One of the oldest methods of making money online is the buying and selling of domain names. Flipping domains could be compared to a car dealer in real life, your sole aim is to purchase at as low a price as possible, and then ultimately sell at as high a price as possible.
This complete guide on domain flipping will cover all aspects of flipping domains in 8 easy to follow steps:
- Choosing A Strategy,
- Setting Up Your Domain Search,
- How To Find Domains,
- Checking Similar Domains,
- Background Research,
- Purchasing A Domain,
- Parking A Domain,
- Selling A Domain.
Before we continue, what is domain flipping?
Domain flipping is the process of buying domain names and selling them at a later date for a profit. There are several thousand people around the world that are very active in this market. Flipping domains generally will fall into several price brackets, (including a multi-million dollar bracket). We, however, will be looking at domains that cost less than $20 which can quite easily sell for over $100.
This equates to a modest 400% ROI (return on investment) if you buy at $20 and sell for $100. We say this is a modest figure because quite often you will buy for under $10 and sell for over $200. We, unlike several YouTube channels, will not blow domain flipping out of the water, we will keep to the basics and not tell you only stories that happen once in a lifetime!
In today’s guide, we will be using live examples where we walk you through this process step by step. In this guide to domain flipping, you will see how a domain that is selling for $20, could potentially be sold for several hundred, or potentially a few thousand dollars.
Below we will jump into the details on how you can make a passive income by flipping domains. First, we will give you an overview, then we will show you how and where to find your next domain name. After you find your domain name we will go through the process of checking to see the quality of that domain, and if it is worth buying.
Several videos and blogs around the internet fail to mention the process of checking quality, this is a fatal mistake as it could mean your domain name is essentially worthless.
Quick Introduction to Buying & Selling Domain Names for Beginners
Flipping domains has, and probably always will be a highly profitable business (if done right). Many people have managed to earn over $100,000 a year in this industry, all from the comfort of their home! This passive income however does require some patience. This is because once you purchase a domain, we will ‘park’ our newly bought domains where they will wait to be sold. We will explain this later in this domain flipping guide.
As domains and the internet is a 24 hour a day, 7 days a week, 365 days a year business, you can flip domains every day, all year as there is no noticeable ‘seasonality’ in this market.
As we mentioned before, this method of earning passive income can take time, although it is easy to master, you can easily wait quite long periods to see the sales start to come in. With that being said, the return on investment that is offered by flipping domains makes it all worthwhile. Once your domain is parked and marked for sale, all that is required from you is to monitor your email to check for any sale updates. This does mean however that the money you invest in domains will be tied up in this domain until such a time it is sold.
How Buying & Selling Domain Names Works
Buying & selling domains overall works in a similar way to buying and selling real estate, or any other goods for that matter. You will aim to purchase a domain for as low a price as possible. Once you own this domain, you can assess the market and ask yourself, “is it worth selling this domain immediately, or is it better to sell it next year?”. What do we mean by this? Let us say you purchase a domain “Events2022.com”, it would make more sense selling this domain closer to the date due to how relevant the domain name is, this will make the price higher and comes back to the core principle of domain flipping, buy low, sell high.
Buying domains can be quite cheap, so it can sometimes be easy to get carried away when you first start. This guide will show you how to avoid making these mistakes, ultimately saving you money and making you more successful.
The domain market is huge. Every day thousands, if not hundreds of thousands of domains are registered and traded. As so many domain names are taken, this is where domain flipping can be profitable. Let us imagine that there is a business start-up called “MikesCoffee.com”, if you own that domain, you can engage with this business to sell this domain to this business.
Our guide will provide you with strategies that we use, these strategies have worked for us time and time again. This method has had the most success for us in the past, and it is the method we absolutely can stand behind saying that it is a great strategy to follow. We will also avoid adult domain names, simply because we do not have too much experience in that niche.
Now the last thing before we get started flipping domain names: Establish your budget!
