Parallel Between Real Estate and Domain Names | DomainInvesting.com

Parallel Between Real Estate and Domain Names

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There are many parallels between real estate and domain names, but I was reading an article in the New York Times last night about home teardowns, and I thought about this in relation to domain names. A fairly recent trend in real estate investing is purchasing a home on a nice lot of land, tearing it down, and building a nicer, more modern, and usually larger home. The investor then sells this piece of real estate for much more than the price he paid and the cost of building the new home.

In terms of domain names, I can see this being a profitable opportunity for an investor who happens to have development skills or a staff of developers on hand. If he is able to purchase a domain name earning PPC for a decent multiple, he could quickly build a custom website, get it indexed by the search engines, and start building traffic and revenue. Assuming that this website generates greater income than the previous PPC page, he could resell it for a higher price. By using the Hybrid Development approach I outlined before, costs would be kept down and this could be done across many domain names.

There are many advantages of domain names over real estate in this instance:

    1) A person is not subject to weather that could impede a real estate rebuild.
    2) Other than the physical labor involved with developing a domain name, there are not many material costs, other than hosting, with a website.
    3) There are no added real estate taxes that will be incurred with a large property.
    4) The Internet is worldwide, and geography plays a small role.
    5) While searching for a buyer, the website is making money – the real estate property is costing money.

Whereas many domain investors buy and resell domain names based on the same PPC model (which I disagree with – but that’s another story), this could add tremendous value to the domain name. Many people believe they can increase the amount of money a domain name is earning by testing various parking companies and/or keywords, which may yield better results. By developing the name, you would almost certainly increase the value of the name much more than relying on PPC. Of course, development is difficult, so this isn’t for everyone. This is just another opportunity in the domain business.


About The Author: Elliot Silver is an Internet entrepreneur and professional domain investor. Elliot is President of Top Notch Domains, LLC, a domain investing company that has sold seven figures worth of domain names in the last five years. Elliot is the publisher of DomainInvesting.com.

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Comments (3)

    sumbini

    Good post! I agree that developing a good domain (virtual real estate) would be better than just relying on ppc. What the domain industry really needs right now is an efficient and deep pocketed third party web developing company willing and able to partner (50/50) with all of the prime undeveloped domain holders. I beleive, that the first “big” player to do so in a “big” scale will win “big” (along with the domain owners) and will dominate said market for many years to come from simply being “first to market”.

    Sumbini

    December 16th, 2007 at 6:26 pm

    Adi

    I aggree for your opinion. You can’t all time to this business, you need a rest someday. Get money from selling domain and start build some real website.

    December 17th, 2007 at 3:08 pm

    frank connors

    I agree with Elliot’s article regarding ‘tear downs’ – there are many domains which offer far less than the ‘attraction’ and ‘cache’ of the domain would suggest. And I would have to agree also with Sumbini’s comment that making it essentially easier to develop domains en masse would be to everyone’s benefit — even the surfer would gain more options.

    Great thinking!

    December 18th, 2007 at 12:47 am

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