Guest Post by professional domainer, Kenny Goodman
Domainers are domain name speculators/traders - they register or buy either new, aged or deleted domain names and then sell/lease them for a profit.
When I use the term ‘buying’ or ‘selling’ ‘leasing’ I am talking about buying, selling or leasing the registration rights as no one ever actually owns the domain outright. Let me explain:
New Domains
When you register a normal Top Level Domain Name (TLD -.com, .net, .org, .info etc) you can register it for between 1 and 10 years for about $8 - £35 per year depending on the registrar.
These are what are known in the industry as ‘new domains’ for obvious reasons.
From between 1 and 60 days (depending on registrar) after registering the domain you can transfer the registration rights of the domain to someone else and this is one of the ways to make money with domains...
They register the domain for about $10 and then find someone who wants the domain for say $40 making 400% profit in this example. Good Domainers will make much more and some make tens of transactions per day.
Aged Domains
Domainers don’t just register brand new unregistered domains, they also buy ‘aged’ domains in forums, auctions, and brokerages and also direct from the owners.
Some good places to find these aged domains are:
- Sedo.com
- Flippa.com
- Namejet.com
- Godaddy.com
- Pool.com
- Snapnames.com
It can be quite frustrating and can take a long time trawling all of those sites so I developed my own software called Domain Face to find aged domains.
It is totally integrated with Domain Samurai and allows you to easily search all of the above auctions/brokerages in one place and it also allows you to see important SEO metrics behind each domain.
Domain Samurai is a tool made by Nobel Samurai (Team behind Market Samurai) and it allows you to find new domains for your niche. Domain Face works within Domain Samurai and powers the data for aged domain searches, so you can search for new and aged domains in one interface.
Domain Samurai is completely free and there is also a free version of domain face (with the option to upgrade for more results/metrics if you wish).
Deleting Domains
If a domain owner doesn’t re-register the domain at the end of the registration period then the domain name will enter it’s expired phase and will move into its ‘Auto Renew Grace Period’ for the next 45 days which is a discretionary period where most registrars will allow you to renew or transfer your domain to someone else. After this period it will enter another discretionary period of 30 days called the ‘Redemption Grace Period’ where some registrars will allow you to renew but it will usually be at an inflated price.
If you still haven’t renewed at the end of this period you will lose the domain and it enters its 5-day ‘Pending Delete’ phase and then after these 5 days it becomes available again.
See diagram:
You can backorder deleting domains through various backordering services and you only pay if they successfully catch the domain for you when it drops.
I backorder with 3 major services to ensure a good chance of success:
- Namejet.com
- Pool.com
- Snapnames.com
It’s startling how many thousands of good dynamite domains people allow to delete every day whilst domainers like me are waiting to snap them up.
There’s a whole bunch of ways and variables attached to valuing a domain and the old school domainers only tend to bother about the following:
- Length of domain – shorter domains are more valuable
- Extension: .com being the most valuable
- Page Rank (although most domainers don’t fully understand SEO)
- Keywords (for brand ability or industry reasons)
These old school domainers make most of their money from buying and selling domains and then some of their money from parking their domains with domain parking companies like sedo.com or afternic.com. Even Google are in on the act now and they offer domain parking.
Domain parking is basically a place to park your domain without having to buy hosting and if someone enters the url into a browser they land on a page which is basically full of adverts and you get paid from the parking company anytime someone clicks on one of the ads. Bit like Google adsense sites but without any content and most of them are the same theme.
Here is an example of a parked page on sedo.com:
The only real way to drive traffic to these pages though is through type-in traffic, (this only generally works with generic .com’s), social media, or if the domain is for sale but generally the traffic here is other domainers, or social media so generating money this way isn’t easy.
These domains are not really offering much value to the public and some old school domainers are sat on fantastic dynamite domains whilst they stagnate on the parking lot!
There's a whole new movement of ‘new school’ domainers called IM Domainers (Internet Marketing Domainers) like myself who invigorate and renovate these domains building good quality high value sites or lease them to people who do the same. We look for what we call Dynamite Domains.
What to look for in a Dynamite Domain
My main aim is to build a big range of high value online assets. I figure the world will see a bull market again in a few years time and with businesses becoming more internet savvy, the virtual real estate market will go through the roof in about 5 years time and I want have a good variety of strong web businesses so I can cash-in some of my chips when the time is right.
I therefore buy good quality aged domains in order to get a head start on this plan and it allows me to create money generating websites fast, which is good for cash flow which allows me to buy more domains and create more sites.
Like most other good IM Domainers I buy with both SEO and Branding in mind, so when I look for a domain I consider the following variables:
- Keywords (for either SEO, Branding or Resale/Leasing purposes): exact match where possible.
- Extension (for Branding or Resale/Leasing purposes): I would always aim for .com domains above any other extension but I also buy .net’s, .orgs, .info’s or CCTLD’s (Country Code TLD’s like .co.uk for the UK) if I am targeting a country specific niche.
