Achieving Success in the Domain Name Business with a $5000 Budget

I’ve hear it day in and day out… Domainers asking about how they can make it in the domain business on a limited budget. Nowadays, most people don’t want to just make it either — they want to be successful. And despite what alot of sources (and disgruntled domainers) will tell you, you can do quite well for yourself in this business if you have patience and put your money in the “right stock”.

If we look at past opportunities… LLL.coms/NNN.coms, LLL.nets/NNN.nets, LLL.orgs/ … (I think you see where this is going) … LLLL.coms/NNNN.coms, it seems that 1 trend emerges — and that is that short names are very much in demand and rapidly increasing in value…

While this trend has no doubt continued on, as can be seen in LLLL.coms and NNNN.coms, one has to ask themselves where it will stop or perhaps more accurately, how long will it take to catch on in other extensions?

Given a limited amount of names, ever increasing Internet penetration and ever increasing demand for short domain names, it’s not a matter of “if”, but rather, “when” extensions other than dotcom will see premium LLLL.ext wiped out.

But… Does increasing demand for LLLL.nets necessarily make premium combinations of them a better investment than very poor quality (or “anti-premium”) LLLL.coms? That’s something currently being debated at Namepros and something which we won’t have a definitive answer to for some time…

There seems to be great divide here, with some of the largest investors selling a portion of their LLLL.coms and branching off into LLLL.nets, while other investors, such as myself, are still investigating the premium market while continuing to purchase LLLL.coms…

For someone on a limited budget, I would recommend sticking to LLLL.coms — they’ve been accepted by the market and have a fairly stable price floor which seems to be going up week after week. I’d currently recommend hunting for bargains in the triple premium and repeat letter categories. Names in such categories can be found (or negotiated) for less than $30. Triple premium LLLL.coms present a considerable opportunity for future appreciation while at the same time still providing some prospects for enduser interest. Repeat letter LLLL.coms are very popular among domainers and are seeing some of the fastest appreciation across the board. Many repeat letter LLLL.coms are also desirable to endusers…

These names already go for $40+ on average, so you really have nothing to lose and everything to gain by buying whatever you can find for < $30. The most important thing in the end for financial freedom is compounding interest. Many informed investors are predicting triple premium and repeat letter LLLL.coms will approach $100 within a year — something which would represent a 300% ROI.

For what it’s worth… If you could make a 300% ROI investing in LLLL.coms year after year, here’s how you’d end up with a $5000 initial budget:

Year 1 – $15,000 ($10,000 profit)

Year 2 – $45,000 ($30,000 additional profit)

Year 3 – $135,000 ($90,000 additional profit)

Year 4 – $405,000 ($270,000 additional profit)

Year 5 – $1,215,000 ($810,000 additional profit)

If that sounds farfetched, it probably is 😉 But there is a healthy dose of reality here… As can be seen, it’s not about starting with alot of money, it’s about getting consistent returns year after year.

Even if you managed to get a 100% year over year ROI (something I think is very reasonable in this sector), you’d be looking at $160,000 from a $5000 investment all of 5 years down the road…

 Moral of the story: Don’t take huge risks you can’t afford to take. Put your money in something that provides as much safety as possible for the return it may present you with. You can’t afford to be overly cautious when dealing with such a small sum of money. Conversely however, it’s more than enough money that you don’t need to take unnecessary risks investing in alternative extensions or unproven markets.


~ by Reece on December 14, 2007.

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