Registering domains as an investment means one thing: you should be prepared to hold onto your assets long term.
The definition of “long term” depends on the exact domain assets you are holding onto. Sometimes, new trends emerge and give you the opportunity to close the circle, and sell these domain names profiting from the investment soon.
Other times, you might have to clean house and eliminate domain assets that have become weeds, that might pester the rest of your domain portfolio.
Lastly, long term investments might exceed a decade or more in active holding.
Having just sold a $55 dollar acquisition for a couple of thousand, I realized that nine years of holding onto a domain isn’t that long. The fifty-five bucks I spent in 2009 was a long term investment; the seller had registered the domain 5 years prior, and by selling it to me they broke even, getting their money back.
On the other hand, my reasoning for spending $55 was the expert valuation of that domain’s worth, and its long term potential. Turning such small investments into sizable sales is something that I’ve been focused on for many years, and it fascinates me when people expect a $50 dollar investment to mature overnight.
It gets better.
Three years after my acquisition, I received a $200 offer on Sedo. My asking price was lower than today, but still in the thousands. A $125 offer in May was even worse to receive – this is the point in time when you question yourself: “should I have sold it for $200 six years ago?”
It’s the domain devil talking into your ear!
Evaluating a domain’s worth should happen every time after an offer arrives, and at the time of the $200 offer I realized that yes, it was worth holding onto the domain asset indefinitely.
This time around, the other party informed me that they registered the .CO of my matching .COM and that they were “not too worried.” The truth is, that those potential buyers that don’t worry, never actually tell you what they’ll do or have done; they simply vanish without letting the owner of their targeted purchase know.
In this case, the buyer did “worry” after all, and the sale closed quickly using the Uniregistry Market.
If you ever question your long holding of domain assets, remember that you are not the only one wanting a particular domain; it’s just a matter of time before someone pays a fair price for your ability to remain patient and strategically optimistic.
I know we domain investors love to talk about how patient we have to be, but you just turned $55 into ~$2,000 over 9 years — that’s a Compounded Annual Growth Rate (CAGR) of 49% per year. Do we domain investors stop to think just how truly patient stock and bond investors have to be to transform $55 into $2,000 when their typical CAGR is far lower than 49%? Stock and bond investors would LOVE to see a 49% CAGR but rarely do.
Yes but it’s hard to be patient. 🙂
Nice article, Theo and thanks for sharing the story.
New domainers please note that these ROI figures for individual sales like these don’t include the cost and overhead for the hundreds/thousands of domains that we haven’t sold.
A successful sale is one thing, a profitable portfolio is something else entirely.
Keith – Exactly why it’s important to “weed and feed” your domain portfolio, keep it lean and profitable.
GreenJobs – The hardest part is to convince yourself it’s worth waiting.
Logan – You’re the ROI master, no doubt about that. Glad to see that Uniregistry Market works well for you via the use of BIN pricing, or the brokers.
Yes, I quite understand but when I list my domains for sale at Sedo via Twitter @DomainsFeast some of them receive very high impressions or engagements then I know they must be worth holding on. So I just weed out all other crappy domains even though they are still two-word COM domains which I only normally use for my portfolio. But again I agree that if I do receive low offers then they must be worth long holding.