How to Make Money Flipping Domains
Updated: Aug 23, 2022
While domain flipping continues to be considered controversial in some circles, it remains a feasible prospect to generate extra money if you’re interested.
In this post, you're going to learn:
How to discover undervalued domain names
How to list domain names for sale
How to negotiate for the best price
Table of Contents
Introduction
If you’re not tech-savvy, the term ‘domain flipping’ might seem unfamiliar. However, if you’re looking for a viable way to make money in the world of online real estate, then this guide is a must-read.
Let’s look at the A - Z of domain flipping and how you can make money doing it.
But, before we get into domain flipping, it’s best to first understand what a domain is.
What is a Domain?
A domain is a website’s address that users typically type in a browser URL to visit a site. The concept of web domains predates the internet - where an early list of 20 domains was used by the US government’s ARPANET network back in the 1970s.
Computers use IP addresses, which are a series of numbers that other computer recognize as an "address" on the Internet. However, it’s hard for humans to recall strings of numbers, hence the development of domain names.
Domain names make it easier to distinguish Internet identities without having to use numerical IP addresses.
A domain name is made up of a mix of numbers and letters and it can work in combination with different extensions, for instance, .net, .com, and .gov.
You need to register a domain name before using it.
Every domain name is distinct, so no two websites can have a similar domain name. Therefore, if a user types in your domain name, they’ll be directed to your website and nobody else’s - think of it as Internet ‘real estate'.
While a domain name is an important aspect of owning a website, it’s only a part of the equation. If you plan to have a website attached to your domain, you’ll also require a hosting service for file storage and content. It’s worth noting that domain ownership does not include hosting costs.
What is Domain Name Flipping?
This term describes the process of buying a domain name to sell it at a higher price later. Based on the domain’s desirability, the profit margin could be significant as long as the timing is right and you’re good at identifying future prospects.
The process demands that you invest time and effort to purchase good names and actively seek potential buyers.
Domain flipping professionals assert that once you purchase a domain, it’s deemed hot property. This necessitates going through the hassle of choosing appropriate opportunities at an opportune time to seal the deal.
Flipping refers to the transfer of ownership of the domain name and does not include any website content that was previously associated with that name. While the process sounds simple, it isn’t necessarily easy.
There are numerous steps to successful flipping. To succeed as a flipper, you require a fair amount of marketing proficiency along with negotiation, research, and networking skills.
A word of caution - never base your strategy on the assumption that just because somebody spends a considerable amount of money on a domain name, they’ll invest a lot of money to obtain a similar name; this rarely happens.
How to Flip Domain Names to Make Money
Although billions of domain names exist, you still need to know what will sell and what won’t. The process involves researching upcoming trends and opportunities. Without research, you’ll end up wasting time on domains that might never sell. Here’s how to flip to generate money:
Find Strong Domain Names to Sell
The initial step in domain flipping is to determine the appropriate domain. This step takes considerable research coupled with some luck. To locate a domain name, visit any domain registrar and search depending on the topics you think are lucrative; or just enter a URL below to see if it is available.
Some flippers use software that helps examine a domain name to decrease the time required to vet a prospective domain. Upon locating a good domain, buy it through a registrar. It will cost you around $10 annually to maintain a domain.
Numerous domain registrars exist, with each trying to sell the best domains. However, not all provide the best tools to determine the perfect domain. Some will even try to sell lesser-known extensions at a cheaper cost. Some tips to find a name for flipping include:
Domains Comprising of Keywords
The easiest and most reliable way to domain flip is to find domains with popular keywords in them. Nearly every website owner seeks a keyword comprising a domain name that’s associated with their website topic.
A good keyword generates a high search rate and a good CPC- cost per click rate. You can implement Google’s Keyword Planner to find popular keywords, this, in turn, will allow you to find high-value domains with good search engine compatibility.
Memorable Names
Only purchase or register easy-to-spell and memorable domain names. A website owner or company will always prefer a memorable domain name to attract more visitors to their site.
