Domain Investing – Expiring minds want to know

Every so often, I get into a debate with friends about the idea of unused domains as an investment. The underlying question is this, if you buy a domain with a one year registration, but ultimately never use it, should you simply let that domain expire? Now there are two sides to the coin on this issue. The first is obviously, why pay another 10 bucks for something you aren’t using? A hard point to argue with. On the other hand though, there is the idea that investing in a domain is like investing in virtual real estate and like real estate, the property matures in value over time. In the case of a domain name, it doesn’t have to grow much to be worth more than the 10 dollars you originally paid. So, which choice is the best one for your business?

Obviously, your ability to pay for the domain registration plays a huge part in that decision. If however, you have the funds to continue registering, from my experience, you are much better off to keep the domain then to let it expire. Owning a domain is like the new millennium’s gold rush claim. You stake your land before others do, and you attempt to mine it into a fortune. Sometimes it pans out and you find gold in dem’ der’ hills. Other times, your land turns out to be a lemon, and is completely barren of the yellow (gotta love Deadwood). Even when you think the claim is dead, you never want to simply walk away allowing someone else to find fortune that should have been yours.

 Since it only takes a matter of seconds to claim your piece of Internet real estate, many people (including myself) make purchases as soon as inspiration strikes, to ensure the name is reserved. Sometimes these ideas pan out and develop into productive websites or active community portals. Other times though, for whatever reason, the domain name remains dormant and goes completely unused. At the end of the year you have a choice to make on whether to keep it, or let it go.

 With millions of people registering new domains all the time, the odds of someone else eventually wanting a domain name you have is pretty high. Increasing those odds are the fact that since you registered the name, it will now be appearing on every domain name expiry list all over the web. This increases its exposure making it much more likely to go to someone else rather then back to the registration heap. Securing expiring domains is big business, and by letting your domain go for nothing, you make it just that much better of a deal to a prospective buyer. If you aren’t sure what your domain is worth, you can try sites like dnScoop to get an estimate of just how valuable your url might be.

In the year you held your domain, you might not realize it, but a couple of big things happened that makes your domain much more valuable then when you picked it up. The first is you’ve held the name long enough to pass the search engine sandbox. The sandbox is the idea that search companies like Google require a domain to be registered for a certain amount of time before they can be sure that it is legitimate. So, this means that any new content added to your domain will enter into search engines with much more speed and credibility then it would with a freshly registered domain. This is very valuable to web developers, especially those starting out with a new site. In addition, your URL has been off the market for 365 days. This fact alone means at least one person was interested in the domain, which increases the value to squatters and resellers just itching to make a quick buck off your mistake.

Here is a perfect example of the value of an expiring domain. Almost 2 years ago now, a friend of mine really wanted to put up a website to encourage bulldog lovers to share photos and videos of their dogs. He registered the domain MyBully.com (no link because he no longer owns it, as you will find out soon) and had the best intentions of putting up a site. He implemented a basic welcome page, but work and family got in the way, and he never did have the opportunity to build the site. When his yearly renewal came up, he declined it and let the domain fall back into the heap thinking no one else would want the domain. Fast forward a year, he now has more free time and the idea of setting up the bulldog focused site comes back to the forefront. Unfortunately,  the domain is no longer available and has been snatched up by a domain reseller who now wants almost $900 dollars for the domain. Needless to say, he really regretted letting the domain go, and is now on the lookout for a different name.

If you are sure you don’t want to keep the domain, there are options available to you that will help you get the most mileage out of it. Domain auction sites such as Sedo, Afternic, Domain Aftermarket, and Enom can help you get the most money for your name. If you want to keep the name, but don’t have any plans for what to put on the site, consider parking it to earn money. There are many ways to make that small $10 dollar investment earn you more money at the end of the day.

So, what does this all mean?

Well, in summary, your domain is as valuable to someone on the web as that prime parking space you have down by the Air Canada Center in Toronto. You wouldn’t just walk away and let someone take your space, so don’t do the same when it comes to your web identity. Don’t let your registered domains go without getting your money’s worth and that will most certainly never happen by letting it expire.

5 thoughts on “Domain Investing – Expiring minds want to know”

  1. The sandbox clock actually starts from when Google finds the site, not from when it’s registered. To get it ticking, you just need to put up one decent link to the domain so that Google starts crawling.

  2. Yeah, that can be nothing more then submitting the site to google for indexing though. You don’t necessarily have to even have a site to link it from. Most of the time a parked page has something up on it anyway, usually from the domain registrar, so it really doesn’t take much to get Google to know you are there…

    Even if your own personal effort with the site is practically zero.

  3. I guess this area of domain investing is pretty much an interesting approach for investing. I myself am part of the IDN rush, where the future may be one of which native citizens can type in their domain names in their own language.

  4. Here’s an advice guys. Before you purchase a new domain name and start investing all your time developing a new site, make sure your domain name is not similar to any registered trademark or service mark. You can search here: http://www.uspto.gov/main/trademarks.htm
    For example, you want to buy this domain name: SuperDuperService.com
    Do not buy it right away, spend some time on the website I mentioned above. Make sure there is no trademark similar to the domain name. If somebody has already registered SuperDuper trademark or service mark, you can get in trouble.

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