In this episode of the Website Investing podcast, Richard speaks with top domain investor Josh Reason about flipping domains. Josh has a great daily domain investing podcast and is building the wholesale marketplace DNWE.
In this part 1, free subscribers get the first ~30 minutes of the conversation; paying subscribers also get part 2 in their RSS feed. As is typical, part 2 elicits more insights as we get deeper into the conversation.
Part 1 Show Notes
The World of SEO Domains
Finding SEO Domains with Value
Josh recently learned more about the SEO part of domain buying (hat tip to Sean Markey who has his own domain newsletter). He now knows how to spot a good deal from a bad one, thanks to some of his podcast guests who helped him learn. Josh thinks that there are only a few domain investors who actually look at the SEO value behind domain names.
In the world of website investing, aged domains are valuable as they enable you to rank content much quicker than on brand new ones.
In the world of domain investing, an aged domain can be more valuable as it was previously bought, i.e. the best names typically get registered first. But if a premium one-word .com drops and the creation date gets reset, it still has the same value as it will make a good brand.
Cannabis Industry Domains
Despite the cannabis industry being relatively new and competitive, and despite it being hard to find SEO names that have value in this industry, a recent deal took place wherein an aged SEO domain related to this industry was sold for ~$4K.
Using Appraisal Tools
Josh prefers using GoDaddy to Estibot, but would only use it as an indicator tool that he can use to sort through large lists of domain names, so that he can figure out which ones have more brand value than others. However, when it comes to dollar figures, he does not use these tools at all.
You could see a lot of SEO sales on GoDaddy and sites that track top sales such as NameBio because when these deals happen, they have a higher dollar amount. In fact, you won’t see many SEO sales when you move down the list. Moreover, there aren’t that many SEO sales happening each day. It is still a small portion of the market.
This could confuse domain investors, especially beginners, as they could think that domain names similar to the ones subject of SEO sales are worth buying.
Buying Domain Names
Josh recommends to beginners that they don’t buy names that they could hand register, because this only means that no one else wanted that name in the first place. Instead, he suggests that one buys a name that is already owned / dropping.
Domains previously used for adult content and spam would most likely have a lower value. These days, leasing domain names (to later own) is getting popular. However, when a lessee uses the domain name for something like adult content, then subsequently defaults and returns the domain, the domain could take a hit in value. To be certain, it’s best to do some research and due diligence on the domain name to check if it was ever used for such purposes, especially if you are paying a lot of money for it.
Other Useful Tools
Josh recently tried a few names over at Squadhelp, which is a good marketplace to give you some additional exposure to buyers. He also uses dan.com as well as Efty to build his own commission-free landing pages. Josh also highly recommends listing your domains on Afternic as the most important single place, which has a big network of registrars.
In his first year of investing in websites, Josh wasted a lot of money on domain names since he did not know much at the time. 6 years in, Josh spends a lot of time investing, and is still learning every day. Josh admits it is not easy, especially for newcomers.
Josh used to have a branding consultancy business mostly centered on domain-related aspects, with various companies as clients. He would usually be consulted on picking out a domain name, as a lot of people would usually choose a brand before choosing a domain name. Josh thinks that this is incorrect, because even when you already have a brand in mind, it’s very possible that you can’t get the domain name that fits best, leading you to build your brand on a sub-par domain name. For him, it’s best to start with a domain name first. Josh suggests using instantdomainsearch.com for quick checks as to whether a domain name has already been taken.
Top tier, one-word domain names usually cost hundreds of thousands of dollars, to even 7 figures, when they are on a .com. This wouldn’t be a viable option for small businesses and startups. Josh suggests going for .co, .io, .ai., and .net as alternatives to .com. They also offer different solutions for companies and industries, with .io being focused more on the tech industry, and .ai for artificial intelligence. .net is usually for traditional companies, and .co is a very broad one.
Early Years of Flipping Domains
After taking a year-long break from his full-time job, he decided to sell the domains he had amassed in order to fill the income he lost from the break. To do this, he would sell as many domains a day he could to reach a goal of $250 a day. He would buy names anywhere between $20 to $200, and would typically turn domains quickly if he doesn’t see a large upside to them. If you don’t have to sell the domain, then it’s best to wait for the right buyer. It’s also best that when you start out in the domain industry, you should have other sources of income so you aren’t forced to sell names quickly, because it takes time to sell names at their maximum value---usually years.
Josh’s Portfolio Now
Josh buys various domains from many different sites at many different prices. Some were acquired for as low as $20, and others for tens of thousands of dollars. These days, Josh spends a lot of his time working on DNWE.com (Domain Name Wholesale Exchange), which is seeing lots of growth over the past months. It isn’t easy for investors to liquidate their portfolio when they need it, as usually they would resort to auctions, which can be difficult and unattractive as an option. With DNWE, you can offer a wholesale price, as well as continue to list at a retail price tag elsewhere.
Episode 13 Part 2
In part 2 of this conversation we discuss:
Flipping vs investing in domains
Wholesale vs retail spreads
Portfolio sell-through rates
Inventory (portfolio) model vs premium model
The most profitable domain strategy for this digital real estate
Part 2 is for paying subscribers, you can access by hitting the button below.
Enjoyed this episode or have any questions? You can leave a comment at the bottom of the web version of this post.
Richard Patey (Host) & Avi Silverberg (Producer)