A great domain name has to ripen. Like planting a fruit tree. In TIME it may bear fruit. I don’t think about selling. Never do. For some Domainers business is a sprint and always running. For others it’s a marathon. I am on the marathon side. Turtle always wins.
– Rick Schwartz, The Domain King
My final entry for this three part series is an exploration of the Buy and Hold style of domaining. Traditionally it’s a long term, passive style of domain investment wherein domains are held for years despite regular, albeit sub-par, offers. Trends and fluctuations in the domain markets don’t affect the Buy and Hold domainer who possesses a deep sense of conviction and unwavering faith in his/her asset’s value and their strong potential for very lucrative paydays.
Let’s break down the Buy and Hold strategy and look at the type of inventory held plus the built in pros and cons of this business model.
- Common dictionary words
- Most 1, 2, 3 and pronounceable, 4 letter domains
- Two and three word domains with strong synergy, industry demand and “mind share”
- Time management – Fewer domains to manage (name servers, renewals, landing pages etc)
- Liquidity – Can be sold for 80% to 100% (or more) of initial investment, even on short notice
- Mega paydays – The average end user domain sale is under $5k and more often in the $2k to $3k range. However, buy and hold domain sales are usually in the $10k to million dollar range.
- Capital investment – These domains don’t come cheap and can cost thousands, or tens of thousands, to acquire. Since they take years to sell a domainer needs to have many of them if he/she has any hope of having at least one sale per year.
- The waiting game – Buy and hold means a lot of holding. Years doing nothing. You need to have a supreme level of patience and a long term view.
- Opportunity cost – During waiting periods your cash is tied up. It cannot be used for personal purchases or other investments such as more domains, stocks or crypto.
- No way Jose – Buy and hold means saying no to lots of offers, even some pretty good ones that are a multiple of your initial investment
- Negotiation – These kinds of sales are often not buy it now transactions. They can take months to negotiate. They are time consuming and can be draining if you’re not up to the task. Sometimes deals get very close and then fall through. Sometimes part of your profits can get eaten up by brokers.
He’s your Mann
One of the most prolific and high profile buy and hold domainers is Mike Mann. Both praised and criticized for his brash, public persona and unreported domaining expenses, Mike nonetheless provides a plethora of self-reported, buy and hold sales results. His success lies in an extraordinarily large portfolio (300,000+) and a willingness to wait 5 or 10 years to get his price.
Here are some sample sales from 2019:
- StarsAndStripes.org $15,000. Purchased 2/21/05 $350.
- HometownInn.com $15,000. Purchased 4/2/11 $70.
- DCDate.com $9,888. Purchased 4/2/11 $70.
- Comporta.com $19,920. Purchased 6/22/12 $140.
- TruffleDog.com $9,888. Purchased 6/30/16 $250.
- Privaci.com $49,888. Purch 11/19/08 $70.
- TinyTree.com $29,888. Purch 8/15/12 $158.
- AmVis.com $20,000. Purchased 11/30/10 $70.
- LinkChecker.com $40,000. Purchased 8/31/07 $11,000.
- SoftwareBuilders.com $20,000. Purchased 2/21/05 $350.
And some of Mann’s biggest sales from 2018:
- CryptoWorld.com $195,000, acquired for $15 in 2011
- BetterFuture.com $65,000, acquired for $350 in 2005
- VideoDesgin.com $50,000, acquired for $2,700 in 2007
- RentalsDirect.com $25,000, acquired for $7,500 in 2007
The King of Buy and Hold
No discussion of Buy and Hold would be complete without some mention of the sales generated by Rick Schwartz over the years.
Here’s a few to get your juices flowing:
- 989.com sold for $818k, registered for $100 in 1997
- 899.com sold for $801k, registered for $100 in 1997
- Men.com sold for $1.32 mill, acquired for $15k in 1997
- eBet.com sold for $1.35 mill, registered for $100 in 1997
- 9595.com sold for $180k, registered for $100 in 1998
- Property.com/Properties.com sold for $4mill + equity, acquired for $750k in 2005
- Candy.com $3 mill + Royalties + 10% Ownership, acquired for about $100k in 2005
When executed successfully the buy and hold strategy can result in a cascade of life changing income and profits. However, the buy and hold strategy isn’t for everyone. It requires an immense level of patience and the unique ability to turn down lucrative offers even after years of waiting.
In this three part series I’ve divided the approaches to domaining into three styles. There’s the short term, domain flipper, the near to mid-term, trend rider and the long term Buy and Hold, domaining stalwart.
If you find that your domaining style doesn’t fit completely in any one of these types it’s because life (and business) never fits neatly into artificial categories. Human behavior is complex and it’s perfectly normal to find ourselves borrowing bits of all three strategies at various times in our domaining career.
However, the one common feature of all three types of “investing” is they are speculative. While liquid names offer the option to cash out at near break-even (or better) – we all know that they are many hundreds of high quality domains which have been sitting in the market for decades without an end user purchase.
So none of these three approaches is a sure thing.
Still, with each domain acquisition we believe that lady fortune is about to bestow her blessings on us and that long awaited end user transaction is going to occur during our stint as the temporary owner of a domain that has previously changed hands many, many times.
In the end, the domaining style(s) you choose will most likely depend on your individual skills and experience, your personal tendencies and available capital. So choose your style wisely.
Till next time……… May all your sales be to end users!
Brandables in the GoDaddy Closeouts