Average domain investors typically turnover 1-2% of their domains each year. New investors should be able to take that figure into consideration when trying to determine how many domain names they should own. For example, if I owned 1,000 domains then I should be selling roughly 10-20 per year. Keep in mind, this figure is for end user sales and doesn’t factor in domains you might resell on forums, to friends, or other places. If you’re selling wholesale or doing quick flips then your turnover rate each year should be more in the 5-10% range. If you’re a full time domain investor then you will probably need to do 5-10% just to pay for bills and other regular expenses.
So, how many domain names should you own? It really comes down to your goals and budget. Are you looking to get into the domain industry full time? Are you looking to invest lots of money into purchasing domains? You can see from the figures above roughly how many you’ll need to aim for selling each year. Now let’s look a bit more into what you’ll need to invest.
Good expired domains can usually be purchased somewhere in the $50 to $200 range, and these can often be sold for between $1000-$3000. Registration fee domains can be purchased for $10 or less and usually sell for between $250 and $999. If you were to buy 1000 average names for $100/each, that’s a $100,000 portfolio. If you could sell 1% (or 10 names) per year at $2000/each, that’s $20,000 in revenue before renewals and other expenses. That figure looks pretty good, but renewals can add up and if you were to only sell 5% over the year you would actually end up behind. Your prime mission should be to mix things up a bit and purchase both cheap and slightly more expensive domains (if your budget is somewhat limited). You should also aim to sell a few lower quality names (such as a hand registration name) for slightly more than the averages (for example, $1500). Let’s take a look at another scenario.
Last year you managed to sell 20 names at $500, and these are all registration fee purchases ($10/each). Take the 20 and times it by 100 (if you’re doing 1%) and you could buy 2000 domains, which is $16,000 in registration fee’s and renewals. That leaves $10,000 in revenue which means you lost $6,000 throughout the year. This is why I stressed above that if you’re dealing with registration fee domains, you must be doing 3-4% sales each year to be making money. That number goes up even more if you like a more expensive lifestyle.
With the examples and information above, you should be able to determine how many domains are ideal for your portfolio. Personally, I recommend to buy less and buy better. You are better to pay more money for better quality names and own less of them than to try and make it by doing nothing aside from flipping registration fee domains. Domains that already have some value are sure to consider climbing over time while those that you’re getting for hand registration fee’s most likely will not.