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Domain investing, domaining… Whatever you call it, the theory of domain investing isn’t complicated. It’s just like investing in anything else, be it property, stocks, or Pokemon trading cards. The basic law of domain investing is: buy low, sell high.

Of course, everyone would do it if it were as simple as that. But with a bit of research and understanding, domain investing can provide a lucrative revenue stream.

Domain names are fundamental to the digital ecosystem: they’re the real estate of the online world, and as people spend more time online domain names will only grow in importance. Think we’ve maxed out screen time already? It seems unlikely, as the numbers just keep going up. The average time spent online is almost seven hours every day at this point, up over 20 minutes a day from 2015. On top of that, one in six retail sales were made online in 2023. All this is what makes “selling high” possible. Domain names are a necessary part of online life, and so they intrinsically have value. 

This is reflected in the domain name sales industry, which grew 4.8% year-on-year from 2017 to 2022 and is forecasted to reach $8.6 billion in value soon.

So let’s answer the question “what is domain investing”. Read on for the complete guide to getting started in a new investing venture.

What is Domain Investing?

Ever wanted to grow a portfolio of assets, but realized you don’t have thousands of dollars to spare on property? Or maybe there’s no room in your Swiss vaults to collect priceless art or Russian diamonds? Domain investing could be the answer.

Domain investing, also called domaining by some, is the practice of buying domain names to hold and sell at a later date, for a profit. It’s popular because it can be cheap to get started: you can start registering domain names for under $10.

Domain investing offers a few strategies for making a profit.

Domain flipping means buying up underpriced domain names and selling them within a short timeframe. It can give you quick returns, which can be reinvested in your business.

A buy-and-hold strategy is for those with an eye on long-term investment. The right domains can be worth huge sums to the right buyers — tens or even hundreds of thousands of dollars. You just have to wait for the right time to sell.

Most domain investors maintain a balanced portfolio of domains for flipping and some they’re holding for the long term. So whether you’re looking for a side hustle, a full-time job, or a retirement fund, domain investing could be for you.

How much could you make? Well, the most expensive domains sold in 2023 went for several million dollars. Here they are:

• Help.com – $3 million
• Hurt.com – $1.5 million
• You.ai – $700,000
• Socrates.com – $600,000
• Giveaway.com – $400,000 

Meanwhile, our domain marketplace is packed with premium domains selling for four to six-figure sums while our Ultra Premium Marketplace offers a selection of the most valuable digital assets available on the internet. This includes single-English-word domains and category-defining options. 

Despite the potential for significant returns, domain investing is no get-rich-quick scheme. You’ll have to invest time as well as money to master domain investing, and even domain flipping for short-term returns requires an understanding of the market and the in-built value of domains as assets.

The most successful domain sellers have invested hours in tracking the market, acquiring potentially valuable assets, and honing their skills. So you want in on the action? Time to learn all about domain names.

The Benefits of Domain Investing

It’s easy to get into domaining and you can start registering domains for as little as $10. There are a few other benefits to domain investing, too:

1. High returns: with the right buyer, domains can sell for five to seven figures, providing a huge return on investment for your assets.

2. Low outgoings: Unlike real estate, there are very few maintenance costs with domain investing. All you need to do is renew the registration of the domains you own. Each domain will cost you around $10 to $60 each year.

3. Generate passive income: Your domains can generate passive income through advertising while you wait for them to sell.

Types of Domain Names

Before you start buying domain names, you need to understand these assets.

A domain name is the unique address that directs a user to a website. They are made up of two parts: a brandable ‘name’ section (like Atom), and a top-level domain (TLD) such as .com, .org, or .gov. Our domain name is Atom.com.

In a real sense, domain names are addresses, which makes them a direct counterpart to real estate in the physical world — one of the best traditional forms of investment. They’re integral to every business’s online identity, the place customers find their favorite brands online, and a strong domain name is just as important to a business as an attractive storefront in a good location.

Here are some more domain name examples:

• google.com
• whitehouse.gov
• harvard.edu
• linguee.fr
• tuborg.beer

There are over 350 million registered domain names. The ‘name’ portion — Google, Harvard, Tuborg — can be anything you can imagine, so long as it’s made up of alphanumeric characters (A-Z and 0-9) and the hyphen (-).