The first thing you will want to do before you even touch your computer is to grab a pen and paper, write down not what you can afford, but what you are willing to spend on flipping domains. If your answer is over $100, then write down $100! Until you get established we would recommend keeping your budget to a reasonable level. Once you know what you are doing then you can always scale your domain flipping according to your experience level.
Once you are happy with what you can afford, we want you to follow this checklist for this guide:
So now, finally, let’s get flipping!
Step 1. Choose Strategy
What does this chart mean? Well firstly we ideally want a domain with 1 or 2 words, since single word domains can get quite expensive, we will aim for 2-word domains.
So what do the terms in the chart mean?
- Service: For example “Roofing”, “Carpenter” etc.
- Location: Self-explanatory, just try to use a city name, do not go as broad as a state.
- First name + Last name: As you would imagine, a simple “John” + “Doe”, so JohnDoe.com
- Adjective: Words such as “Best” are great keywords, and can sometimes boost the power of a domain.
- “News“: You will want this term to be at the end of the domain name, for example, “MiamiNews.com”.
Now, this strategy will also use some further rules which we will cover in the search settings later in this guide.
Step 2. Setting Up Our Search
To set up our search we must first go to a website called ExpiredDomains.Net. Once you are on this website you can sign up for free.
Go ahead and click the “signup” button to signup for free.
Once you have signed up, log into your account, and get back to the main page of ExpiredDomains.net.
Once on this main page, you can search for a domain using the search bar on the top right of the website.
For this tutorial, I will be target strategy number 2, “Location + Service” and a .com domain. So for this, I will enter “Miami” in the search bar and hit enter. Once the results load, you might be taken back by a huge number of domains, don’t worry, we will now add in our filters to set up our search. (The “Show Filter” tab is just above the list of domains)
Now in the filter page:
- In the “Common” section: As we want to use the “Location + Service” strategy, we want to have the location as the “Starts With”, in this case, we are looking for “Miami”. To help keep the URL looking neat and professional, we do not want numbers or consecutive hyphens in our domain. Lastly, we want to set our budget, which we said was a maximum of $20 per domain, to hide the “make an offer” domains I have also included a minimum price of $1.
- In the “Additional” section: We will want to only show .com domains, so select this option, also as we are using a location in our strategy, I have enabled the “only Geo Domains” option.
Now you can scroll down and select “Apply Filter” to complete this step of the guide.
Step. 3 How To Find Domains
So once you have applied your filters you might still be left with quite a long list of available domains. This is where you will have to browse through the domain listings and find a domain that you like the look of. Remembering the strategy, in this case, we want a 2-word domain that is “Location + Service”. So for our search, we found this domain:
So now the question is: “Is this domain good?“, “Is it worth the $20 price tag?”, “Does this domain have a ‘clean’ history?”. To find the answer to these questions we will move into the next step.
Step 4. Check Similar Domains
Before we do any more work, we want to see if it is even worth doing background research on this domain. We can check if there are similar domain names that have sold, for this we will use a website called NameBio.com, this website is free however does have some ads (which you can pay to remove, or just wait for the ads to close when they popup).
As we want to compare like with like, for this domain name, our best option is to search for the term “doctor” which is geolocated and is also a .com domain:
This setup should now filter ONLY domains that are identical to our “MiamiDoctor.com” domain. Once you set up your search options, click search.
The search results for us seem to be quite promising:
What stands out here is that although we have names such as “CaliforniaDoctor”, being picky, this is a “State” + “Doctor”, rather than “City Name” + “Doctor”. In this case, we want to disregard domains that are not the same. So here we are ONLY interested in “ChicagoDoctor” and “SanAntonioDoctor” as they follow the same style domain name. On this page we want you to add the “Price” of all of the domains that are similar to yours, and divide the number to get an average (in our case: $571 + $500 = $1071 -> $1,071 ÷ 2 = $535.5 Average sale)
If we purchased this domain name for $20 and sold for $535.5 we would have a profit of $515.50 meaning we have an ROI of 2,577% (return on investment).
