Rick Schwartz published a post earlier today and while I agree 100% that you’re leaving money on the table when flipping, I’d like to explain that in some cases, that’s not necessarily a bad idea.
Rick’s strategy represents the best approach for his situation and I said this on DomainingTips.com in the past as well: if you’re a well-funded domainer like Rick, flipping is a bad idea.
But the thing is, a lot of domainers aren’t well-funded and in such cases, flipping can be a good temporary business model if and only if you are able to put the liquidity you generate to good use.
If you flip a domain and use the money to buy a depreciating asset like a useless gadget, then flipping was a bad choice. You would have been better off keeping the domain.
But if you flip a domain and use the money to buy something else (another domain, stocks, you name it) that will ultimately generate more money than you would have made by keeping the domain, then flipping was a very good choice.
Sure, nobody can be 100% certain things will unfold exactly that way (that the asset you invest in using the profits obtained by flipping a domain will actually generate more than you would have made by keeping the domain) but as a general rule, I’d say that if you’re confident you’d be able to put the liquidity generated by flipping a domain to better use, go for it.
Once liquidity is no longer an issue for you then I agree with Rick, you should forget about flipping because you’re better off keeping the gems in your portfolio.
What I tried to explain is that for domainers who aren’t liquid enough to be able to make new acquisitions without sacrificing current inventory, flipping can be a good approach.
November 3rd, 2013 at 6:48 pm
“…flipping can be a good temporary business model if and only if you are able to put the liquidity you generate to good use.”
No! Wrong! Flipping is not good business model. It may be necessary to flip some domain name if needed. Business model is about what you want, not need.
Whoever does domain names flipping is not a domain name investor, but just low end flipper. Pick your side…
November 3rd, 2013 at 7:48 pm
Well said. Agreed.
November 4th, 2013 at 12:04 am
great article. rick is a millionaire and that’s fine but we are not. we are selling domains to make a living.
November 4th, 2013 at 2:36 am
Couldn’t put it better.
November 4th, 2013 at 4:07 am
M.G if you were a successful “domain name investor” you wouldn’t be reading and responding to this article. you are a windbag of the lowest order. you are the bottom feeder not the domainers who buy and sell domain names for a profit.
November 4th, 2013 at 7:39 am
I have domains that i try and flip and those that i hold onto as more of an investment, but we need cash flow and flipping domains does this.
November 4th, 2013 at 10:22 am
I support domain flipping since it is an extremely profitable business model in itself. The fact that Rick says something means nothing to me or most other sensible domain investor because the fact is that Rick started off his career flipping domains for the first 10 years or so. Almost all his initial domain sales were domains he bought and flipped within weeks, months or years.
Another thing that hasn’t been mentioned by most domain bloggers is website flipping. There is enough evidence that websites that are flipped make good money. My company has made thousands of dollars in profit just by flipping sites and domains. And, I have spoken at seminars in India where most other Asian domainers flip domains and make a decent living.
So Rick’s post just goes to show that almost “all” of his advice to other domainers is useless and something he doesn’t follow himself.