This is then paired with one of over 1500 TLDs, which fit into certain categories:

• Generic top-level domains (gTLDs): .com, .org, .edu, etc.
• Country code top-level domains (ccTLDs): .uk, .fr, .de, etc.
• New top-level domains (nTLDs): .beer, .shop, .pizza, etc.

Some TLDs, like .ai and .io, are ccTLDs that have become globally popular and are now treated like gTLDs.

When it comes to domain investing, you should focus on premium domain names. These pair a strong, brandable ‘name’ portion with a recognized and trusted TLD. As a general rule, a premium domain name has the following characteristics:

• 13 characters, or less
• No hyphens
• No numerals
• Made up of English-language words or recognizable Greek or Latin words. There are also opportunities in other, non-English speaking markets.
• An elite TLD, such as .com, .org, .io, .co, and a few others.

Premium domain names will be the most valuable domain names and form the backbone of your domain investing portfolio. To spot them, you need to know how domain name value is created.

Understanding Domain Value

To make money in any investment strategy, you need to sell your assets for more than you bought them for. Investing in stocks or cryptocurrency relies on the market to create the value of your assets, but with domain names, it’s possible to find valuable assets at bargain prices.

That means you don’t need to wait for the market to inflate the value: it’s built into the characteristics of your domain. All you need to do is find the right buyer to realize a domain’s true value.

As with all complex skills, once you’re a seasoned domain investor you’ll understand the rules well enough to break them, but when you’re getting started there are a few key factors to consider when determining domain value. Here’s what to look for:

Domain Length:

Short domain names are usually more valuable because they are easier to remember, type, and search for.

The value of shorter domains is demonstrated in the most popular websites: among the top 10,000 websites, the average domain length is eight letters while among the top 100 websites, it’s six. Single-word domains or two-word combinations are very popular.

Brandability:

Brandability can seem like a nebulous concept, but it has a huge influence on the value of your domain names: overall if your domain names are brandable then they will be worth large sums to new businesses.

Brandability is created by multiple characteristics, including spelling and pronunciation: BlueBarista.com will be more valuable than BlueBarysta.com, which will in turn be more valuable than BlueByrysta.com to a new coffee supplies brand.

The associations of the word or phrase in your domain also influence brandability. Brandable names will invoke an emotional response in customers as well as hint at the values of the business: for a skincare range, blissbirch.com implies luxury, self-care, and elegance while freshcheeks.com offers a more playful brand tone.

Colors can provide instant brandability as they have strong emotional connections. Red is bold and brave, blue is cool and trustworthy: consider the difference between the two domains: redforest.com and blueforest.com, and the value each could hold to different businesses.

Keywords:

Domain names including relevant keywords for specific industries can increase their value and make them more discoverable in search engines. For example, titancoffee.co is likely to be more valuable than titanbeans.co or titanroasts.co. 

TLD:

A strong TLD is hugely important to domain value. For example, partysupplies.com is far more valuable as both an asset and an online home than partysupplies.pizza. Remember, .com is the gold-standard domain, trusted by users and it’s also the most easily remembered.

Relevance to Trends:

Finding and following naming trends can help identify potentially valuable domains. Shopify, Spotify, and Wealthify have popularized the -ify suffix and -ly is growing in popularity, as seen in Cloverly and Officely.

A good domain investor stays ahead of trends. The market has peaked for -ify names, and new trends are coming around the corner. A good investor will pay attention and catch the next wave.

Website History:

Lastly, if you’re buying a dropped domain at auction, the current traffic and historical usage of the website at that domain can also influence the value. The website’s current traffic, backlinks, and positive search engine optimization (SEO) metrics can offer a new buyer a strong start.

However, most websites have a limited usage history, so this is rarely a factor outside of certain expired domains.

How to Get Started in Domain Investing

Ready to get started in domain investing? Follow these steps and you’ll be a pro.

1) Finding and Acquiring Domain Names

When you’re finding and acquiring domain names, do your due diligence to ensure every domain you purchase has the potential for a strong return on investment. You should understand current trends, analyze past domain sales to maintain an overview of the market, and watch specific industries such as tech for emerging trends.

