Domain investing, sometimes called "domain flipping", is the practice of buying domain names with the goal of selling them later at a higher price. It sounds simple, and in some ways it is, but doing it well requires research, timing, and a good sense of market demand.

Digital Real Estate

Over the years, domain investing has matured from a niche side hustle into a legitimate business model, with some investors making six or even seven figures on a single sale.

With those kind of revenues, domain investing is anything but a hobby, or a game left to chance. It requires patience, knowledge, and a thorough understanding of the market.

At its core, domain investing is about digital real estate, and just like physical real estate, location matters.

Short names, keyword-rich domains, and .com extensions tend to be the most valuable.

The right domain can give a brand credibility, help with SEO, and even reduce marketing costs. That's why companies are willing to pay a premium for the perfect name.

When it comes to proof, there are some standout examples that show just how lucrative this can be.

Voice.com

In 2019, this domain was sold for $30 million to a blockchain-based social media platform. It's one of the highest public domain sales ever recorded. From the seller's perspective, MicroStrategy held the domain and waited for the right buyer, and that patience paid off. From the buyer's side, the company behind Voice.com viewed the name as a critical asset for their brand. A simple, one-word domain with high relevance and credibility that was worth every dollar of the investment.

Hotels.com

Another high profile example is Hotels.com, which reportedly sold for around $11 million in 2001.

Back then, that number did more than raise a few eyebrows, but today it's hard to argue that it was anything other than a genial investment. For the buyer, the domain became the cornerstone of their global online hotel booking business. The generic nature of the name gave it instant trust and authority, which helped them scale at a phenomenal rate. For the seller, timing was everything. Early domain investors who had the foresight to register generic industry names in the 90s and early 2000s often cashed out with significant returns, and Hotels.com is just another leading example of that trend.

Crypto.com

More recently, Crypto.com was purchased in 2018 by the company now known as Crypto.com for a rumoured $12 million.

The seller, a college professor who registered the domain in the early days of the internet, had held onto it quite literally for decades. His foresight, turned a low-cost registration into a life-changing sale, which is something most every domain investor hopes to achieve. For the buyer, the domain name became the face of their entire brand, which now includes a crypto exchange, debit cards, and a global sponsorship strategy. In the crowded crypto space, owning the Premium Domain in their segment gave them an unparalleled competitive edge.

That Was Then But What About Now

So what does it take to succeed in domain investing today?

Well, you might be surprised to learn that despite the years, little has changed, at least when it comes to the critical aspects of investing.

Quality does, and has always mattered more than quantity. Many domain investors make the mistake of registering or purchasing portfolios of hundreds or even thousands of domain names believing that eventually they will turn a profit.

This type of speculative investment might be compared with trying to shoot a pea with a shotgun. Sure it's possible you might hit it, but it's more likely you would do so through luck, rather than aim. Ask any professional investor, and they will all tell you the same thing. Luck rarely pays off. In fact, there's very little sense in using thousands of dollars to purchase hundreds of domains where only one is perhaps potentially valuable.

What Goes Around...

The simple truth is that a small portfolio of highly targeted, Premium Names is more valuable than thousands of random domains.

Single, one-word .coms, short acronyms, and names that align with growing industries such as AI, biotech, or sustainability are especially sought after at present.

While the trend in artificial intelligence, in bio startups and "green" sustainability might well fade over time, they certainly show no sign of doing so at present. Moreover, even if they do, the exact same principles of short, one-word .coms, acronyms, and names that align with growing industries will remain true, because what goes around inevitably comes around.

A Marathon Not A Sprint

As a domain investor, timing and patience are key. Many of the best sales happen because the investor held onto a domain for years, waiting for the right buyer to come along. But renewal fees are expensive, and continue to escalate, so how would you know which domain(s) are/ might be worth holding onto? That's the million dollar question, and knowing your market helps. Understanding what kind of names entrepreneurs are looking for, or what trends are gaining momentum can give you an edge.

Trends Are Cultural

Trends in domain investing are no different to trends in any other market space.

Large properties with sprawling gardens might suddenly be out because of fashion and difficult to sell for any number of variables. Land taxes. Water rates. Maintenance costs. You name it. In their place, small, new two-room apartments might be all the rage and hard to come by.

Popular carbonated energy drinks selling in their millions might suddenly experience a nose-dive in sales in favour of consumers preferring bottled water.

The point is that trends tend to follow broader shifts in tech and culture. The housing example, due to the increased costs of modern living. The example in bottled water, due to greater health awareness.

When it comes to tech, the rise of Web3 saw a surge in interest around domains related to blockchain and NFTs. Now, as AI becomes the dominant force, domains with ai or related keywords are spiking in value. Even extensions are changing. While .com is still king, others like .io, .ai, and .xyz are gaining ground in specific niches. Knowing precisely where and in which, is all part of the job in being a serious domain investor.

In Conclusion

Domain investing is a mixture of skill, foresight, knowledge, and a sprinkling of luck — which in essence is that intangible trait called timing.

The big wins are rare, but they happen, and when they do, they can be massive.

If you're considering domain investment, then arguably the key is to treat it precisely like any other form of investment. You wouldn't buy stocks on a whim, and you wouldn't buy a company without doing due diligence first. Do your homework, understand your risk tolerance, and be ready to play the long game.

The internet isn't going anywhere, and the right name still matters. However market trends evolve, one thing that is certain. Relevant names are increasingly harder to come by, and the right ones will matter even more in the future.