Every website needs a domain name to become accessible online. While the demand for domain names is continuously increasing, some become valued extremely high. For example, in 2019, the domain name voice.com sold for $30 million.
You can also get domain names and sell them for profit. If you play your cards right, you can get a significant return on investment (ROI).
In this article, you will learn about what domain investing is and the reasons why it’s an excellent way to earn profit. Let’s get started.
What is Domain Investing?
Domain investing – also called domaining – includes buying domain names and selling them at a higher price.
Like most investments, the “buy low, sell high” method is also the core of domain investing. Domain investors buy currently undervalued domains, hold on to them until they increase in value, and then sell them to willing buyers.
For example, a domain investor or domainer buys a potentially valuable domain such as horseapparel.com. In the future, an equestrian apparel company might be interested in purchasing that domain, and the domain investor can set a profitable price.
Why You Should Invest in Domains
Let’s take a look at seven reasons why domain investing can be an excellent opportunity to jump into.
1. Cost-Effective
Compared to many other investments, domain investing is more accessible and affordable.
Domain names are unique, so costs can vary depending on a specific domain’s assigned value. But in general, domain names cost around $10-20/year.
You can start buying domain names even if you only have a small budget in the beginning. Once you’ve sold a few domains, you’ll have more money to expand your domain portfolio down the line.
2. Tax and Insurance Free
In addition to low domain registration and renewal costs, domain investing is also free of tax and insurance. This is another advantage of investing in domains over physical assets. The only expenses you need to pay are the domain’s registration and renewal fees.
3. Limited Supply But Growing Demand
With more and more brands understanding the importance of an online presence, the demand for domain names will only increase. However, every domain name is unique. For example, there can only be one beebulletin.com.
Domain investors take advantage of this situation by quickly claiming domains before anyone else gets to them. If in the future someone wants the domain, they’ll have no choice but to purchase the domain from the domain investor.
4. Has Unique Value
Every domain name is different and comes with unique value. Therefore, the possibilities of new domain names are endless. You’re free to specialize in a specific niche or diversify your domain portfolio.
Additionally, domain investors with a creative edge will find it exciting to develop different combinations of keywords to find a potentially lucrative domain name.
5. Capital Appreciation
Compared to most investments, domain investing is significantly less risky. A good domain name is very likely to be sought after in the future.
Additionally, significant losses are rare. Many domains can be sold relatively quickly, too. This is another advantage of domain investing over other investment types with a “high risk, high return” style.
6. Depth of Investment
While this article has focused on domain investing as selling domains at a higher price, there are other options to profit from a domain name.
One option is to lease a domain instead of selling it. By leasing a domain, you’ll receive a regular income while still being the official owner of the domain. The domain’s value will continue to grow, and you can sell it at the ideal price in the future.
Another option is domain parking. By parking a domain, you’ll be able to display ads on it. This lets you receive a steady income while waiting for the right buyer to come around.
7. Solid Return on Investment
With its cost-effectiveness, limited supply, growing demand, and investment depth, domain investing can yield a solid investment return.
Conclusion
Domain investing is the activity of buying and selling domain names for profit.
In this article, I’ve listed seven reasons why domain investing is a worthwhile venture:
- Cost-effective: You don’t need a lot of money to start.
- Tax and insurance free: Unlike other investments, tax and insurance obligations are not part of domain investing.
- Limited supply but growing demand: While the demand for domain names increases, the number of domain names aren’t, making the good domains more valuable.
- Has unique value: Every domain name is inherently valuable due to its uniqueness.
- Capital appreciation: The risks of domain investing are significantly lower than other investments.
- Depth of investment: You can also lease or park a domain name instead of selling.
- Solid return on investment: Expect a good ROI because of the cost-effectiveness, limited supply, growing demand, and investment depth of domain investing.
I hope that this article has got you excited about investing in domain names, and good luck.