Once you can spot a valuable domain name, it’s time to start building your portfolio. Here’s how you can begin acquiring domain names:

1. Unregistered domains: Unregistered domains are available for anyone for a registration fee, usually between $10 and $60. While most strong domains have been registered already (the last three-letter .com domain was registered over twenty years ago) watching emerging trends and new TLDs might provide unregistered domains for your portfolio.

2. Expired domains: Expired domains are previously registered domains that have not been renewed by the owner. This makes them available again and they’re usually auctioned by the domain registrar.

3. Domain auctions: Bargain domain names can be found on domain auction sites. Often, these names will be sold for short-term profit by domain flippers and could provide a long-term asset for your portfolio if you can wait for the right buyer.

4. Private acquisitions: Lastly, you can acquire high-value domains through private acquisitions. These sales will often require negotiations and the domains you purchase will be at a higher price, maybe even in the thousands of dollars. However, these can become long-term assets and present a huge potential for return.

Building a Portfolio and Budgeting

As with any investment strategy, you should balance the risk and potential returns. Investing everything in a few high-value domains runs the risk that none will sell, or you’ll run out of money before you can realize the potential of these domains.

Aim to create a balanced portfolio, with a wide spread of domain names. This can mean you own hundreds, or even thousands, of domain names, some of which you intend to sell in the short term through a domain flipping strategy and others that you’re holding until the right buyer comes along.

Of course, if domain investing is a side hustle, you can afford to have an unbalanced portfolio. You might focus on domain flipping, making a quick buck after your normal 9 to 5.

But if you aim to grow domain investing into your primary income stream, as many have, you’ll need a long-term strategy and careful budgeting.

2) Choosing a Domain Registrar

Domain investing is different from investing in another asset like property, cryptocurrency, or fine art for one big reason: when you own a domain, you lease it from domain registries who manage the domain name system. You have the exclusive right to use (and sell) that domain, but you have to register the domain and renew that registration every year to keep that right.

That’s where domain registrars come in.

Domain registrars are the intermediary between the general public (ie, you!) and registries. You need to register every domain you own at a domain registrar, and it’s important to choose the right one.

Popular domain registrars include:

• GoDaddy
• NameCheap
• Squarespace
• PorkBun

…and there are many more. A good domain name registrar will provide a streamlined service for managing your domains, keeping your websites online, and reminding you to renew your registration. Read more about choosing the best domain name registrar and a list of low-cost domain registrars.

3) Prepare Your Domains for Sale

Once you own your domains, it’s time to make them look attractive to potential buyers. To maximize return on investment, follow these steps, or use a service like Atom which offers domain sale preparation services for all sellers.

• Choose an Industry: You can maximize the value of your domain by showing buyers what it’s worth in their industry. Whether that’s healthcare, tech, or food and drink, understanding your buyer lets you promote the best aspects of your domains.

• Create a Logo: A strong logo will bring your domain name to life, showing potential buyers how a brand can be built around it.

• Write your Sales Copy: Your sales copy will emphasize the value of your domain, telling them about the industries it can be used in and the brands that can be founded on it. Don’t make your customers use their imagination — tell them!

• Build a Professional Sales Page: A professional sales page adds legitimacy to your domain name and provides potential buyers with a direct line to the purchase page. 

4) Monetizing and Selling Your Domains

After all that investment, it’s time to make money. Consider hosting ads on your domains to generate passive income until they sell.

There is a variety of places you can sell your domains, depending on whether you’re flipping domains or maximizing returns. Your target market can also determine the best platform for selling a domain.

Here are your options:

• Domain Marketplaces: On domain marketplaces, you can set a fixed price for your domain and wait for it to sell. The best domain marketplaces, like Atom, offer additional services such as logo design, landing pages, and dynamic pricing to help you get the best prices for your domains with minimum effort.

• Domain Auction Platforms: Domain auction platforms sell domains for bids, rather than fixed prices. They’re popular among domain flippers looking for a quick sale but can offer unpredictable returns for specific domains.

• Brokerage Services: Ultra-premium domains like single English-language words (think coffee.com or bestguitars.co) may require a specialized service. Domain brokerage services negotiate with potential buyers on your behalf, extracting the maximum value from elite domains, but they charge hefty fees.

• Private Sales: eBay probably isn’t the first place you think of selling domains, but it’s an option. General online classifieds provide a cheap way to list your domain for sale, but you’ll have less protection than when you use specialized domain sales services.