- Age of domain (SEO & Resale/Leasing Purposes): The older the domain the better. You can manually check the creation date of a domain on domaintools.com
- History of domain (for SEO & Reputation or Resale/Leasing Purposes): It’s important the domain name history is relevant to the niche you are targeting. Also make sure the domain hasn’t been involved in any kind of taboo industries like adult or gaming. You can manually check the history on Archive.org
- Popularity/traffic (Money generation & Resale/Leasing): If you don’t have access to the domains analytical data, you can potentially check how popular the domain is with Alexa.com. It isn’t wholly accurate but does give an indication of traffic. You can also check popularity at Compete.com
- Google PageRank (SEO & Resale/Leasing Purposes): higher the page rank the better. SEO extensions for Google Chrome (https://chrome.google.com/extensions/detail/oangcciaeihlfmhppegpdceadpfaoclj) and Firefox (http://tools.seobook.com/firefox/seo-for-firefox.html) provide this data for manual checking.
- Back links (SEO & Resale/Leasing Purposes): quality, quantity and relevancy. Look for relevant authority back links. You can check this manually by going to Yahoo and typing in link:www.domainname.com. You can do the same on Google but you will generally get less data
- Indexed pages (SEO & Resale/Leasing Purposes): the more indexed pages a domain has the better. You can check this manually by going to Google or other search engines and type in site:www.domainname.com
- DMOZ/Yahoo Directory listings (SEO & Resale/Leasing Purposes): Gaining either DMOZ or Yahoo listing costs either money, time, effort or all 3 so it’s a real bonus to find domains with these listings. Google sees these links as high authority links, which is good for SEO. You can check this manually at DMOZ.org or Search.Yahoo.com/dir
Domain Resale
Naked Domain: A naked domain name (domain with no website) will get you the least amount of money on resale.
Domain with Website: If you add a website then this will automatically add more value.
Ranking: If the website ranks for keywords then again this will add more value.
Traffic: If the website has proven natural traffic then again this will add more value.
Turnover: If the website has natural traffic and generates revenue then as long as it isn’t losing money, there is usually a buyer out there, because you are now selling a business.
Profit: A profit making website is the Holy Grail. It’s now a fully functioning ‘going concern’ and positioned well to lure in serious bids.
You can create a fully functioning website in a matter of hours these days which is why we are seeing an increase of IM Domainers on places like Flippa.com
Leasing Dynamite Domains
If you have ever been involved in traditional bricks and mortar real estate then you will understand how difficult it is maintaining the properties and looking after the tenants.
If one of the properties gets a leak then it is your job to fix it. If the roof needs repairing it is your job to pay and fix it. The list goes on….
With domain leasing it’s totally different:
Advantages to Domain Owner
Your only job as the domain owner is to maintain the registration of the domain. This means if you lease it out for 3 years then you just need to keep it registered for those 3 years. Simple!
Domain parking earns very little money whilst your domain stagnates in limbo.
Domain leasing on the other hand is much more lucrative and you are paid by the lessee whilst they develop and add value to your domain!
Advantages to Domain Lessee (Person Leasing the Domain)
Lease to buy Options
I generally only get involved with ‘lease to buy’ options, which is where the domain lessee (the person leasing the domain) has the option but not the obligation to buy the domain within the agreed lease period.
It basically gives the lessee full control over whether they want to purchase the domain or not within this period.
They can manage their risk and ‘try before they buy’. I usually allow a 1-year break in the contract allowing the lessee to exit the lease after 1 year if it isn’t working out.
So for example, if the domain is worth $20k and they lease the domain for $250 per month then their risk is $3 rather than $20k. If they make a success of it then they can usually make enough money from the domain to purchase it within the lease period. If not you can always extend the lease if everyone is happy with the ongoing arrangement.
Domain Name Brokering
I also broker domain names which allows me to get involved in domain leasing or sales by being the middle man, without ever owning a domain or using any of my own money.
Anyone can do it and it’s a real simple process.
Most of us know people in business or people in marketing so when you educate people about the power of dynamite domains they will invariably want to get some for their business.
Once you have a budget from them and have ascertained their requirements, the easy part is finding the domain, contacting the owner and then negotiating a deal where everyone is happy. I always try to do this over the phone or face to face where possible.
How to get paid:
Option 1: You negotiate a % or flat fee with the domain buyer
Option 2: You negotiate a % or flat fee with the domain seller
Option 3: They share your cost
As you can see there are various ways domainers make money from domains but there seems to be 2 distinctively different sets of eyes these days.
1. Those of the old school domainer who generally only care about quick turnaround naked domain selling
2. Those of the IM Domainer who look for dynamite domains so they can build high value online assets.
Kenny is the founder of Domain Face, and you'll find his blog at http://kennysblog.com. He's also on Twitter @KennyGoodman
Happy Domaining! -Kenny Goodman
p.s. Have a hard time finding good domain names that are actually available? See: How to Choose a Domain Name
About Lynn Terry
Your post is filled with valuable info. Enough to help me decide if this is a direction for me. What do you use to build your websites?
From the article: "You can create free account here: (Lynn do you have affiliate set up with us? If not go here http://www.domainface.com/affiliates)"
*poke poke* 🙂
-Erica
else I would like to add a freshdrop.net - is good domains service. thank you for useful post 😉
Hi, Kenny:
Which company is your preferred for domain leasing? I did a search on Google for domain leasing and came up with "Lease This" and "Lease My". Would love to hear more about domain leasing.
