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Make Money Faster by Flipping “Ugly” Domains

by DRL Team | Marketing

Updated on
May 30, 2024
There is a different type of domain that many folks in the domaining business will likely overlook, unaware of the fact that these assets can offer a more consistent opportunity for profits on a smaller investment than what is usually required to build a regular domain portfolio.

If you are in the domaining business, you probably know that domainers tend to look for domains that are short, memorable, keyword-rich, relevant, and have potential for brand development in the hopes of fetching 5 to 6 figures per domain, so the conventional wisdom in the domaining business is that assets are valuable when they meet these criteria:

Traditional Criteria for Evaluating Domains

Domain Length and Simplicity

  • Short and memorable: Shorter domains are easier to remember and type.
  • Brandable: Names that are catchy and easy to brand are highly valued.

Keyword Relevance

  • High-search keywords: Domains containing popular keywords can drive organic traffic.
  • Industry relevance: Domains relevant to profitable industries or niches.

Extension (TLD)

  • .com preference: .com is the most sought-after extension due to its recognition and trust.
  • Other TLDs: Niche-specific or country-specific TLDs (e.g., .net, .org, .io, .co) can also be valuable.

Market Trends and Demand

  • Trending topics: Domains related to current or emerging trends and technologies.
  • Future potential: Potential for growth in a specific industry or market.

Exact Match Domains (EMDs)

  • Match keywords: Domains that exactly match high-traffic search terms.

So sure, if you find a domain with all these attributes, chances are you have a golden nugget in your hands, however, finding a domain like this is usually next to impossible and if you happen to be lucky enough to find it you will likely have to shell out several figures in order to secure it and then hope you can sell it for a higher price.

Another problem with buying this type of “pretty” domains is that even if you follow all the guidelines to secure what is supposed to be a winner, you are never 100% sure that you actually got one, because a good part of these parameters are highly subjective, which is why most domainers end up with a bag of worthless domains and hardly make any money on their portfolio.

But the reality is that even a great domain, such as a single word or a highly brandable domain will not sell overnight, because you will need to find a very specific type of buyer who is very interested, motivated, and willing to pay a pretty penny for your assets. Simply put, the market for great and expensive domains is very limited.

So, you have to keep in mind that domains, even great domains, are highly illiquid assets that will force you to sit on them for months or even years before you can actually sell one, which means your investment, big or small, will take a long time to give you a return.

Traditional Domain Portfolio Performance

Indeed, industry experts agree that a good domain portfolio tends to perform at a rate of between 1% to 5% of sales annually, as evidenced by some of the data they share:

Michael Cyger (DomainSherpa): Michael Cyger, a well-known figure in the domain investing community, suggests that a successful domainer might sell between 1% to 5% of their portfolio annually. This rate can increase for those with highly valuable or highly targeted domains.

Rick Schwartz (“The Domain King”): Rick Schwartz emphasizes the importance of holding premium domains for longer periods. His strategy often results in lower annual turnover but higher individual sale prices.

Domain Investment Survey (NamesCon/GoDaddy): Surveys conducted during NamesCon events and through platforms like GoDaddy often report that domainers sell around 1% to 2% of their portfolio each year. These surveys aggregate responses from various investors, providing a broad perspective.

Industry Averages: According to Sedo’s Annual Domain Market Study, the average portfolio turnover rate hovers around 2%. This figure is derived from transactional data across their platform.

Example Calculation:

A domainer with a portfolio of 1,000 domains might sell between 10 (1%) and 50 (5%) domains annually, based on the typical rates mentioned by experts. For premium domains, this percentage might be lower due to higher individual sale values.

The “Ugly Domain” Approach

What if I told you that instead of investing in a portfolio of 1000 domains (and around $50,000 assuming an average acquisition price of $50) to sell between 10 and 50 domains for a 1%-5% performance annually, you could invest in 100-200 domains, SEO domains, and achieve a performance of about 50% annually with your portfolio, meaning you could easily sell 50-100 per year on a small portfolio.

Think this is too good to be true?

Well, it’s not, this is the performance I get from my SEO based domain portfolio, because I focus on domains that have good metrics and backlinks rather than “pretty” domains that are short, memorable and all the rest of it.

In fact, most of the domains in my portfolio are what I like to call “ugly” domains, but they are loved by buyers not for what they look or sound like, but for what’s under the hood, that is, the metrics and backlinks already built into the assets.

