Is Domain Investing A Good Side Hustle?

No. Definitely not.


I have been in domain investing and the buy/sell process for about 15 years and looking back, there goes so much into this getting it right.

Every day of the week on X, Namepros forums or other places I see newbies betting on ‘domaining’. Like it’s a viable business.

My portfolio holds over 10K domains now, and my annual renewal cost is about 180K USD per year. That includes lots of standard .coms renewing at 10 bucks a name up to a few thousands for some premium names. (including this one)


Here are my observations and personal experiences:

  • It’s addictive
  • It’s merely speculative, and variance can drain your cash faster than you think
  • Lots of names are bought and sold through hype cycles. (early-late)
  • It requires research, tons of it
  • It requires daily upkeep
  • Sales aren’t just coming to you, there’s lots of outbound attached to it
  • New players don’t know how to balance
  • It’s a numbers game


Let me elaborate:


Addiction. Not Obsession


Starts with one. You end up buying dozens in a day, week or year. Domain buying and investing can be as addictive as a hard drug and should be handled with a lot of care. I’ve seen too many people being obsessed about the subject, hoping to score a 4-6 figure sale and before they know it, they end up maxing out their credit cards.


Domain investing or buying up those ‘great names’ can lead to an addiction where you more lie to yourself than actually buy based on data driven research or market data.


It’s Speculation


Just like equity or capital markets, domain investing is a very speculative game. Values shift and demand – supply can change.


A prime example is .ai domains. Whilst they exist since 1995 and were open for public domain buying in 2006 or so, nobody gave it second thought until… Open AI came out swinging.

Cash was spent into buying more and more .ai domains because the trend indicated that we’re betting on AI a lot more than a decade ago. Order and money flow indicates a pump in value of .ai domains. Seeing some of them going over the counter for a $100K.


It’s all fun and yes, I sold off a few for a nice sum last year, but I also held on to those names for almost 10 years.


If Open AI and ChatGPT didn’t come out swinging, I would probably had to hold them for at least a few more years or either resell them at cost spent in total.

The swings in markets on the domain market are worse than crypto (in my opinion) where you barely control the outcome.

99% of the domain investors go with a spray and pray principle, until renewal fees hit. And end up negative liquidating them or letting them expire.

I have a golden rule nowadays. If I were to buy any new domain:

  • I will have at least 5 years of renewal fees in liquidity set aside. For example, if I were to buy a .com name for 10$, I would need to have $60 dollar in cash set aside. (1 year first reg + 5 possible more years)
  • I buy the domain with the intention to develop, not with the intention to sell first.
  • Most domains I buy are going for sale for a ridiculous price, you never know if some nut job is willing to pay for it. But I do it with the intention of keeping the name in my sights for future development
  • I buy the domain if I see a lot of CPC or type-in traffic. Which means I can calculate how much I need to earn a month per name to go breakeven on my renewal fees per year, IF I were to park the domain on a platform like BODIS for example.

If you want to speculate, I would advise ETFs and index funds. Not domain investing.


Hype Cycles


Aligned with the previous subject, if you buy them too early, it can become a sunken cost fallacy. If you buy them too late, you might end up being a bag holder.

Lots of names are exchanging hands through new hype cycles. New terms or trends are rising and you would see certain keywords and alternatives bought up by the thousands overnight.

Research


Fuck me. This was the most annoying part of them all. The hours and nights spent in researching market data and domain auctions, keyword trends, is something I do NOT ever want to do again. EVER.


There was a time I was doing this by myself, until I made enough cash to delegate this task that almost drove me to insanity. And I can tell you it’s boring.

Not only boring, but also incredibly tilting. My experience with a lot of domain investors or buyers is not the most pleasant one. Lots of toxic vibes passed onto others where one shouts your recent domain purchase is garbage, whilst the other one says it’s the best and a third one puts in a 10$ valuation on a domain you just bought for 10K.


Research is critical in making smarter data driven decisions and that soaks up a lot of your time.


Upkeep & Maintenance


Managing a few is nothing. But before you know it, you ended up in a rabbit hole owning hundreds if not thousands of names.


  • The leads
  • The sales cycles
  • Expiration date check
  • Organizing the portfolio
  • Shit, this list goes on

You’re sinking in so much time in optimizing and maintaining the portfolio clean that your earnings might shrink (if you even sell one) if you factor in time at your usual hourly rate.

Outbound


Just like any other business, outbound cold emails and calls are… mandatory. Especially if you want to upkeep a decent STR (Sell Through Rate). It’s not because you buy one, put it for sale on the market on platforms like Dan.com that sales will magically appear.

This is paired with your own DYOR and possible find leads that are interested in buying your domain name because they currently own an alternative extension for example.

Even if you catch a hot lead, the sales process isn’t always as smooth. Because sellers always want the highest price and buyers will aim for the lowest offering. The first one that cracks, loses the battle. But you as a seller will lose more often because those leads might want it as a nice to have but not very much needed.


Balance


Newbies don’t know how to balance. They buy 100 domains in a week because there’s a promo running until next year the bill comes. You want to build a balance between buys and recurring costs in case your portfolio starts to grow and have a better grip on how the domain market really works.

Just like regular investing in stocks, you rotate through seasons or trends, sell or buy equities to re-balance your own portfolio and cut losses or maximize gains when possible.

Don’t just go buy dozens of domains when you have no plan, no bankroll and definitely don’t buy them based on hopium.


It’s A Numbers Game


Eventually domain investing is a true numbers game. IF you were to go for either selling them with a profit or build a portfolio that matters.

Yes, there are people that get lucky and buy a few domains and sell em for 100X the value. But that’s rare. Ultra rare.

The ones you see on X selling name after name? They have numbers, data and big portfolios and put in a LOT of work. But they rarely reveal the downsides and this gig or ‘side hustle’ is painted as a glorified money making motherfucking printing machine.


Close


So, if you made it this far and you wanted to dive into domain investing as a side hustle, by all means. But please I hope you remember the downsides I described.

I would never advise this as a legitimate business or side hustle unless you have the bankroll. And no, I am not spreading doom and gloom. I just truly believe and know from experience that there are better ways to make money with more stability and less speculations.

I myself are semi-retiring this business after 15 years and plan to liquidate 3000 domains hopefully in 2024. It’s time for me to make ways for other ventures and step aside from this rollercoaster ride.