How I Turned $800 into $192,000 and counting Flipping Domains
Thursday, September 4th, 2008 |So I mentioned in my last post I’d give my visitors reason to read my content. Was I able to get your attention? I’m guessing so. Well now that you’ve made it this far I don’t want to disappoint so let me dive right in with all the details.
A Little Background
In early 2000 there was a buzz surrounding the growing popularity of domain names as “online real estate” and I wanted to know more. I had just graduated from college and was already looking for an exit to the corporate world. I thought domains might be the answer. I got my start by heading over to the early Afternic chat boards. A few days later I dove in head first and registered some of the worst domains you could imagine racking up over $750 in registration fees in the process. After taking inventory I realized I didn’t have a clue as to what I was doing and decided to join some of the new domain forums to learn more. Forums such as DNForum, DomainState and later NamePros are where I started to learn how the domain game really worked which lead to everything I do today. I was only able to sell a few of my original names and the rest went to the expiration pile. I took a pretty big hit for a poor kid right out of college and was very cautious with my domains moving forward. While my portfolio held between 100-200 in 2006 when I got back into the game most of my domains at that time were earmarked for development. One thing that stayed constant through those six years was that I never stopped reading and learning.
The Accidental Challenge
I’m really into finding my angles through data research. I primarily do keyword research to optimize my sites for search engines and find under served affiliate niches. In early 2006 I got my hands on a monthly dump of the overture keyword search tool. I found this data fascinating and ran it through several tools I use including Luc Lezon’s Domain Research Tool. I ran a list of Overture searches that ended in .com (and other extensions) through the tool and noticed many of the domains being searched didn’t resolve to anything. Many were typos of big sites which was to be expected. What I didn’t expect to see was the large number of generic domains that weren’t being monetized in any way. It looked like a nice opportunity but I was really busy working on developing my sites so I put it aside in my “maybe later” bin.
It was July of 2006, at that time I had a site that catered to the teen crowd and I noticed a lot of my incoming searches included the word “bored”. It got me thinking about a possible offshoot so I went looking for a “bored” domain. After an exhaustive search and several offers I landed Bored.org for $800 (Not near the original asking price but I’d just left an office job of 5 years as a buyer/negotiator which helped). I didn’t have immediate plans for the name so I parked it at my Sedo account. At one time it was a site so I expected a little traffic but I got a lot more than that. Not only was there traffic from incoming links but direct type-ins as well to the tune of about $12/day in parking revenue. I knew the domain was nice but I’d stumbled onto a real gem. This got me thinking….
Around the same time I had read a handful of posts on the domain forums where people were claiming domaining for big bucks wasn’t possible any more and the days of a new guy making a living in the industry were gone. I knew all this “missed the boat” and “woe is me” whining was Bull Shit. So much so that I decided to pull my domain opportunity out of the “maybe later” bin and make it a personal challenge to prove the naysayers wrong. I decided I would start by flipping Bored.org to give myself a bit more purchasing power. I posted the domain at DNForum with a few weeks stats and had the name sold for $16,000 the next day. It was time to get started.
(Note: I’m only going to disclose the name of my first and last sale as those were the only names publicly reported)
Turning Potential Into Profits
With $15,200 of extra padding to my domain venture bankroll I fired up DRT and began to pinpoint all the potential buying opportunities. My basic assumption here was that if the domain did not resolve there was a chance the owner did not understand the full value of the domain or the traffic it was getting. My goal was to find generic .com/.net/.org domains that were on my overture list and negotiate purchases at a price I felt that I could immediately sell for at least 3 times more. Less than two months later I had spent my full $16,000 domain bankroll on 10 solid domains and had some good traffic and parking revenue coming in. To get a premium return I sat on the domains for about a month to get a decent history of parking earnings. It was right at a month when I stumbled across an opportunity I could not hold back on. I found a two letter .com (WT.com) listed on GoDaddy’s TDNAM marketplace for $100,000. The 2 letter .com sales at that time had been rising significantly and all of the good letter combos were well above the $100,000 level. I was confident I could get the name for less so I decided to put my newly acquired set of domains up on DNForum with the goal of flipping my $16,000 investment into at least $90,000. Three days and a bit of a bidding war later I had a deal sealed for the 5 of th 10 new names at $90,000. I had no time to celebrate though. There was another deal to make. I got in touch with the owners of WT.com and had an agreement to purchase the name for $75,000 before the wire from my earlier sale had even cleared my account.
All of this happened in under 6 months and I needed to take a step back before deciding what to do with my new gem. After having my wife/accountant review everything (and paying taxes on my profits) it looked like holding the name for at least a year to get the long term capital gains discount was going to be the play unless someone made me a big time offer. That is exactly what I did and just a few months ago I put WT.com up for sale. Finding a buyer in the six figure range proved to be a bit more of a challenge but the buyer did eventually come and a sale was made at $192,000.
I’ve added a time line image below for the visual folks.
You might note that I have “and counting” in my title. That and counting is the result of the other 5 names I didn’t tell you about and the $15,000 difference on the sell prior to the WT.com purchase. The other names were sold as well and several generations of flips later I’m now sitting on a portfolio of over 5,000 domains (note: many are regs and lower priced local verticals, my new love).
Can This Still Be Done Today?
Yes. That said, it would be much toughter to do the EXACT same thing I did right now. I believe the Overture search data I had was from the last month the tool was online. If you really wanted to try though Quantcast has their top million site rankings here (10mb zip). I’m sure that list has some nuggets in it although I’ve yet to take it out of my “maybe later” bin. Regardless, I will say that the best time to buy is when money is tight so if you have funds right now and you want to play the game, make a move. The opportunities are all over the place.
Moving Forward
So that’s it. The BEGINNING of my story. Almost seems too simple right? Believe it or not most success stories are. Just put in the time and effort and you’ll be rewarded.
Aside from HOW I pulled this off I think the value in this post is that the money is in seizing the opportunities you find (even the accidental ones) and executing them with a unique angle. When people say something can’t be done take that as a challenge and find a way to prove them wrong by taking a different path.
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