How to Invest in Domains

1. Step 1

   Don't presume declining an offer of $100 for a domain in your portfolio will get you another similar or higher offer later. The market is always changing, and eight months from now your domain may be worth even less. Really weigh the factors before immediately declining what could be considered an offensively low offer: how long have you owned the domain, how much have you spent in renewals, etc.

2. Step 2

   Unless you have a big wallet to begin with, don't start out buying anymore then 5-7 domain names if you are just starting. One, for every domain reseller that makes a few thousand, there are three domain resellers who just lost the same amount with their portfolios. Unless you have a few profitable sells under your belt, its best not to waste your money on an online business endeavor.

3. Step 3

   Don't buy a domain name from an auction website for $250 if you think you can sell it for $500. That is not a big enough spread. For example, it is unwise to buy lxpe.net for $75 if the current market value is $100-120. Why? Because you are leaving yourself a $40-50 profit on a $75 initial investment (which in itself is a risk). Be patient and find the sneaky finds that are going for $500 but has the potential to go for several thousand. That way, you have room to experiment and more importantly make mistakes.

4. Step 4

   When pricing your domains, always remember to pay attention to every cost you pay for maintaining those domain names. How much did you initially pay to register them, put up parking services, renewal fees, advertising fees, etc. When you get your total bill, a safe goal is to be making twice as much profit, or a %100 gain on your domain investments.

5. Step 5

   Don't get caught up in the hype. For many domain resellers, the tried-and-true is usually the best bet. Just because LLLL.com's are selling well now, does not necessarily mean all LLLL.net and LLLL.org's are hidden goldmines in the future. Although the pioneers of a trend always make enough to pay for their retirements, there are only a handful of those and chances are you are not one of them. Be defensive with your money, stick to things like two-word .com's that have keywords that are both relevant and marketable.

6. Step 6

   Don't waste your time trying to emulate other seller's domain prices. Just because someone is asking $5600 for PimpMyCellPhone.net does not mean they will get a single bid, and does not mean that your domain -- PimpMyIPhone.net will fetch that same price even if it DOES sell. Do appropriate research, set a BIN price you'd be satisfied with, and always entertain offers. You never know how many offers you'll get.

7. Step 7

   Don't be too aggressive. Declining every offer that comes your way and setting your 'expected' price to skyrocketing levels will get you NO bids. Although there are plenty of domain resellers that attempt to snatch a few domains and wait it out for the big steal, the safer way from my experiences is to snatch up a handful of decent, marketable domains and sell them for two to three times their value. For example, buy a domain for $10 and sell it for $50-75. When you begin making a lot of $50-75 sales, that $2000 price you set on PimpMyIPhone.net won't look that promising anymore.

8. Step 8

   Don't expect buyers to come to you. You must face the reality that your domains are probably not as good or profitable as you think they are. This does not mean you can't turn a great profit, but just because you think DogLeashes.com is a hidden treasure does not mean the rest of the world will think that way, especially with the thousands of other similar sounding domain names and keywords. Take the time to make it a blog, get daily hits from visitors, etc. so that your domain stand out from the crowd.

9. Step 9

   Don't invest more then you are willing to lose. Many people fall into the trap of buying more domains to cover their past losses. This is a bad mistake. Though you can have a decent income stream from domain selling, do not expect it to pay the bills. If you are on a losing streak and none of your domains are selling and are in the red, back out before you make a huge financial mistake.

10. Step 10

    Be wary of where you are hosting your domains to sell. Places such as GoDaddy are good bets and cater towards domain resellers. Others, such as iPower, are intended for hosting and not domain exchanges, and therefore customer service reputation, quick tech support, etc. are important things to consider. It's unwise to keep your 100 domain portfolio hosted with a place like Yahoo, you'll end up spending days on the phone talking to customer service representatives about why you can't unlock your domain or retrieve your authorization code!