning, I’d suggest selling a few names in order to let the market prove you right or wrong. The first domains you’ll buy will probably not be “buy and hold material”, I’m sure most domainers can’t help but laugh out loud when they remember the crap they spent money on back when they started out 🙂
3) Things are anything but predictable these days and I can assure you most of the calculations you make today will not be relevant let’s say this time next year. IMO, trial and error is where it’s at. Buy domains, sell domains and once you have some results under your belt, trust your instincts. Aside from that, don’t forget that common sense if your most powerful weapon. It would be great if we had more control over everything but we unfortunately just don’t and as a result, we have to take calculated risks.
June 9th, 2010 at 1:34 pm
I’d like to subscribe to your superb RSS feeds.however i can’t find any here.Do you have great RSS feeds to be used?thanks,Anna
July 4th, 2010 at 6:58 pm
Each post I have read is well written and to the point. I would also like to state, not only are the articles well written, but the design of your site is excellent. I was able to navigate from post to post and locate what I was looking for with ease. Keep up the great work you are doing, and I will return many times in the future.
August 7th, 2010 at 2:49 pm
I do not think you, yourself are proper, have you actually looked at the facts?
July 22nd, 2011 at 12:29 pm
We appreciate you sharing this info. A person led me effectively
July 22nd, 2011 at 2:28 pm
Great post, you have pointed out some superb details, I likewise conceive this is a very wonderful website.
September 21st, 2011 at 4:23 am
Its always better to spend time learning about the stuff that you want to invest in and be patient. You should know that people who are successful today didn’t reach this position overnight.
November 10th, 2011 at 7:12 pm
I’ve said that least 3167136 times. The problem this like that is they are just too compilcated for the average bird, if you know what I mean
January 5th, 2012 at 2:18 am
HVO5 ugg boots HUL2 http://www.mobihash.com/blogs/1579/30200/buy-ugg-boots-cheap-44bl