The Investment Potential of Generic Domains

September 8, 2015

The Investment Potential of Generic Domains

domain investingThe advent of the internet age has forever changed the landscape of the investment world. Along with making traditional investment and trading easier and more personalized, the internet has also created an entirely new class of investment assets. One such asset is the domain, or the basic name of a website. Domains can be thought of as the real estate of the internet world, and just like properties in the real world, they have enormous investment potential. In this article, we will take a look at the basics of how domain investing works, as well as the investment potential of extremely generic domains.
Why are Domains Valuable?

The first thing that must be understood when it comes to domains as an investment asset is what makes them valuable. Generic domain names command value because, once registered, they may not be duplicated. This means that if a company wishes to start a website with a certain domain name, they must purchase that domain from the existing owner. The basic market laws of supply and demand therefore dictate that the domain will have an inherent value to both buyer and seller.

If one is to treat a domain name as an investment, it is important to find one in a fairly competitive market where good names are hard to come by, as well as a market that receives a high volume of search traffic.

How to Invest in Generic Domains

Unlike many forms of investing, buying and selling domains is extremely simple, and can be done for a very minimal initial investment. To get started, you merely need to use an online domain registrar such as GoDaddy or HostGator to purchase your domain name. Prices vary, but most .com domain names can be purchased for somewhere between $10 and $20, with a yearly renewal fee of the same if you hold the domain for more than one year after purchase.

Finding a good domain name is critical to making money as a domain investor. One of the best ways to do this is to use Google’s Adwords tool to find keywords with high traffic volume. This can help you to determine what niches are likely to have new websites springing up in them. If you can get a domain name that exactly matches a high volume search term, for example trucks.com (which is, of course, already taken in reality), you will stand a very good chance of being able to sell it at a large profit. Keywords related to a single high volume search term are often the best alternative, as exact matches to these terms are usually already registered.

Once you have found and registered a domain name you feel confident will sell at a profit, you have a choice to make. You can either put it up for sale immediately, or wait a while to let it age. Domain names that have been off the market for multiple years often command higher prices, but keep in mind that your investment cost will go up every year that you have to renew your domain. If you feel that you have something that will sell at a reasonable profit, an immediate flip might be the best option. When you do decide to sell, using a website and domain auction site.

Much like physical real estate, improvements and development can also be made to domains. This means constructing a website on your domain, posting content to it, and getting a steady flow of traffic. This will, of course, increase your investment. However, developed websites with steady traffic on high value domains will often sell for many times more than the raw domain.

How Much Money Can be Made Investing in Domains?

The answer to this question will be slightly different for every domain. If you have done your research and found a domain that corresponds to a high traffic keyword in a popular niche, the profits can be very large indeed. It is far from uncommon for a domain registered for a mere $10 to sell on a domain auction site for $100 or $200. In the cases of domains that are perceived to be of higher value, this number can climb to multiple thousands of dollars. Even the most generic of domain names, if selected with an eye toward marketability, can make their owners huge profits on their initial investments.

Conclusion

Domain names have a great degree of potential as an investment asset. They are easy and inexpensive to register, and will commonly sell for many times the initial purchase price. To learn more about what sells well, investors would do well to keep an eye on the domain reports that we publish here on investing.co.uk.