To keep moving, first, you need to take note of the average sale figure you have worked out, it will be used again later on.
Go Daddy Appraisals:
I will caution you before using this free tool! GoDaddy is a registrar, they are in the business of selling domains. So you will often get an artificially high domain appraisal. However they do supply some very useful information, we will show you this useful information here:
On the left side, is the part we warned you about, however, if you do want to consider this price, we would estimate a rough guide would be to divide it by at least 2, if not divide it by 4!
So why do we use this page? Well, there is still some great information on this page. On the right side, we can see why this domain is valuable. TIP: Take note of these points if you plan on selling directly to a business, you can build them into your sales pitch.
Now you are still on the Go Daddy page, scroll down until you see “Comparable Domains” which will look like this:
We only want to consider other comparable domains that use the same setup as we have used. So in the case today, we want: “City Name”+”Doctor”.com.
What we do here is add up the values of comparable domains and then divide it to get an average. In this case, the average of our comparable domains is $783.
Find the average of the average
Go Daddy: $783
So we now have a full monetary picture of this domain, and we have our ‘average of the average’ which we will use later in this guide so keep this figure noted.
(In comparison: “Generally speaking, if you’re estimating how much your stock–market investment will return over time, we suggest using an average annual return of 6% and understanding that you’ll experience down years as well as up years.” – NerdWallet.com)
At this point, if you are not happy with the similar sale prices, go back to look for a different domain. Just write down the domain name, in case you want to come back to it!
In this case, we are happy that we will make money with our domain “MiamiDoctor.com” so we will continue to do some further research in the next step.
Step 5. Domain Background Research
To perform further research on domain names we will now use several FREE tools, there are paid tools available that can give you greater insights. We will give a list of paid tools at the bottom of this page.
One way to immediately see if a domain is worth proceeding with or not is by using a website called Archive.org. This website will show you screenshots of a website from the past, what you will be looking out for is what could be perceived as spam, in the case of our website, it is based in Miami, so we could expect English, or potentially Spanish language, anything else would be strange.
Once you are at Archive.org you can search for your domain name.
After you search you will be presented with a timeline, a great way to start is going back to see what this website was at the very beginning
Click on the first year, you will now be presented with a calendar, in the case for us today, this took us back to November 29, 1999.
If you click on the time “snapshot” you can see that the website seems to be legit, nothing wrong here. Now you will want to scroll through every couple of years to see if anything is worrying in the history of this domain.
So their website changed quite a lot in 2014, this however was just an upgrade rather than anything that might damage its value.
So this website has a clean history. Let us move on.
Once on Google, you can search for “site:domainname.com” (no spaces) this will show you if Google is already aware of this website. In this case, they are.
So this website is already registered in Google, that is always a good indication that this website has not been ‘blacklisted‘ or “sandboxed” by Google.
After clicking on the homepage we can see that this website is still actually up and running and appears to be the same as what we saw previously in Archive.org
Now on to check if there are any additional bonuses that we can use to market this domain when it comes time to sell it.
The next thing we will use is the Ahrefs backlink tool. Once again this tool is free, and is worthy of a bookmark! In the case of our domain name, this was the result:
This shows us that although the domain is not that strong (domain rating), it does have backlinks from 4 referring domains. In this case, no backlinks seemed to be spam, just genuine backlinks that happened to be lower quality pages, but the big picture showed that nothing stood out as being a problem. So once again the domain name has passed this check.
Now we want to proceed to purchase this domain. We will move onto the next step. If you are not happy with anything so far, move back to the domain search and find a new domain, repeat this process up until this point until you have a domain that will quite easily have a return on investment of greater than 600%.
