One way to make passive income online is by flipping domains. Flipping domains is like participating in online real estate. The properties consist in the domains, and your goal is to purchase the best properties, and to hold onto them until you find a buyer.
What is domain flipping? Domain flipping consists in buying domain names, parking them and then selling them later on at a higher price. Many people are making thousands of dollars by simply registering domain names for $1 a piece and then selling them for $5,000+ upwards.
Below, we go into detail on how to make passive income by flipping domains, therefore buying domain names, parking and then selling them to the highest bidder. Learn about some of the risks, difficulty level, seasonality and more when flipping domain names as a beginner.
Quick Introduction to Buying & Selling Domain Names for Beginners
Domain flipping can be a great passive income business. What you need to do in order to make money is to buy domain names, park them for a period of time and then sell them to people willing to pay for them.
This passive income method involves little time and yields very high returns for the best domains. The ROI you can produce is exceptional, and non-seasonal, meaning that you can purchase and resell domains all-year round.
Even if this method is very easy to implement, it comes at a very high risk. If you are looking for a risky passive method of making money, but one that is easy to implement, yields high profit, takes little time to implement and can be performed every day of the year, then you need to be in it for the long haul.
How Buying & Selling Domain Names Works
Buying and selling domains is similar to making money by buying and selling real estate in the real world. You are buying a property in a good location and a low price, and after a few years you are re-selling it to a buyer willing to pay you 20-30%+ more. Buying domain names is very cheap. You can start off with just $100 a month for about 10 domain names (.com’s usually cost about 10$ each). However, your success depends on the domain names you choose, the niche you’re in, finding motivated buyers, looking for trends, and the list goes on.
The domain names market is huge. Thousands of domains are registered on a daily basis. For example, when new businesses are launched they look for domain names for their company. This is one clientele for people who are willing to sell them for a higher price. That’s where you come in. You are the person new businesses will come to if you purchased the domain before them.
Let’s take a theoretical example. Let’s say that you bought 2 great domains, for example pizzanewyork.com and pizzanewyork.net. Pizza shops opening up in New York may be highly motivated to buy these domains, because they are already SEO-optimized for searchable keywords like “pizza shop” and “pizza shop New York”. Imagine if you bought these domains for just $10 a couple years ago, and you are now selling them for over $1,000.
If you want to make money with domain flipping, you need to remember that this method won’t make you rich overnight. The initial setup is a very active process that will take up many hours of your time, from research to selling. It takes time to get better at it, plus you also need a little bit of luck to land great offers. Without further ado, let’s take a closer look at the practical steps on how to make money online registering domain names, parking them and then re-selling them at a higher price to the right bidder.
1. Establish your Budget
First of all, you need to know for sure how much money you are willing to invest, because you will have to invest money upfront to purchase and park a couple domains. Come up with a starting budget you are comfortable with. At this point, we recommend a budget of around $100-$200 to be able to purchase 10 to 20 domains around $10/year each. Once you selling and you can reinvest and purchase more.
2. Find a Niche
In order to make money with domain flipping, it is imperative to choose a niche. We gave an example with a pizza shop in New York above, but that’s nothing more than an example. The truth is that there are many other more niches. You need to go deeper and choose potential business names and more.
3. Narrow your Focus
In addition to finding a niche to focus on, you need to choose the right domain name extensions. Do some research and try to find extensions that are popular in 2019. It is recommended to start out with .com’s as these are something everyone recognises. However, there are other extensions to choose from including newer ones like .store and .app.
4. Find Great Names That Are Searchable
The key to be successful in buying domain names, parking them and re-selling them is to find the right names to focus on. Think of it this way. You are buying a valuable name that will prove to be a great asset to a future buyer. Think ahead of the curve and try to determine what people will want in the next few months or years.
When searching for names, you should start with keyword groups. These are words people actually use to search for things. Our own name is a good example of this – Beginners Passive Income. If you are looking to learn more about making passive income online, and you are a beginner, you can imagine our site strives to serve you just that – passive income ideas and guides for beginners.
Other types of names you can look for are potential business names or events. A good example is the FIFA 2022 in Qatar. That event, which will be held between November 21 and December 18, has a huge potential for domain names. Lastly, geographic names that relate to cities or countries can also be sold to people who want to start their own local events, businesses or sites.
5. Think Ahead on Pricing
Think of who would buy your domain names. How much profit can they get out of it? How much money will they have to spend on advertising the domain? Is it a small business domain name or a large business? And the list goes on. If you can answer all these questions, then you can easily sell your domains for very high prices. When evaluating the resale value, do not forget to take the SEO value of a domain into consideration.
6. Purchase the Domain Names
To find available domain names, we recommend Namecheap. It’s a service we use and love for their user-friendly back-end, two-factor authentication (extra security level) and excellent support.
- To buy a domain name
- Go to NameCheap.com (this link will send you to our Resource page for even more info).
- Search for the domain name you would like to purchase (enter the extensions like .com for more precise search results)
- If the domain name is available purchase it
- Leave it in your account and activate auto-renew if you would like to keep it for more than a year
Take note that domain names are renewed yearly, so you will be paying for them every year.
7. Sell Them
NameCheap makes it super easy to resell domains right within your control panel. Just indicate that the domain is for sale and it will be available to purchase for anyone searching for it. NameCheap will make the sales and bidding process seamless.
How Passive is Flipping Domains?
Domain flipping has a huge potential of becoming passive. However, this business opportunity will never be 100% passive. You’ll always have to spend time buying new domains, advertising them and finding buyers.
Startup Costs
This business is very affordable. You can start small, with just an investment of around $100 you can already get about 10 domain names. Once you get a few sales, you can reinvest more money. If you manage to land a good sale, you can make substantial income.
Difficulty
Running this business is pretty difficult, especially in the beginning. You might need to spend hours looking online, educating yourself and reading how to articles. You may find excellent information on YouTube on how certain people have made a lot of money flipping domains. Finding excellent domain names is a skill that takes time to learn.
Time
Fortunately, to buy domain names and park them and sell them afterwards, you only need to invest much time. After the initial learning and research period, it takes only a few hours a day to manage your business. You can easily have a full time job and still use this passive income method to make ends meet.
Risk
This business is very risky. You need to be aware that you might fail to sell certain domains. In terms of liquidity, you might have to wait years until you make a profitable sale for certain domains. You may never sell some domains and lose the money you invested to purchase them.
Seasonality
Selling domain names can be done all-year round. That’s a great benefit of this passive income method.
ROI (Return On Investment)
In terms of ROI, this passive method beats anything else on the market. You can easily get a 1,000x ROI for a single transaction. You can buy a domain for just $10 and then resell it after 2 years for over $10k. Some users purchased domains for just $10 and sold them for over $1 million.
The potential to make money buying domain names and then reselling them is definitely there. You just need to assume the risks and overcome the learning curve related to buying domain names and reselling them.
Related Questions
How much money can you make flipping domains? Some sites claim you can produce $100,000 (source) by flipping domains, however, most domain flippers earn between $500 and $50,000+ depending on the domain name and the demand for it (source), others have made millions (source).
