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Monday, August 31, 2009

Domains have been registered for $35 and then sold for millions! Flipping this real estate pays!

monopoly-e-commerceImage by danielbroche via Flickr

Domain Names! You've heard the term "Domains" before. A domain is the address you are at when viewing any web page. Just look up right now at your address box and you will see that you are at Retirefund.Blogspot.com The term "Blogspot" is owned by Google and is the main domain. The term Retirefund is owned by me, and in this case, it is the "sub domain". Once I move this blog to my own domain (coming soon) it will be located at Retirefund.com

Now, as you may have already guessed, not all domain names are created equal.

Pure, generic domains with "type in" value, especially in the .com and .net extensions have the most value when buying or registering a domain name. (words that people will naturally type into their address box when searching for specific information such as: Football, Baseball, hiking, Fund, Funds, Hobby, Toys, Computers, Games, jewelry, perfume, LasVegas, NewYork etc.) Some brands are valued as much or more such as Cocacola, Honda, Heinz, Toyota, Ford, ProctorandGamble, Gap, MacDonald's etc and are protected by their owners. You wouldn't want to tread on any of those or similar names for fear of a law suit. Even trying to register a longer name which incorporates these brands will get you into hot water.

Other brands that were completely unheard of only 10 or 20 years ago were "branded" only after the owners registered the domain name and launched their business. Many have become household names in that time, Google being the prime example along with many others like Amazon, Ebay, Facebook, Twitter, Technorati, AOL, Yahoo, etc. (you get the picture).

Since the beginning of the world wide web (circa 1994) the most valuable domain extension has been, by far, the .com extension, followed by .net .org .us and other country code names like .uk (Britain) .de (Germany) .Ca (Canada) etc. Some .com extension domains have literally fetched a fortune for their astute owners who had the forethought to register them from 1994-1998. Nine years ago, when the domain Business.com sold for $7 Million, it stunned the online world (and the investment world) It also stunned the "original owner" who registered it for $35 and sold it for over $200,000 believing he had made a killing, until the buyer flipped it for the $7 Mil. The domain name aftermarket had started well before that sale, however that was the catalyst that lit a fuse under some serious investors who put together multi million dollar portfolios of names after that, and have been raking in profits.

Most domain names sold in the aftermarket (domains already registered) will usually fetch prices in the hundreds or thousands of dollars. However, here are some "financial" domain names, and the prices they fetched just last year in the Domain Aftermarket
(as supplied by the Domain Name Journal DNJournal.com)

Fund.com $9,999,950

RealEstate.com $5,000,000

RealEstate.net $300,000

Loans.com $3,000,000

Creditcheck.com $3,000,000

Creditcards.com $2,750,000

Coupons.com $2,200,000

Savings.com $1,900,000

Mortgage.com $1,800,000

TheMortgage.com $500,000

Mortage.com (a mispelled domain) $242,400

Seniors.com $1,800,000

Deposit.com $1,500,000

Wallstreet.com $1,030,000

Investment.com $900,000

Forsalebyowner.com $835,000

Stability.com $800,000

Capital.com $750,000

Taxes.com $700,000

Dollars.com $650,000

Rebate.com $500,000

Rebates.com $500,000

Here are some sold "this year"!

Toys.com $5,100,000

Candy.com $3,000,000

Fly.com $1,760,000

Auction.com $1,700,000

Webcam.com $1,020,000

Server.com $770,000

Brazil.com $500,000

Talk.com $500,000

Top.com $464,750

Body.com $400,000

(There are many more, but you get the picture)

Then there are the all time top sellers to date.

Sex.com Unknown - estimated between $12,000,000 and $15,000,000

Porn.com $12,000,000

Fund.com $9,999,950

As you can see, it didn't take long for some astute investors to make a killing on a very small investment in their domain portfolios. Several of these portfolios are now worth over one hundred million dollars. One investor has a portfolio of $300 Million!

Now here is the most interesting part of the story (from an investor point of view). Some of the richest domainers did not enter the game until everyone else figured all good names were already registered. During the downturn of 2000, these smart investors began gathering large portfolios as desperate earlier investors began dumping theirs. (Sound like the stock market of today).

Some of the smartest domainers of today buy up names in the $100-$500 range and make from 100% to 1500% on them. One of those successful domain investors even developed an extensive course to teach others how to enter the game and gain an advantage. He calls himself "The Rich Neighbor"! You will find his link at the top right of this page.

For the sake of disclosure, I have been trading in Domain names for 11 years.

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