The 6 steps to buying and selling domains profitably.

The following article is a guest blog post from one of our readers.

If you have ever wondered how to make money passively, look into domain name buying and selling, seriously. Why? You don’t need to spend all day every day looking for domain names. You don’t have to put in a lot of work. The domain hunting game isn’t as difficult as others will make you think. You can take an ordinary domain and increase its value too, even if it’s not a prime, one-word domain. With sites like NamePros of Flippa, selling domains was never easier.

Of course, the old rule still applies. You have to buy low and sell high. Assuming that you know what you’re doing, you can work as little as possible, but maximize the amount of value you get for the time you spend working. Best of all, the assets that you buy and sell tend to go up over time just like real estate and stocks.

However, unlike real estate and stocks, domain names come with fewer headaches. Sounds pretty good right? Well, there’s a right way and a wrong way of doing anything in life, and sadly, a lot of people who have tried their hand at domain speculation failed miserably. The reason for this is because they don’t follow the basics of domain marketing. Jumping in cold feet and purchasing random domains won’t do you any good. You will need to follow some basic guidelines before you begin, and don’t worry, making money with domain names is actually quite easy. In fact, not most people can manage to do this. In other words, every time you buy and sell domains, you can make a solid profit.

The 6 steps I lay out below pave the way for solid profits. Follow them and you increase your chances of making money every single time you unload your domain assets.

Step 1 – Look for current domain trends. Go to Flippa.com and look up the past 3 months-worth of domain sales. Flippa.com is an amazing resource, because it’s very easy to navigate and it keeps fairly substantial records on all domain sales.

Step 2 – Figure out which niches are the most popular and sold the most. This is where you’re going to put on your thinking cap. With step 1, you have come up with a long list of domains that were sold during the past 3 months. Looking at them at face value, it may seem that there’s really not much rhyme or reason to them. Look deeper. Pay attention to each name and try to figure out which niche or subject matter category such domain names are related to. At this point of your analysis, certain patterns should emerge. There should be some general outlines of which niches tend to sell well on Flippa.com and which ones tend to be ignored.

Step 3 – Figure out the average sales price of the niches on Flippa.com. You can actually look up the value of the domain that was sold. You need to dig deep into this data, and try to come up with average prices for each of the niches. A general pattern should emerge with certain niches on average, fetching more money than others. What’s important here is that you get an average sales price for as many niches you can find.

Step 4 – Retrieve all the sold domains in your target niche. Now that you have a clear idea of which niches sell well and which ones fetch a higher than average price among all niches, the next step is to retrieve all the domains that were sold on that niche during the past 3 months. You should be able to do this yourself in many cases, there’s not really that many domains. We’re not talking about tens of thousands. Even if the niche has maybe 200, you can still manage to do this yourself. However, in the rare situation where you have identified the niche that actually has hundreds upon hundreds of sales, you probably would want to use a software to scrape this information or hire a virtual assistant to do this manually.

Step 5 – Now this step is little lengthy, so I recommend that you hire a virtual assistant to help you out. Usually, they’re very cheap and to the boring work for you. Once you find a person who can takle this, instruct them to come up with unregistered closely related domains. Now that you have retrieved all the sold domains in your target niche, you would notice that some are actually just variations of other related domains. For example – Chef’s Hat Collection may be related to Chef Hat, Chef Hats and Accessories, Chef Accessory Collections and so on and so forth. You should see how the names are related to each other and how they improvise on each other.

Seeing these patterns, you should hire a virtual assistant to come up with similar variations. You need somebody with a good command of the English language. You need somebody who is very good with synonyms or using a thesaurus whatever the case may be. Instruct this person to come up with closely related domain names based on the sole domains you have retrieved in your target niche. After they’ve come up with many variations, the next step is to make sure that they produce a tremendous amount of variations. If your starting amount is let’s say 200 domain names, set a quota for your virtual assistant to produce least 1,000 or even 1,500 domain names, the more the merrier.

Once they have this huge amount of closely related domains, ask them to send it to you randomly. Go through the related domains and make sure that the virtual assistant actually followed your instructions. Make sure that these are thematically related to each other and that they do make sense. Be on the lookout for random word pairings that don’t make grammatical sense or just don’t make logical sense.

Assuming that your virtual assistant did a decent job, instruct that person to then load all those names into a bulk domain name checker. Namesilo.com is a good resource because it can process domain name availabilities in clusters of up to 500 domains. If your virtual assistant was able to find 1,500 or even 2,000 domains, you only need to have that person check for 3 to 4 times for you to get a nice list of unregistered yet closely related and thematically similar domain names. After they have filtered out the names that have been registered already, ask them to send you the final list.

Step 6 – Do a final quality check of your list and advertise on Flippa.com. At this point, you should still have a few hundred names on your list. These are names that are topically and thematically related to hot selling domains on Flippa.com. These are also unregistered domains. At this point, you had to make a judgment call. It doesn’t make much economic sense to register all those hundreds of domain names considering the fact that each registration will set you back at least $8.99.

It’s easy to see that your list can’t cost you quite a bit of money. At this point you should try to pick out 10% of the names that make the most cents and might have a very strong chance of possessing a commercial value. Generally, you should stick to shorter domain names. Try not to pick a domain names that are made up of more than 2 words.

Also, look for domain names that are very easy to remember and hard to misspell. Once you have filtered the remaining list of domain names based on these parameters, you should have a more manageable number. At this point, you should then do a final judgment call as to which names based on your gut instinct would sell faster and for a higher price on flippa.com. Once you have selected those 10 to 20 names, register them and put them up for sale on flippa.com. If you followed the steps above correctly, you should be able to sell a decent percentage of the names you have researched.