Since these names are easier to recall and type in, you might discover they’re more costly upfront. Therefore, you’ll want to establish the amount you might be able to sell it for before purchasing.
If you can find a brief domain name, you should buy it before somebody else does.
Names Featuring Popular Extensions
Numerous extensions exist beside .net, .com, and .org. However, if you’re new to flipping, you might want to stick to .com domains since they’re most popular. Most businesses seek a .com domain because they’re easy to sell and are widely recognizable over the internet.
Sell the Domain Name
Selling domain names can be as challenging as locating them. You can consider some platforms to list your domain for sale. A common one is Flippa, which takes a proportion of the sale, so make sure you factor this before listing.
Nonetheless, the process is comparatively easy.
Another choice includes selling the domain name privately. While this can prove challenging if you lack connections, there are ways to make private selling easy. The first involves developing a landing page for your domain where you can incorporate its cost and your contact information.
The second option involves publicizing your WHOIS information so that others can identify you as the owner of the registered domain and see your contact information.
WHOIS is a query and response protocol that is widely used to search the databases of domain registrars to determine who owns a particular domain name.
When you buy a domain name, your personal information is recorded in the WHOIS database of that particular registrar. Most registrars will offer to keep this information private for an additional fee, but keeping your information public will make it easier for perspective buyers to find you. However, publicizing your WHOIS information will also generate a lot of spam emails too.
Remember, domain flipping is more of a numbers game.
Some of the domains you buy may never sell, so you must generate sufficient revenue on those that sell to recover your total investment costs while leaving a considerable margin to generate a profit.
The most successful flippers usually list their domains on different marketplaces to exploit their likelihood of locating buyers. Ideally, you’ll want numerous buyers competing for your domain; this will increase sales costs.
Ways to Sell Domains
There are three ways to sell domains.
The first is through direct sales where you state the domain’s price, find a buyer who agrees to it and the sale takes place.
The second and most popular means is through an auction. In an auction, you set a minimum cost for your domains and hope that people will bid on them. You’ll find that thousands of domains sell through different marketplace auctions daily. Auctions typically last from 4-30 days.
The third way of selling domains is through backorders. In this approach, most marketplaces permit prospective buyers to put a domain on backorder. Prospective buyers determine the price they’re ready to pay to buy the domain, and as the domain’s owner, you receive alerts when this takes place.
Subsequently, you can decide to contact the interested party directly for further negotiation if you believe their backorder bid lies within an acceptable cost range. Bear in mind that domain marketplaces vary somewhat in terms of selling policies, the functioning of the selling interface, the kinds of auctions held, and other aspects associated with selling and buying domains.
You should explore each choice meticulously before you commit to selling through a marketplace.
How Much Does a Domain Name Cost?
Before you get started with domain flipping, you’ll want to consider the budget. You’ll discover that domain costs differ among registration providers. The most lucrative domains that are up for purchase often have a .com extension.
New domain registration can be as low as $2.99 annually while .com domains begin at $9.99. The .com extension is the most popular extension by far since most people equate it with domains and frequently type it by default. This is because, after decades of getting used to .com domains, most people are psychologically primed to remember them.
Alternatively, you could purchase other domain extensions, for instance, .io, .org, and .tech. Keep in mind that costs for new domains that you may have developed yourself are usually low. On the other hand, it can prove challenging to come up with potentially lucrative names that haven’t been taken already.
Remember, countless domains undergo registration daily, so you must be relentless in pursuing domains that have considerable profit potential. Prices for abandoned domains and those bought from resellers range from 99 cents to hundreds or thousands of dollars.
As a flipper, you should have a reasonable clue of a domain’s worth before investing money in domains you intend to flip.
You can adopt various strategies when buying domains to flip. If you want optimal results, it’s prudent to vary your flipping strategy.
The different purchase strategies are:
Develop a New Domain
You can develop and purchase a new unregistered domain.
Purchase from a Reseller
You can purchase used domains directly from those selling for much less than their actual worth
Buy Abandoned Domains
You can consider previously registered domains that remain abandoned and buy those you feel are most promising.
