“Just imagine, buying a domain name for $10 and later flipping it at $150, making easy $140” my friend, John’s voice is full of excitement “and all I have to do is just check my email.”
“But things in life are never so easy and simple.” I have doubts in my mind. “This is too good to be true.”
“Yes, it is!” he insisted. “You never take risks in your life.”
“Ok, give me a week time to analyze this opportunity,” I concluded.
And in this post, I explained what I found during my research. This complete guide on how to start a domain name flipping business will cover all aspects in 8 easy to follow steps.
But first, let’s start from the basics.
- What is A Domain?
- What is Domain Name Flipping?
- Benefits of Domain Flipping
- 8 PRACTICAL STEPS - HOW TO START A DOMAIN NAME FLIPPING BUSINESS
- Step 1. Identify Your Strategy
- Step 2. Setting Up Search
- Step 3. Search For Domain Names
- Step 4. Check Similar Domains & Assess Price
- Step 5. Domain Background Research
- Step 6. Purchase the Domain Name
- Step 7. Sell Your Domain
- Step 8. 4 Domain Runs
What is A Domain?
Simply, google.com or wikipedia.com is a domain or a domain name. Domain name is a unique address to access website.
What is Domain Name Flipping?
Domain flipping is the process of buying domain names and selling them at a later date for a profit. Buy low and sell high is the mantra of domain flipping.
Flipping domains generally will fall into several price brackets, (including a multi-million dollar bracket). Here we’ll be looking at domains that cost $10 to $20 which can quite easily sell for over $100.
What is the need for this post, when there are thousands of sites and YouTube videos explaining the process of domain flipping?
The fact is that majority of videos and blogs describe the process but fail to mention one very important factor, that is, the process of checking domain quality. This is a fatal mistake as it could mean your domain name is essentially worthless.
Benefits of Domain Flipping
Before discussing how to start a domain name flipping business, it is important to understand the benefits of domain flipping.
Flipping domains is 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 homes!
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. I will explain this later in this domain flipping guide.
Since the internet is 24 hours 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.
It’s easy. 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.
Buying domains can be quite cheap and anyone can afford it.
It’s addictive, so sometimes you can be easily get carried away when you first start.
The domain market is huge. Every day thousands, if not hundreds of thousands of domains are registered and traded.
8 PRACTICAL STEPS – HOW TO START A DOMAIN NAME FLIPPING BUSINESS
Step 1. Identify Your Strategy
One-word domains are considered ideal, but since they are no more available or very expensive, so I will aim for 2 or 3-word domains.
There are a number of strategies and you should go for the one you find most suitable for you.
Service: Examples: Plumber, Roofing, etc.
Location: Just try to use a city name, do not go as broad as a state.
First and Last name: Esha + jane becomes EshaJane.com
Adjective: Use ‘Great’ or ‘Best’. This also increases domain strength.
News: For example “ChicagoNews.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 Search
To set up our search, go to a website called ExpiredDomains.net and signup for free.
Once on this main page, go to the search bar on the top right of the website.
I will use the news strategy as an example here.
So, I will enter “Chicago” in the search bar and hit enter. Look for the “Show Filter” tab just above the list of domains.
Now on the filter page: Go to the first tab i.e., “Common” section.
Start domain name with: ‘Chicago’ and ends with ‘News’.
Then click check boxes of Domain Name Settings and enable No numbers, No characters, no hyphens and no consecutive hyphes.
Now, move to the next tab “Additional”. Check only .com as TLD and under Geo Domains, check the box ‘only Geo domains’.
Finally, set the budget at a minimum of $1 and a maximum at $20 per domain.
Now you can scroll down and select “Apply Filter” to complete this step of the guide.
Step 3. Search For Domain Names
Once you have applied your filters, you might still be left with quite a long list of available domain names. This is where you will have to browse through the domain listings and search for domain names that you like.
For our search, we found this domain: “ChicagoNews.com“
Now we have to check;
“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 to the next step.
Step 4. Check Similar Domains & Assess Price
Before we do any more work, we want to see if it is even worth doing background research on this domain.
Visit a free website NameBio.com to check similar domain names that have sold.
As we want to compare like with like, for this domain name, our best option is to search for the term “news” which is geolocated and is also a .com domain.
The search results for us seem to be quite promising:
Now add the “Price” of all of the domains that are similar to yours, and divide the number to get an average (in our case: adding$571 + $500 = $1071, then for average $1,071 ÷ 2 = $535.5 Average sale price)
If we purchased this domain name for $20 and sold it 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 of domain names, 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.
Staying on the Go Daddy page, scroll down until you see “Comparable Domains”.
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 them 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.
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!
Step 5. Domain Background Research
To perform further research on domain names we will now use several FREE tools.
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 Chicago, 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). The result shows if the site is indexed in Google or not.
It also confirms that Google does not blacklist (or sandbox) this site.
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 on 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 Ahrefs to check the backlinks.
Now we want to proceed to purchase this domain. We will move on to 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%.
Step 6. Purchase the Domain Name
To purchase a domain name, I 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.
To purchase the domain name:
Go to Namecheap (or one of the other registrar of domain names 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.
When you have the domain name in 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 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 on to pricing the domain names that you want to sell.
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 Domains
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. Go to these sites to park and list your domain.
To park and list your domains on these websites, visit their homepage, and create a free account. Then import your domain list to these services.
A full tutorial can be found at the following addresses:
For Dan.com: Dan Seller Guide
For Afternic.com: Afternic Selling 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)
Step 8. 4 Domain Runs
The majority of domain flippers out there 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 “ChicagoNews.com” which costs $20,
I will now sell this domain for a minimum offer price of $120 (if it sells for more that is just a bonus!)
Also, keep in mind that Dan.com charge a 9% fee and Afternic.com charge a 20% commission rate of 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.
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 sell for a minimum offer of a 600% mark up.
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.
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.
Related Post: 13 Easy Ways to Earn Money Online Fast
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.
What is The 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. I
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.
I would also recommend setting a “cost per month” budget and sticking to it. Use this cost and invest over 3 to 6 months. This will result in slowly but successively building your portfolio.
What if I Face 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 (as explained here in this guide) domain flipping will become easier. I strongly advise creating an excel sheet with domains, the purchase prices, sale prices, and any other relevant information.