Building a Business in Digital Real Estate – How to Make Money from Domain Names

What is digital real estate? In the online world, a piece of digital real estate is known as a “domain name.” A domain name is your “street address” on the internet where your customers can find you.

Digital Real Estate is a very attractive income lever requiring very little time to set up and start. Once you are open for business, this income lever can earn for you long into the future.

Below are step-by-step instructions on building a business in digital real estate and how to make money from domain names.

So, How To Make Money From Domain Names?

From a high-level view, you buy low and sell high.

Like in all retail businesses, a successful business is built on acquiring inventory at a low cost and then reselling that inventory at an appropriate profit margin.

Domain name reselling is an online retail business with very low overhead – that keeps your costs to a minimum. For domain names, annual carry costs are minimal (less than $10.00 per year), and domain names require virtually no maintenance as a digital asset.

As a “digital” form of real estate, domain names can make money similarly to how actual real estate creates a return for investors.

• • You can buy, hold and resell later after the domain name has increased in value.
  • You can rent advertising space on your domain name (known as “parking”) to earn money the same way billboards are erected on actual real estate.
  • You can lease a domain name to a user for a monthly fee, like how you would lease an apartment, retail storefront, or land.
  • You can make improvements to the property to add value.

There are several approaches to starting a domain reselling business and building a business in digital real estate. They range from simple and easy to set up and run (using your domain registrar’s infrastructure only) to complex (building and hosting your domain name resale platform).

I use both approaches for my domain name resale businesses, but for this article, I focus on the quickest, easiest, and least expensive way to get started making money from domain names.

Building a Business in Digital Real Estate – What do I need to open a domain name resale business?

You must first sign up with a domain name registrar to get started. Certain registrars have robust domain name reseller platforms that help you market your domain names, including:

• • Discounted Bulk Domain Name Purchasing
  • Monetized Domain Name Parking
  • Payment Processing
  • Affiliate Programs
  • Reseller Programs

Depending on the level of service your registrar offers, you can buy, monetize and market your domain names from a single platform.

You must purchase the domain name, choose a selling price, and list it on a premium listing site (we will use Afternic in our example). This is the simplest way to start building a digital real estate business.

You can open this business in less than 10 minutes.

Using this method, you leverage the premium listing site’s platform, marketing, payment processing, and online infrastructure.

Your only costs are your domain names and the commission you pay when a domain name sells. You can set up your business for just the cost of 1 domain name – less than $10.00!

In this example, we will purchase the domain name from Namecheap and list it for sale on Afternic as part of the Fast-Transfer network.

How to make Money from Domain Names – Step By Step Instructions.

In these step-by-step instructions for building a business in digital real estate and how to make money from domain names, we are going to buy a domain on Namecheap and list that domain for sale on the Afternic premium network.

Here is a walkthrough of the actual process at Namecheap:

STEP 1 – Sign Up for a Free Account at Namecheap:

Signing up for Namecheap is very simple. Simply click this sign-up link and sign up for your free account.

STEP 2 – Purchase a Domain Name to Resell:

Find a domain name you would like to add to your digital real estate portfolio. This should be a domain name that you can brand that is short, memorable, pronounceable, and ends with .com. In Domain Reselling 101 – How to Find a Great Domain Name, I go through how I find great domain names in more detail. You can easily search for available domain names with Namecheap’s search engine.

Namecheap also has a domain name auction area to pick up great domain names. Here is what the domain auctions results area shows when searching:

Part of the research that goes into acquiring domain names for your portfolio is to get an appraisal of the domain before purchase. However, I take these appraisals with a grain of salt – they can vary from appraisal site to appraisal site.

I typically look for short (less than eight letters) pronounceable domain names with no hyphens or numbers. I also consider if the domain name can be used for a specific type of business, like affiliate marketing for example.

I found a domain name Beqars.com on Namecheap that I could buy immediately for $5 at a closeout sale.

The domain only has six letters, is pronounceable, and ends with .com, all of which add value to the domain name. The “ochiva.com” domain looked interesting for $9. Still, I am just writing an example article on getting started building a business in digital real estate and how to make money from domain names.