Where Can I Purchase a Domain Name?
There are many registrars through whom you can easily purchase a domain name. Selecting the right domain registrar saves you from problems in the future, so it’s wise to consider top registrars.
This registrar is one of the most popular worldwide. They permit you to register top-level name extensions and dozens of country code top-level domains. The registrar has a fast search tool for researching domain names.
Furthermore, their search reveals premium domains. You’ll have access to all the management tools that you’re likely to expect from a major registrar, including whois, privacy protection, bulk registration, email account, and other extra services. You could even purchase web hosting if you wish. This registrar is ideal if you are only looking to purchase a domain registration without web hosting.
This domain registrar is one of the biggest worldwide with more than 7 million registered domains. They allow you to register a wide range of domain extensions, including .com, .info, and .biz. Due to their size, their services include website builder, web hosting, online marketing, and IT support.
Their search tool will give you access to available domains and reveal premium domains as well. Their platform also comprises features such as private registration and DNS management. You could equally obtain a free domain from the registrar if you buy their WordPress hosting plans.
This hosting company is one of the largest worldwide and is an official WordPress hosting partner. They include domain name registration as part of a web hosting service. You’ll find their interface intuitive for beginners and a very helpful chat support.
They also have numerous features that website owners require, for instance, the ability to include unlimited subdomains, website malware protection, and more.
The popular company offers website owners a one-stop-shop for shared website hosting and domain names. They provide a good choice of extensions, easy-to-use DNS management tools, and domain privacy. You’ll find their search tool is easy to use and can help you locate an appropriate domain name quickly and effortlessly.
Their domain management area is well documented and beginner-friendly, allowing easy domain transfer if necessary.
GoDaddy is one of the most popular and oldest domain registrars. They manage over 77 million domain names for more than 18 million customers and provide a wide range of popular name extensions from which to choose. Beware that their prices are extremely competitive but you might secure a considerable discount in the initial year of your domain’s registration.
GoDaddy’s domain management interface is easy to use and permits domain name transfer, the change of name servers, and customization of other domain settings. They also have a suite of other services, including email marketing, website builder, and hosting.
What To Watch for When Purchasing a Domain?
Although buying a domain name can be exciting, there’s more to it than simply locating the perfect name. Keep in mind that not all registrars are the same. Some implement tactics, for instance, hiding charges or selling your data to generate more money. With these few tips, you can identify what to watch out for before purchasing a domain.
Beware of 'rock-bottom' pricing
Like any other buying decision, the price can be a major factor. It’s easy to find yourself being lured into purchasing a domain at a very low cost. Don’t be deceived: some registrars issue promotional pricing at a very low price, but then conceal lots of other charges in the contract, including charge elevated renewal rates, and lock you in.
Generally, be wary of registrars issuing rock-bottom prices as they may follow unethical practices to make money.
beware of hidden charges
Numerous registrars depend on the fact that most people rarely read the fine print. Before you purchase a domain, examine the Terms of Service and watch for any dubious terms, fees, or obligations. Make sure you examine the renewal rates and ensure you purchase only what you want and need.
Extras and Add-ons
Registrars will frequently cross-sell or upsell features you don’t require. For instance, they might propose you buy extraneous domain endings or they might suggest you bundle your domain with other services you might never use.
Transfer Charges
You might want domain transfer to a different registrar in the future. Ensure that the Service Terms don’t have transfer-out charges for shifting your domain to a different registrar. These charges can be exorbitant and breach ICANN policy.
Beyond the price, some registrars make it virtually impossible to facilitate a transfer by making the process hard to navigate and cumbersome. It’s recommended that you examine the ease of the transfer process before selecting a registrar.
Privacy Protection
Since domain details are public in RDAP and WHOIS directories, numerous businesses and people opt to keep their personal data private. After all, unprotected data is vulnerable to being mined by scammers and spammers. You’ll want to work with registrars who issue privacy protection at no cost.