(We will show you why this number is important at the end of this guide)
Step 6. Purchase the Domain Name
To purchase a domain name, we recommend a company called Namecheap. Namecheap is by far one of the world leaders when it comes to domain registration. With excellent customer support and great security features, the services offered by this company are unmatched.
Alternatively, you can purchase domain names from these websites. For flipping domains, they are all as good as one another.
To purchase the domain name:
- Navigate go Namecheap (or one of the other domain registrars located above)
- Search for the domain name you would like to purchase, using the domain search bar.
- You will now see a screen that shows the domain name you searched for as well as additional domain names.
- Click the “add to cart” option next to the domain that you wish to buy.
- Once you have added the domain name to your cart, you will be offered additional services. For flipping domains, none of these are required.
- Once you have the domain name in your cart, it is time to complete the purchase. Go to your cart by clicking on the cart icon at the top right of the page.
- Once you are viewing your cart, click the “Confirm order button”.
- You will now be on a page where you can complete your purchase.
We recommend creating an account, this will be an easy way to store all of your domains in one location. This will just make everything easier in the future.
Step 7. Sell Your Domain
To sell your domain, we will keep everything in one location. We will also use Namecheap for this service.
To sell domains within NameCheap, simply edit the domain you would like to sell from within your User Control Panel.
(if you have chosen a different registrar, you can do this step in all of these platforms)
Domain Name Inventory
The first step is going to be understanding your inventory, this inventory will consist of domain names you want to sell immediately, and potentially domains you want to hold onto.
The domains you want to hold onto for a future date you can set aside and look at what’s left in your portfolio. These are domains you are willing to sell.
Once you know what should be for sale and what you want to hold onto, we can move onto pricing the domain names that you want to sell.
Pricing Your Domain
Now that you have a list of domains for sale, it’s time to set up your prices.
Although you can set domains for an “offer” we would recommend always setting prices. Marketing studies have shown that this method will generate more money for you, but also you will be more likely to sell these domains. If a potential buyer wants your domain, and there is an “offer” price on it, they will have to waste time trying to negotiate, rather than just clicking “buy now”.
Now is where our figures come in from earlier. You will want to use the “average of the average” number we discussed to set as a buy now price.
The next step will be to set a minimum offer price, to set this amount, multiply your domain purchase price by 600%. This will create a low figure but will result in more domains being turned over.
In the case of our domain today, we purchased for $20, our buy now price will be $650 (659.25 rounded down to the nearest 10), and finally, our minimum offer will be $120 which equates to a 600% return on investment, the reason for this will be discussed in the additional strategy section below.
Park and List
So setting prices is just the first step, but setting prices and not advertising would be like trying to sell a house without putting up a “For Sale” sign. To park and list your domain, we will use more free services.
Domain Park & List services:
To park and list your domains on these websites, visit their homepage, and create an account (free). Once you have created an account, you will want to import your domain list to these services. A full tutorial can be found at the following addresses:
For Dan.com: https://dan.com/help/seller-guide
For Afternic.com: https://www.afternic.com/sell-domains
You will want to list your domains for sale on these websites using the same prices you previously set at NameCheap. (or other registrars)
Final Strategy: (4 domain run)
So some domain flippers out there will hold onto domains, sometimes for years trying to get the price they want. Our method however is slightly different. It focuses on actively selling domains, where you will withdraw profits along the way. What do we mean by this? We will run through this “4 domain run” strategy below:
In today’s course, we looked at “MiamiDoctor.com” which costs $20,
We will now sell this domain for a minimum offer price of $120 (if it sells for more that is just a bonus!)
Now Dan.com will charge a 9% commission rate, Afternic.com charge a 20% commission rate up to $5,000 (at the time this article was published)
This means that the worst-case sale would be if our domain sold on Afternic for $120 and nothing higher.
The payout from such a sale would be $96. Now take back your initial investment, in today’s case the domain cost $20. So we are left with a raw profit of $76.