Part of building a business in digital real estate (or any business for that matter) is learning to acquire inventory at a minimal cost (in this example, $5.00) with what I believe has a much higher resale value. I may have to hold the domain for a few years, but if it sells for $2,000+, it will be worth it.

It sounds simple, but understanding the spread between inventory cost and ultimate resale value is critical in how to make money from domain names.

STEP 3 – List the Domain Name for Sale on Afternic:

 

Listing a domain for sale on Afternic is easy. I go through the process of listing the domain name beqars.com for sale below:

If you don’t have an Afternic account, sign up for free.

Choose the price you want to list the domain name. It can either be the estimated value from the appraisal tool (what I used in this instance) or a custom amount. Using several different domain name estimators is good practice to arrive at a good listing value.

You must also consider if you have added value to the domain name through branding, logo design, or another creative value-add.

Adding a domain name to Afternic is a 4 step process.

Step 1 – Add the Domain Name.

Under the portfolio side tab, click on add domains and enter the domain name. It is a good idea to capitalize words in multiple-word domain names (i.e., GreatDomainName.com) to make them easier to read.

Step 2 – Configure the “Buy Now'” “Floor'” and “Minimum Prices.

The “buy-now” is the binding price shown on Afternic and partner sites (like Namecheap). Having a “buy-now” price gets your listing into the Fast-Transfer network and uses the Afternic landing pages.

The floor price is the lowest price that the Afternic brokers will close the sale without contacting you first.

Brokers use the minimum to get the conversation started with potential buyers.

Step 3 – Review Your Listing

Review and confirm that all the information is correct and then submit for processing.

Step 4 – Ownership Confirmation and Nameserver Update

Afternic will email you instructions on how to opt-in at Namecheap and update your nameservers at Namecheap. to list the domain for sale.

You are all done and open for business for just the cost of the domain name!

 

What do My Customers See When They are Searching for a Domain?

When someone is searching for a domain name via the GoDaddy domain name search engine, they will see the GoDaddy premium domain name marketing page (I used another one of my domains for sale, “InstantStars.com” in the example below):

You get a “buy it now button” on the page and a buying assistance call-in number (handled entirely by GoDaddy/ Afternic) for interested domain name purchasers.

Another significant value-add to help you close the sale is the “Why It is Great” area, which details the benefits of your domain (in this instance, having a .com extension and having less than 15 characters is a huge benefit).

If your potential buyer clicks “buy it now,” GoDaddy/ Afternic handles all of the sale elements, from collecting the sale amount to transferring the domain name to the new owner.

Since the domain is included in the Fast-Transfer premium network, it is also shown on 100+ premium reseller sites in their network. Here is a look at a few of them – the whole list can be found on Afternic.

Here is what a search on Namecheap for the domain name returns:

Afternic also puts optimized conversion landing pages for domains for sale on their network. Here is an example for InstantStarts.com:

I accessed this via VPN with a European IP address to check, and the contact numbers on the landing pages changed based on my IP address and location. Brokers in that office work in the same time zone as the potential buyer!

 

How to Make Money from Domain Names – What am I paying to Use Afternic’s Infrastructure?

Afternic charges a scaling commission rate for premium domain name sales that scales down the higher the sale price. Here is a screenshot from the Afternic website detailing the commission charges (make sure to check the Afternic site for the latest commission information):

 

 

The great thing about this commission schedule is that you have no upfront charges to list the domain name for sale. You only pay upon the successful sale of the domain name.

Afternic pays to market the domain name on its website and pushes marketing out to 100 other aftermarket domain sales platforms if you are part of the Fast-Transfer network (which you should sign up for). Afternic also handles all payment and customer service-related issues.

More Tips for Building a Business in Digital Real Estate and How to make Money from Domain Names

Digital Real Estate is a great income lever and an easy online business to start. I hope these tips for building a business in digital real estate and how to make money from domain names help. In this example, if we bought beqars.com for $5 and listed it on Afternic for free, we would have built a domain resale business for just $5!

In later articles, I will expand your domain marketing reach with additional tips on how to make money from domain names.

These additional articles include monetizing parked domain names, reselling your domain names through multiple channels online, building your digital real estate brand, and building your domain reselling platform.