Be wary of registrars who issue premium charges for 'privacy services,' particularly those who offer to provide their details on the registries rather than yours, secretly giving them domain ownership.
Transparency
Look for registrars that provide transparency in their practices and pricing. For instance, it should be easy to locate renewal rates and the processes for canceling or transferring your domain registration.
It’s not uncommon to find some registrars offering cheap registration for the initial purchase only to charge you exorbitant prices for domain renewal the subsequent year.
They might even make it hard to cancel your order. Therefore, find a registrar whose pricing information and service terms are upfront. This will prevent unnecessary surprises down the road.
Distinguish Sales from Support
Some registrars lack support personnel but have salespeople instead who are trained to convince you to purchase unnecessary add-on services while pretending to provide customer support.
Consider reading reviews of their support team or contact their support line before buying. You want a registrar that provides professional and courteous assistance and service.
Data Protection
Besides failing to protect your information from public records, some registrars go to the extent of selling your data to 3rd parties such as marketing organizations. Some will even mine the WHOIS database and send fabricated renewal invoices, getting you to transfer your domains unknowingly.
Ensure you locate a registrar that assures you that they’ll never misuse or sell your customer information for marketing.
Tips to Make More Money Flipping Domains
Like any other business, you require relevant experience to succeed as a domain flipper. Remember, purchasing domain names for sale at a higher rate isn’t easy. You might have to remain under the radar for at least one year and learn everything associated with domain flipping before you can begin selling domain names for profit.
For some, flipping is simply another income source or just a fun way of generating money. For others, it’s a full-time career.
Whichever the case, these tips will help you generate more money:
Do Your Research
Purchasing an appropriate domain is crucial to generating money as a domain flipper. That means you should analyze all facets of a domain before deciding to buy it. A major mistake new flippers make is the failure to understand what makes some domains profitable while others have a minimal chance of generating a profit.
Numerous factors determine whether a domain can earn a considerable ROI, so the better you become at researching names, the higher the likelihood of you succeeding.
One way of obtaining a quick overview of sales trends is by visiting platforms such as NameBio to establish domains that have undergone recent sales.
Make sure you note the amount of money various domains are generating.
When researching sales, you must pay attention to the used extensions, keyword patterns, and length. Keep in mind that trends change often, so your research should be ongoing.
Check for Penalties or Bans
Before you buy an expired domain, you want to make sure that Google hasn’t banned it; otherwise, it could devalue your sale.
Google bans domain names that don’t comply with their terms & conditions.
You might also want to check whether Facebook has banned the domain for spamming. You can confirm whether a name is banned on Facebook by posting the link to your timeline.
When it comes to penalties, double-check with the seller to see if any penalties exist.
If the domain you’re purchasing is expired, just confirm it with Google Search Console and wait for five days.
If any manual penalties exist, they’ll emerge.
If you discover that Google has blacklisted the site as spam, a manual penalty will be present. In such cases, you could try submitting a reconsideration request.
Give it Time
Domain flipping isn’t always about generating quick cash. At times, you must spend days researching before making a profitable sale. Consider flipping as an investment and keep in mind that locating the right price and buyer for a certain domain doesn’t occur overnight.
Depending on your domain’s popularity, it might be prudent to avoid accepting the initial offer.
Instead, obtain numerous offers before selling. It’s always better to wait for several months or even years to sell a domain name for a higher profit than settle for a meager profit.
Consider investing in a Tool
If you’re keen on buying an expired domain, there are numerous tools for browsing various domain stats and auctions. Such tools provide an easy way of viewing the domain authority of numerous domains, their price, and other elements that are worth considering.
The right tool will also help you locate suitable expired domains that are up for sale.
You will find numerous tools on the internet for collecting expired domains, but, most are either pricy or complicated. You'll want a tool that’s easy to use and cost-efficient.
Don’t Forget About Taxes
Essentially, the IRS determines that the costs of obtaining domain names should be capitalized under Sec. 263 and the costs must be amortized over 15-years under Sec. 197.
