Domain Name Investment: Is It Good Business or Shady Dealing?


So it’s happened to a lot of us. We have a great idea for a new website that we’re sure is going to be the next big thing. We’ve even got the URL all picked out. However, when we head to our domain name registrar to secure the domain of our dreams and get the ball rolling at long last, fingers crossed that it will be available, it’s not. However, it may be available for sale by the current owner at a sometimes cost-prohibitive price.

The domain you wanted was purchased by a domain name investor. Domain name investment is a million dollar business that has made those that are good at it rich. Some people specialize in purchasing unused, expired, or potentially valuable domains from registrars or previous owners and turning them into streamlined websites that have more value than the original domain had on its own. Others simply snap up the domains themselves and sell them to the highest bidder.

Whichever way you slice it, domain name investment is a controversial business that has both haters and supporters. But what’s the real story on this booming goldmine? Is it a legitimate way to make a living or a shady business practice that deserves to be stopped once and for all?

Is Domain Name Investment an Honest Business Practice?

Domain Name InvestingMany people feel that domain name investment is an unfair practice, as it limits the access the average person has to some of the best, most potentially lucrative domains out there on the market. The practice has been compared to scalping tickets or even hoarding. However, what domain name investment haters fail to realize is that the practice really has more in common with real estate investment than anything else.

Consider the fact that the modern website or web domain has absolutely everything in common with a building a person might want to use to start a business or make a home. Some buildings are going to be located in more fortuitous places than others. Some will be in great shape the way they are while others might need some rehabilitating before they’re really useful again. Some will be completely up for grabs while others will be privately owned.

Whatever the case, anyone who wants a particular building expects to have to bargain with the owner for the asking price. A given real estate investor may own and maintain many properties. However, no one considers it unfair that this is the case even though he most likely doesn’t live in or use all of the buildings on a personal basis.

The same should be considered true for web domains. Domain investors are simply making an investment in property that is up for legitimate sale. Once they obtain a given domain, it’s theirs fair and square to use or sell as they please – just like virtual real estate.

What Makes a Successful Domain Name Investor?

Although domain name investment is certainly as honest in practice as any other type of investment business, it’s important to understand that it’s still a business. It’s not easy money or a sure thing. Success in the domain investment game requires an ability to know how to spot a good investment when you see one and the motivation to make the most of it.

Having a Solid Plan

Before getting into the investment game, it’s important to have a solid plan in place as far as how you plan to make money from the domains you purchase. You’ll also want to consider where and how you plan on acquiring your domains. Are you looking mostly to work with brand new registrations or would you rather purchase and rehabilitate domains acquired through the secondary market?

Knowing How to Spot a Good Domain

Domains that are simply sitting around gathering e-dust are not going to be good candidates for investment. If it’s not generating interest as far as potential buyers and it doesn’t have the potential to generate traffic, it’s going to be worthless as an investment opportunity.

Make it a point to keep on top of the current trends as far as what types of domains are hottest. Smart investors are always one or two steps ahead of everyone else in that they think of the next big thing before anyone else does and wind up with hundreds of valuable domains on their hands as a result.

Learn to Think Like an Investment Mogul

In addition to understanding how current keyword and web trends will potentially affect the domain name market, it’s important to learn how to be forward thinking in the same way investment moguls are. Domain names that would easily apply to up and coming industries like biotech, nanotechnology, genetics, and more could all be potentially great investments, for instance. However, it’s also important to learn how to distinguish lasting trends from mere fads that will be forgotten quickly.

Succeeding in the Investment Game as a Newbie

Even though the internet has been around for a while at this point, we’re still hearing all about the domain investment giants that managed to cash in on the market before it became big business. However, while the great majority of the original ultra-valuable domains are probably long gone, it’s important to realize that there are still plenty of great investment opportunities left for those that are new to the game and are prepared to play things smart.

Smart newbie investors don’t just know how to spot a great investment. They go into the process prepared to do the work and be thorough when it comes to making sure their domains sell. Don’t make the mistake of leaving domains unresolved, for instance. Putting up a single page that informs visitors that the domain is for sale will help ensure that interested buyers know to inquire. Others will decide to monetize the domain by putting up affiliate links and the like in the meantime. They also know how to sell intelligently once prospective buyers come their way.

At the end of the day, domain investment may not be the most conventional business choice by traditional standards. However, it’s certainly an honest one that is worth exploring.