The Hidden Cost Behind Domain Name Portfolios

A few weeks ago I received an email from someone who had a large portfolio of domain names for sale. This isn’t unusual, but what can be frustrating is seeing the same mistakes and unrealistic expectations, over and over again.

Consequently, I thought there are some interesting lessons for newcomers to the domaining industry, so I thought I’d share them. For confidentiality reasons I’m not going to reveal any information that could identify the seller or their domains. I have also “rounded out” the numbers below:

Parking Revenue: US$3993 per month
Price: 20 months parking revenue

The knee-jerk reaction for many people will be “$4k a month of parking revenue” is pretty good. From my perspective, it was “What’s the COST to me to keep this portfolio going?” After reviewing the documentation, I saw there were 3,300 domains. Of course, what was omitted from the documents was the COST to renew these domains. I know from experience, it costs about $17 per year for EACH of these domain names (they are ccTLDs). So you do the math…

Registration Fees: $56,200 per year
Parking Income: $47,916 per year
LOSS: -$8,284

Doesn’t look so good anymore does it? Now that is assuming that you are buying the portfolio for parking (not development or splitting it up for domain sales etc..).

The reason I’m pointing this out, is that there are many domains for sale at the moment and many newcomers (both investors and bloggers) to the industry.

If you are just starting out, domain investing can be time consuming and hard work. Don’t fall into the trap of buying up big straight away, you will almost certainly lose your $$$.

World’s Largest Online Domain Name Auction – On eBay

Fernando Escovar, a Los Angeles photographer is auctioning off his domain name portfolio, reported to be valued at US$1.5 million. The portfolio allegedly contains 1500 English, Spanish, Tech, TV and geo-centric domain names.

Some of the domain names include: lasvegastowers.com, lasvegastower.com, share-holder.com, comision.com, vegasi.com, and reporttv.com.

Escovar explains “In the game Monopoly, the person with the most properties usually wins. In this virtual age, whoever owns a list of highly valued and trafficked domain names owns the internet”.

The auction will go live on eBay on June 3, 2008 with a portion of proceeds going to the Make-A-Wish Foundation.