According to the IRS, you must capitalize the costs because the domain will offer a future benefit to a user irrespective of whether the domain name is non-generic or generic.
This means that if you purchase and sell a name for revenue, you should set some of that money aside in anticipation of taxes.
Tips to Find the Perfect Domain Name
Although it might seem easy to register or purchase new domains and sell them for good money, it isn’t. You must find out about the domains to buy or register and their worth.
These tips will help you select a name for flipping:
Local Domains
Local small businesses emerge all the time. By obtaining common business domain names, you’ll be able to sell them to local business proprietors looking to start.
Purchase Deleted and Expired Domains
Purchasing deleted and expired domains can be advantageous but demands considerable experience. You must be cautious when choosing these names. Make sure you seek a high domain name with quality backlinks.
A reliable domain name with high authority should feature several quality backlinks.
Less scrupulous domain owners may implement black hat SEO tactics to boost their ranking by generating harmful backlinks; but this is ill-advised because Google algorithm has been adapted to distinguish between good and bad backlinks and will adjust a domain's search placement accordingly.
Look for Short Domains
Shorter domain names are usually more popular and you can also sell them for a higher price. Plus, a shorter domain permits visitors to identify what a business is about.
They’re also easier to understand and remember, and allow easy communication.
Short domains comprise two or fewer words and are concise.
They’re also easier to incorporate on printed brochures, materials, and business cards. Longer names are difficult to type, pronounce, remember, and spell.
Purchase Brandable Domains
Purchasing branded domains is another option worth considering. Branded domains are domains that contains the names of unique products or services, but haven’t been attached to company websites; and have not been trademarked.
The idea behind creating them is that a suitable buyer will eventually purchase and use them for a particular brand.
A distinct, premium domain name can be crucial for a specific brand or company; and can potentially fetch a very handsome price.
While descriptive names come with a predefined connotation, brandable domains are defined by the brand they signify. They aren’t limited by keywords that are pertinent to what a business does.
They can be unregistered or registered, but shouldn’t be in use currently.
Forms of Brandable Domains
Keyword Based
With this type, the keyword will hint at the services/products your business offers, the positioning, or the emotions your clients will exhibit when using your business. For instance, Flickr offers a distinct play on the term 'flicker' as it associates with taking pictures and photography.
Vessel Names
These names are made up and permit you to develop your brand without any preconceived opinions or biases associated with your brand name, thus permitting maximum control over your brand.
Features of a Brandable Name
Keep it brief - Brandable domains should be as short as possible. While quality names can comprise up to 15 characters, brandable names shouldn’t surpass 7 characters.
It should be catchy - A catchy domain is important because buyers will want their business name to draw people’s attention. The name you select should feel, look, and sound fresh and thrilling.
It should be pronounceable - Brandable domains must adhere to the general rules of branding. No confusion should arise on the name’s pronunciation. Therefore, it must read like it’s pronounced without needless letters that make it difficult to utter.
Opt for Purchase.com Extensions
Although it can be tempting to devise clever names with new extensions, .com domains remain the most credible and established extension. Furthermore, newer extensions can appear untrustworthy to many Internet users.
Domains with the .com extension are also memorable. Numerous users, particularly those who aren’t as tech-savvy, will type '.com' automatically at the end of any domain. Another reason you might want to opt for this extension is that they have international recognition. Therefore, it will appeal to businesses that plan to go global at some point.
Is Buying and Selling Domain Names Legal?
Domain flipping is legal, but cybersquatting isn’t. Cybersquatting refers to the practice of buying a domain that integrates a trademarked name to benefit from the trademark-holding entity’s status.
Bottom Line
To generate money from domain flipping, you need a keen sense of what constitutes a valuable domain and the kinds of domains, buyers find most appealing today.
The most successful flippers purchase comparatively low-cost domains and earn six figures from flipping them. With diligent research and experience, you can learn the tricks of the trade when it comes to domain flipping and become a pro at it.
