Terry Rydzynski

So, I’ve been in the domain game for a couple of months now and have learned so much already. Having decided to stop reading about it and actually get my hands dirty, I have found out so much more than I ever could have from simply observing.

The Story so Far…

To begin with, I didnt really have clue what I was doing and to be honest, i still dont really know although I have learned my first real lesson - Cash is King. Robert Kiyosaki first taught me this lesson in his excellent Rich Dad, Poor Dad books although until now I hadn’t really made the connection between Real Estate investing (which is what Kiyosaki mainly talks about) and domain investing. Kiyosaki recommends investing in “income-producing assets”, and this has now become the first part of my strategy for domain investing: becoming Cashflow Positive.

My first ever domains where kind of generic brandable phrases such as dedicatedtsport.com, dedicatedtosoccer.com, dedicatedtopoker.com, and a couple of “hot topic” domains such as buyiphone.biz. I still have plans to develop some of these domains into large sites but they would need to be long term plays as the respective markets are extremely competitive so it would take a lot of time and money before i see a decent return on these if ever. Time will tell whether these will prove to be good investments in the long term.

In the short term, however, my portfolio of 55 of these domains gets a combined total of about 300 clicks per month and generates around £1 per month in revenue. Given that registration fees for these domains is between £5 and £15 each for two years, the whole portfolio is barely generating enough cash to pay for the continued registration of a couple of domains and I’m instantly into negative cashflow over the life of each domain. This is clearly not a sustainable business model, and is ruining my chances of ever getting round to developing any of these sites. Oh, and I havent even mentioned the tax implications here!

In truth, I had no idea that these domains would generate so little traffic but it seems obvious now. Where was i realistically expecting this traffic to come from?!

If I presume for a moment that I am correct about the brandability of some of those domains (which remains to be seen), then that’s where the traffic would come from but only after sufficient branding activities (and expenses) have been utilised. The problem is that very difficult to brand a parked domain using white-hat techniques. For most Internet users, there is little inherent value in such a domain until it has been developed into a useful web site instead of a parked page full of sponsored links and a couple of pretty pictures. No directory site worth its listing fee will allow me to list a parked domain, so there is little chance of the site getting listed in the Search Engines, and no webmaster in their right mind would place such a link on their site!

Back to the drawing board then…

So, In my quest to get cashflow positive, my next question was to ask how to get traffic to parked domains. It would appear that typo domains might offer a good bet for me, as they are already branded and completely unreliant on any traffic from search engines. Note: Google is apparently coming down hard on parked domains due to the lack of perceived value (in their opinion) and relevancy, so not becoming overly reliant on Search Engines looks like a sensible play.

Great, so where do I get typo domains from and how do I know which ones will work and which ones wont? As far I see it at the moment, I have two options here:

1. Do some keyword research and then try to guess unregistered typos, take a punt on them and see what happens. This requires a lot of work upfront and can be potentially fruitless unless I can bag a real gem for just the cost of the registration fee. There is also the added risk that a domain may not perform as well as hoped, and you have to just suck it and see. For me, this is too risky, even though you have the potential to grab a real star performer for less than £10 for two years, and you can basically make more mistakes for the same amount of cash upfront than with option 2.
2. Find existing typo domains that already generate cash and appraise them accordingly. These are a little bit easier, as they are often advertised on web sites such as Digital Point, SitePoint, and Acorn. Simply subscribe to the RSS feed of the “Domains For Sale” forum and you get notified everytime someone posts a new domain (or even their entire portfolio) for sale.

Being lazy, I think I’ll go for the existing domains as part of my short-term strategy to generate cash. This does carry more risk as there is more cash involved in the purchase and you may get completely duped with false figures. However, if you are careful then you can potentially get yourself into positive cashflow pretty quickly.

Although there are many options with regards to strategy going forward, in the short term I am simply going to invest in domains that already generate revenue. Once i have found these (assuming they are for sale) then its a case of working out how much I want to pay for them based on ROI, level of risk, future potential cashflows etc.

Now I just have to work out my criteria for selecting new domains. Once I have a bit more experience with these tactics, I’ll let you know what I think make good “cashflow domain” selection criteria.