Cheers,
Missy
Thanks for this great info. The graphic clarifies stuff I've never been to sure about, it's great to see it demonstrated so well. That alone has gotten me up and ready to get rid of some aging domains.
Great content, thanks for sharing!
I've never even heard of leasing a domain but it makes sense if you can get an established domain with a decent page rank. What if you want to sell your site though? Does the lease go with it?
I'm sorry but I find domain squatting, leasing, selling, etc. deplorable. What is this world coming to if, with all of our individual talent and abilities, we trade our better senses and abandon our common courtesy just to make a buck?
People who engage in this sort of selfish, ruthless, bad karma-ridden behavior should invest more time into their personal ethics. If you have no interest in a domain name other than to make money off of it, please use your brain power to find a more ethical and intelligent way of making money.
For the record, I am very much a fan of ClickNewz and this is the first time I have been utterly disappointed by its content and advice. The reason I started following Ms. Terry (yes, I am a paid club member) was because I thought her tactics for internet marketing were more honest, creative, and useful to both sides of the seller-buyer relationship, and instead turned the tide against scheming marketers. However, this article and the one before it makes me think twice.
In fact, I'm NOT sorry that I find domain squatting, leasing, buying with the sole intention of selling for a higher price, etc. deplorable.
My little nephew spent a few hours on the beach last Tuesday, and collected several beautiful seashells. He set up a table at our yard sale and sold them for a tidy profit.
I spent a few hours last Tuesday, and collected several beautiful domain names. I set up shop online and sold them for a tidy profit.
Sea shells may be collected by anybody who takes the time. Domain names may be registered by anybody who takes the time.
Cybersquatting is deplorable. Cybersquatting is using someone elses' trademark in your domain name. All other available domain names may be registered by anyone, at any time, for resale purposes or not.
Buying and selling domain names is the digital version of buying and selling real estate. Only one person can own that beautiful house, or domain. The one who buys it first has every legal, ethical, moral right to do as he pleases with it, including selling it at a profit.
Let me guess, Mr. Pimental, you must also be in favor of developers bulldozing historic landmarks and paving over nature and open land in order to build malls, skyscrapers and other unnecessary monstrosities in the name of having more money than one truly needs.
When people do things solely "for profit", they are rarely doing the ethical and moral thing. It is true that we all need to eat but at what cost do we choose to buy our bread? It is the asinine motive do to things mostly "for profit" that has led our society to decades and decades of financial and social problems and has degraded our nation's ethics and morals.
I agree with 2stepup.
I am "in favor" of exactly opposite of what you are attempting to pin on me.
It's easy to spout irrational accusations from the safety of an anonymous post. If you would like to know my position on any subject, ask me. Don't post hit & run accusations.
Online real estate is comparable with traditional bricks and mortar real estate in my opinion, I do agree though that cyber squatting is not good form and this is why this post does not promote it.
I tried domain parking a while ago but maybe my domains just weren't that good. I recently let a lot of my domains expire because I have a habit of getting a lot of great ideas but failing to follow through - but I might look at selling them next time.
@ Gene I am with the other camp, where I look at domain speculation and acquisition an opportunist and non productive business practice as well as a miserable way to do do business. I am sure you can justify the opportunity, but to compare it with bricks and mortar investment is a pathetic way of hiding opportunistic greed. Using words such as ethical, moral right has no place in in the conversation.
Kenny:
AWESOME post. I saw your post over at the Flippa blog too. The content you put out is always detailed and thorough. I have always struggled understanding the life cycle of the domain registration process. The chart you included here really helps to visualize it. In fact, I'm printing it out and pasting it on my white board.
The idea of a leasing a domain is something I never thought of. I'm looking to acquire a high dollar GEO domain and I might present the owner with a lease option instead. Thanks!!
Travis
I've just heard that one can make money on domains but I've never seen it described in detail such as in this post. Thanks for the tips. I just might consider selling domains too.
I never thought that leasing domain would be possible. Maybe if I have enough saving, I could try this strategy in having domains. I heard selling domains, sites can really give you huge amount of money.
There are people who make a lot of money doing this. I don't have the knack for it but I am constantly thinking about it. I constantly visit Flippa and see gems in the rough. One day, I will hopefully take the plunge.
Well, it's very good and very important to learn some new and emergent tactics so that we can make more and more money online in a proper manner so that the results we get should be good and should be for long lasting...
Kenny, I must say that your post are the most vivid, interesting and informative post I ever read in a blog. You really describe it precisely. I learn more from your post then reading all those GURU secret formulas.
Thanks again man.
Thanks for the very informative blog post. I'm just starting to get my feet wet with domains. I'll definitely employ some of the methods described in the post to get me started. Great work! Bookmarked! 😀
thanks for the post very informative. i just started purchasing a few domains with idea of selling them for profit. i think you are right about having content and ranking it before selling it. i had thought that and this post just triggered the light bulb in my head. thanks.