Erik’s Blog: Board Shorts and Business Suits

You can read Part 1 in Buying and Selling Domain Names for Profit or continue on. 

I’m not going to divulge my actual investment dollar amounts right now, I may in the future, but for now I’d like to keep them secret. I can say that it’s not small potatoes so these numbers aren’t skewed by one large return. I’m going to use percentages because it’ll keep my investments secret for the time being. There is a way to figure out the initial investment but I’ll leave that to the people who really want to know (although one large number has been left out.)

I started back in the late part of June and the numbers go through to this month. I bought a few domains each month and tried to reinvest my earnings each month to increase the monthly return and build my domain portfolio. Here are the month to month ROI’s adjusted each month for domains and reinvested earnings. I took the total invested up to the end of that month and divided by the earnings that month.

You’ll see right away that last month my earnings jumped considerably. The only reason for that is because I sold a domain name in which I made a sizable profit. If I weren’t to have sold that name my earnings would have been about 8% again and I would have had a total return of 38% with a yearly return of 76%.

Still a very respectable return. Feel free to use either chart for your personal decision, either way, both returns beat many other investments out there.

 Also of note. I recently evaluated my domain portfolio by asking for an appraisal in one of the domain forums and was offered the same amount as my total investment which, if I sold the portfolio then, would have mad my return 138% or an estimated 176% on the year.

The spread of earnings on each of my domain names ranges from a 1% to a high of 80%. These are just monthly returns and do not include sales of domain names. It’s like the earnings a company makes off investing on a piece of land or equipment.

From these numbers you can see that I was able to earn a steady return of 6.3% per month (equating to 76% per year). So on a simple $1000 investment I would make $760. I can live with that, so can most other investors willing to accept a little risk (which I delve into in Part IV). You must also remember that this is an investment that you do no more work other than searching, buying and letting sit.

If on the other hand I were to take the total return on my investment including sales. I would be averaging 10.8% per month or 130% per year. So on a $1000 investment I would make $1300. More than my initial invest. So even if I couldn’t give the domains away at the end of the year I would still make money. Actually I would still make a 30% ROI, still an amazing return when compared to the stock market.

In the next part I will be discussing the basics of what I look for and how I go about buying and selling domains. That’s right I’ll be revealing some of my “secrets” to my domaining world.