When I Offer a Lease Deal
Leasing seems to be the “new” hot topic in the domain industry these days. There are positive and negative aspects to domain name leases, and I want to give you a bit of insight into when I might offer a lease deal.
There are really just three times I would offer to lease one of my domain names:
1) The potential buyer is a great fit for a domain name, but our valuations are way different. If I don’t think we’ll be able to bridge the gap, but I know the domain name will be built and that it will lead to much greater monthly income than the domain name is generating at present, I would likely propose a lease. This might be intriguing to the buyer since his upfront costs are substantially lower and he may be able to buy the name at a later date.
2) The buyer is a great fit for a domain name, but the company doesn’t have enough funds to purchase the name right away. Similar to the above instance, but I am banking on the leasee to significantly enhance the value of the domain name and want to purchase the name at a later date to secure it for his or her business.
3) I treat a lease offer as a last ditch effort to prevent a qualified buyer from ending negotiations on an acquisition. If it’s gotten to the point where the potential buyer and I value the domain name in the same ballpark but the buyer doesn’t have the funds to make the purchase right away, I might suggest a lease deal, or perhaps a lease to own deal. Assuming a lease deal is made, the leasee will likely want to eventually buy the name (assuming lease terms aren’t too good).
I treat most of my domain names like inventory. I need to have liquidity to continue acquiring great domain names. I don’t want to tie up my names for long periods unless they are going to produce substantial income. As such, I would never advertise a lease opportunity.
I think there are many good reasons why a domain owner should consider leasing some domain names, but for my business, a lease opportunity is more of a backup plan, and the conditions must be right to make it work.
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