Wherever you choose to sell your domain, make sure there’s a third-party escrow service holding the buyer’s funds while the domain transfer process is in place. If you transfer ownership of the domain before receiving funds it can be incredibly difficult to get it back.

The Benefits of Selling Domains at Atom

Atom’s domain marketplace has helped thousands of investors sell a domain name, and it’s popular for a reason. We strive to provide the most up-to-date seller tools to help you get the best return on every domain.

• Advanced Seller Tools and Monitoring Services: A range of advanced seller tools help to increase your sell rate. These include automatic pricing based on interest and a selection of payment plans to encourage buyers. Atom also monitors associated TLDs and business registrations related to your domains.
• Premium and Ultra Premium Marketplaces: Our tightly curated marketplaces are built with top industry expertise and provide unbeatable marketing services for your strongest domains.
• Audience and Reach: Get maximum exposure for your domains with over three million monthly unique visitors to Atom’s marketplace. Our business naming contests and marketing and remarketing campaigns help promote your domains.
• AI-Powered Marketplace: Leverage AI to see more sales. We offer one-click AI-generated descriptions and auto-categorization of your entire portfolio to make selling easy and effective.
• Customer Support: Access 24/7 support and offers management from our domain brokerage experts to get the best price for your most valuable domains. Our platform has the best of both worlds of straightforward domain marketplace selling with the elite services of domain brokerage.
• Easy Domain Transfer: Our Transfer Center facilitates an easy exchange of the domain post-sale.
• Low Selling Fees: No sale? No cost. All Atom selling fees are commission-based.

The Risks and Challenges of Domain Investing

Domain investing is one of the few places where you can see high rewards without putting it all on the line, but investment strategy carries some risk. Here’s what to look out for.

• Overvaluing domains: If you consistently overvalue domains, and overpay as a result, you could end up losing money. Carefully evaluate every domain based on its objective strength and connection to trends and keywords. If your domains aren’t selling for what you expect, reconsider your strategy.

• Market fluctuations: While the domain name market goes from strength to strength, there are still considerable fluctuations within the market. Some gamble on new TLDs like .tech or .ai. These could prove to be highly valuable in the future, or maybe they’ll be a flash-in-the-pan and won’t earn customers’ trust. A balanced portfolio of proven TLDs and new options can mitigate this risk.

• Legal considerations: You might think you’ve found a bargain when you buy the domain name dizney.com at auction. But you have to consider the legal implications of your assets. If you infringe on trademark laws you could end up in costly lawsuits or even losing your assets altogether. 

• Long-term costs: A $10 annual registration fee for a domain name won’t break the bank, but one thousand $10 registration fees might! A selling strategy that includes some short-term domain flipping can secure an income to cover your costs.

Holding a diverse portfolio is one of the best ways to mitigate the domain investing risks. Let’s say you have $1000 to get started. That’s:

• 1x$1000 name
• 2x$500 name
• 10x$100 name

A diverse approach would be to acquire five $100 names and one $500 name. You can then flip some of those $100 names to kickstart an income stream that covers your longer-term costs.

As a rule of thumb, an investor with a strong portfolio will sell around 2% of that portfolio every year. Good domain investors plan long-term, and they don’t pack out their portfolios with junk names. If you’re getting into the game now, it might be a while before you see results, but there is the potential for steady sales over time if you learn the ropes properly. 

Wrapping Up

Successful domain investors don’t rely on luck: they know the value of a good domain and build a diverse portfolio that balances risk and reward.

Unregistered domain names are exceptionally easy to acquire — you can head to any domain name registrar today and own a domain name within minutes, often for an outlay of under $10. But don’t rush into domain name investing. Before you buy your first domain name, take the time to understand the market, learn what makes a domain name valuable, and spot the emerging naming trends and challenger TLDs, or you might end up wasting $10 several times over.

For some inspiration on brandable domain names, head over to Atom’s Premium Marketplace to see what’s on offer. When you’re ready, you can join our thriving community of sellers.

Additional Resources for Domain Investors:

• Want to keep your finger on the pulse of domain name trends? Use a service like Whois Data Centre to track recently registered domains.

• Want to know who owns a particular domain name? Use the ICANN Lookup tool here.

Sell your domain names with Atom today. Click here to get started.