{"id":2045,"date":"2011-11-30T13:38:40","date_gmt":"2011-11-30T18:38:40","guid":{"rendered":"http:\/\/acro.net\/blog\/?p=2045"},"modified":"2011-11-30T13:40:58","modified_gmt":"2011-11-30T18:40:58","slug":"the-art-of-domain-investing-part-one","status":"publish","type":"post","link":"https:\/\/acro.net\/blog\/the-art-of-domain-investing-part-one\/","title":{"rendered":"The Art of Domain Investing &#8211; Part One"},"content":{"rendered":"<p>After reading <a href=\"http:\/\/www.ricklatona.com\/2011\/11\/30\/why-im-raising-my-prices-on-all-my-domains\/\" target=\"_blank\">Rick Latona&#8217;s announcement<\/a> today that he realized he&#8217;s been selling his domains at too low prices, I decided to point out a few flaws in the evaluation process.<\/p>\n<p>At the same time, I will be offering a few guidelines regarding how to proceed with domain investing.<\/p>\n<p>Rick&#8217;s method involved a simplified model, whereupon one owns a portfolio of 1,000 domain names.<\/p>\n<p>This\u00a0 model assumes the following:<\/p>\n<blockquote>\n<ul>\n<li>All domains were acquired at $100 a pop. Why no smaller acquisitions and manual registrations?<\/li>\n<li>All domains must be sold tenfold, at $1,000. In reality, a 10x ROI is far from great. How about 50x, 100x or more?<\/li>\n<li>Sales to portfolio quotient\u00a0 must be 1% &#8211; in other words, in a given year you sell one domain out of 100 that you own. Surely, that&#8217;s way too low.<\/li>\n<\/ul>\n<\/blockquote>\n<p>Why are those points simplistic and non-representative of what one should strive to achieve with domain sales?<\/p>\n<p>First off, there are domains out there that can be acquired for far less than $100. You can find them at domain forums, dropping auctions or you can attempt to buy them from their active owners.<\/p>\n<p>Not everyone was lucky to have owned quality .com\/.net\/.org domains since day one. I recall going through thousands of such domains in 2001-2003 and hand registering them for $7 a pop. My margin is therefore much higher; that&#8217;s the same case for even moderately priced domains in the aftermarket.<\/p>\n<p>Regarding the return on investment: surely 10x for a $100 domain doesn&#8217;t seem too exciting. When I get offers, I tend to aim for a ROI in the 50x range or more. A domain I acquire for $500 will go for $xx,xxx.<\/p>\n<p>Being a long term investor and not a domain flipper, I decide when to sell &#8211; not when I get an email with a random number that does not much my pragmatic expectation for the domain.<\/p>\n<p>When you sell one out of 100 domains in your domain portfolio, that rate is too low. How about 5% or 10%, is it achievable?<\/p>\n<p>From my experience, it is, given the number of venues available to domainers these days. There are auction houses, brokers, forums and newsletters. Oh, and don&#8217;t forget your own piece of work, the cold-calling and targeted emailing.<\/p>\n<p>Regarding renewal fees; like death and taxes, one cannot avoid them but one can surely write off the cost as a business expense. Form a corporation specializing in domain names and you will be able to write off every penny of renewal costs, year after year &#8211; until you sell the domains.<\/p>\n<p>The cost of acquiring a domain &#8211; including its registration fee &#8211; will be subtracted from the sales price and taxed as capital gains when you sell it &#8211; as long as you hold it for a year plus a day. You can&#8217;t do it earlier, so make sure you have enough cashflow to renew your domains every year, otherwise you need to reassess your portfolio.<\/p>\n<p>Lastly, when it comes to selling one needs to aim high. If you ask for $1,000 you will most likely get this much. If you ask for $10,000 you can probably get close to that asking price. It&#8217;s a scalable practice that I&#8217;ve used, time and again, to turn $20 dollar acquisitions into four and five figure sales.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After reading Rick Latona&#8217;s announcement today that he realized he&#8217;s been selling his domains at too low prices, I decided to point out a few flaws in the evaluation process. At the same time, I will be offering a few guidelines regarding how to proceed with domain investing. Rick&#8217;s method involved a simplified model, whereupon [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,3],"tags":[],"class_list":["post-2045","post","type-post","status-publish","format-standard","hentry","category-business","category-domains","entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Art of Domain Investing - Part One - Acro.net - A Domain Investing Blog by Theo Develegas<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/acro.net\/blog\/the-art-of-domain-investing-part-one\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Art of Domain Investing - Part One - Acro.net - A Domain Investing Blog by Theo Develegas\" \/>\n<meta property=\"og:description\" content=\"After reading Rick Latona&#8217;s announcement today that he realized he&#8217;s been selling his domains at too low prices, I decided to point out a few flaws in the evaluation process. 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