Now we want you to buy a domain that is worth $76 (the profits from run 1) and now repeat this entire process. (To do this view our guide on GoDaddy auctions)
This will mean that we purchase for $76 and sell for a 600% mark up. This will mean a minimum offer of $456, which we would round down to $450.
Again the worst-case scenario would be selling this domain at a 20% commission rate would create a profit of $360.
Use the $360 to buy a domain, once again repeating the process, and selling for a minimum offer of a 600% mark up. (To do this view our guide on GoDaddy auctions)
This means we will have a minimum offer of $2,160. Again after a commission of 20%, we will end up with a profit of $1,728.
Now reward yourself at this point and take anything over $1,000, so in this scenario $728.
Invest the $1,000 in a high-quality domain, but this time we will change our strategy. (To do this view our guide on GoDaddy auctions)
As we invested $20, which we already took back after the first step, we have already profited $728 in Run 3.
Now with profits in our pocket, as well as a quality domain, we can sit back and wait for our wanted price, rather than accepting low offers.
Given this example, we used a domain name that cost $20, so at the beginning, we said we would look at a maximum of $100 per month. This would mean you can get 5 domains of $20 and follow this process and strategy with all 5 domain names.
This would mean that (if all of our domains sold for the lowest offer price, as well as selling with the highest commission rates) would end up in Run 4 with $3,640 in raw profits, our initial investment of $100 would be on top of this number, and we would also have 5 high quality, expensive domains that we will sit back and wait for a high bid.
How Passive is Flipping Domain Names?
Domain flipping is not 100% passive, it will take some time to get started and learn the skillset and the flow of how to go from finding a domain, to performing all the relevant background checks. With that being said, once you get started, it is minimal work, sometimes the work required will be as basic as checking your email.
Startup Costs For Flipping Domain Names
The startup costs with flipping domains are not a factor. In this tutorial, we have shown a domain that would require an investment of $20, but in reality, $10 would be enough to buy one domain. We suggest buying 3-5 domains to start with, then see how you like this industry. This will make any potential losses insignificant, but also will be enough to diversify your portfolio and raise your chances of being successful.
We would also recommend setting a “cost per month” budget and stick to it. Use this cost and invest over 3 to 6 months. This will result in slowly but successively building your portfolio.
Difficulty In Flipping Domain Names
The difficulty is really at the beginning. Learning how to run through a full process from start to finish. Once you learn all the steps (which we have thought you in this course) domain flipping will become easier. We strongly advise creating an excel sheet with domains, the purchase prices, sale prices, and any other relevant information. One of the hardest parts can be remembering what exactly you want to earn from a specific domain. This is especially important if you follow our 4 Run Strategy.
The only way time is a factor in this business is finding a domain name. Once you have run through the process of finding, buying, and parking a domain, the only time factor as far as work goes will be checking from time to time on their status, be this via your email, or the website they are listed for sale on.
Domain flipping like any business does have its risks. This is why we teach people to create a budget and strictly stick to this budget. This will mean that we can mitigate the risks involved. With that being said, the return on investment can be so large that the risk versus reward is heavily weighted on the side of the reward!
Selling domains does not follow any seasons. Unless you purchase a domain that is specific to a period or specific holiday than we do not believe there will be any seasonality aspect of this business. Our methods and strategies will keep you away from very specific domains, which means that if you follow our guide there really will be no seasonality to this passive income business model.
ROI (Return On Investment)
In terms of ROI, domain flipping can easily perform much better than the stock market! The average investor will make approximately 6% ROI, and this figure is for those who know their way around stock trading, the ROI on the stock market without knowing your way around will usually be loss-making. With domain flipping, you will frequently see several hundred percent, potentially a few thousand percent ROI. Personally, using the methods contained within this course, we have had multiple domains sell that have provided us with an ROI of over 5,000%.
Thank you for your time. Should you wish to add more passive income streams to your finances, view our other passive income courses.