The rise of new domain name extensions is giving more people an opportunity to invest in a range of appealing domain names.
Although new global top level domain names like .Wine, .Hotels and .Careers will be snapped up by relevant businesses and individuals, there is also a chance for smart investors to buy up domain names in the hopes of selling them off at a higher rate in the future.
But is it worth actually buying domain names that you don’t really need for yourself?
There is already an abundance of prominent investors in the domain name market, many of whom have made fortunes from buying and selling domains. On the other hand, there are also people who have spent a lot of money getting domain names, only to end up stuck with them for years because of a lack of buyers.
As with other investments, like real estate or stocks, there is some risk attached to buying domain names you plan to sell for a profit. So if you are just starting to consider the possibility of investing, it is important to learn more about the industry and the strategies required to increase your chances of making money.
According to general manager of DOMAINfest, Aaron Kvitek, domain name investing – or “domaining” – can be compared to commercial real estate.
“Before a business can physically setup their place of business, they need to select the best location, the best commercial real estate address for their needs. The same process happens in the online world,” he explains in an interview with online marketing company Bruce Clay.
“Before a business can setup their place of business, they need to select a domain name, an online address if you will, that best suits their needs.”
Investors in this medium predict the value of domain names based on elements like the length of the web address, the keywords included in the domain, the extension and how likely it is to be wanted by an individual or business.
But there are also risks to be aware of. For starters, the value of domain names can vary as much as the value of houses and other properties in traditional real estate.
Another issue is that finding a buyer for a domain name you never wanted could be very challenging. There are all kinds of legal requirements that need to be met, and the wrong domain name in the wrong hands could lead to accusations of cybersquatting, among other things.
If you do find a domain name that you think is worth buying for resale, however, you can get guidance from a domain name broker to make sure the purchase is worth it and to help facilitate a valuable sale.
While most people invest in a domain name or names that they plan to actually use, buying domain names that could be popular in the future is another way to make money in this field. And as more domain names become available, the web of opportunity is growing all the time.