There are a few of reasons that explain why these domains perform at such a higher level than “pretty” domains:

Reason #1: They have a practical application for end users regardless of aesthetics, because usually the purpose of buying an SEO domain with strong metrics and backlinks is to fast-track the ranking process and gain traffic in a shorter period, which is a big money saver right from the get-go.

But even if the end user is not looking to rank in the search engines, they may be looking to set up a PBN, in which case the stronger the metrics and profile for the domain the more value and revenue they can get from adding it to their network.

This is all tied to the fact that building up a strong link profile on a domain costs a lot of time and money, so there is a clear financial advantage for SEO domain buyers that motivates them to pay good money for these assets.

Reason #2: Unlike “pretty” domains, SEO domains can be evaluated based on 100% objective parameters, there is no guesswork or gut feeling involved, because I (and my buyers) simply look at numbers, metrics, and the quality of the asset’s link profile to make a decision.

Therefore, buyers of SEO domains have a higher level of confidence in their investment because they are paying for a very well-defined value that is determined by objective parameters that are the standard in the SEO industry.

Reason #3: SEO domains sell faster and in larger numbers because on top of the reasons mentioned above, their pricing tends to be a lot lower than the average price of “pretty” domains.

This, right off the bat, means that you have a wider pool of potentially interested buyers in a position to pay for your assets.

So yes, I may not sell domains for 5 or 6 figures, but I have a higher inventory turnover ratio, meaning I sell more domains more frequently with a smaller inventory, which dramatically improves my cash flow, reduces my holding costs (renewal fees) and increases my return on investment (ROI).

For example, if I buy 100 quality SEO domains, I will usually sell around 1 domain per week at an average price of $280-$480, so if I invest let’s say $100-$150 per domain to build up my inventory, I will have spent $10,000-$15,000, and sold around 50+ domains per year.

This means that, if I sell 50 domains at an average price of let’s say $330 per domain, I will have about $16,500 in annual sales, and a net profit of about $8,500 after I subtract the holding cost of my inventory and the cost of goods (because I need to buy 50 new domains to maintain the inventory at 100, assuming an average purchase price of $125 per domain).

So, if I invested let’s say $12,500 to build an inventory of 100 “ugly domains”, I can expect a return on investment of about 70%, which is way above the industry standard for portfolios comprised of “pretty domains”.

Now, let’s have a look at how you can build a great portfolio of “ugly” SEO domains so you can also get a quick and high return on your investment.

How to Evaluate “Ugly” SEO domains

As mentioned before, the evaluation process of “ugly” SEO domains focuses on numbers and not aesthetics (although if the domain is catchy or memorable it will be a bonus but not a determining factor for a successful sale), so what you will do when looking to invest in one of these assets is to analyze the domain’s metrics and link profile to make sure that it concurrently has at least these:

Majestic Trust Flow: At least 10 and up.

You can check Majestic Trust Flow (TF) for free using our TF checker tool.

Moz Domain Authority: At least 20-25 and up.

You can check Moz Domain Authority (DA) for free using our DA checker tool.

ahrefs Domain Rating: At least 10-15 and up.

You can check ahrefs Domain Rating (DR) for free using ahrefs backlink checker.

Moz Spam score: Less than 30.

You can check Moz Spam Score (SS) for free using our SS checker tool.

Link profile: The domain should have no toxic backlinks, and if it happens to have what I like to call “super backlinks” (such as a backlink from websites like the New York times, Wikipedia, Cnet, etc) then this is a big bonus.

This is the list of negative words I personally use to weed out domains with toxic backlinks in their profile:

xxx, porn, casino, slot, sex, viagra, cialis, escort, drug, pharma, bet, gambl, xanax, poker, jackpot, judi

To run a check for these undesirable backlinks, simply open ahrefs backlink checker and use a chrome extension like “Multi Find: Search and Highlight” to bulk search for the presence of any links containing one or more of the negative words. If everything looks good, then move to a manual check of the link profile to spot any “super backlinks” and take note of how many you found.

Remember, all these elements must be present in the domain’s profile in order for it to hold value, and the reason behind this is that SEO domain experts and investors all tend to have their “preferred” metric and analytics tool to evaluate a domain’s SEO “power”, so making sure that all metrics are solid increases your chances of the domain appealing to a larger number of end buyers.

Indeed, SEO domain buyers know that a single SEO analytics tool such as Majestic, Moz or ahrefs is not 100% reliable on its own to determine the SEO value of a domain name, so what most experts like to see is a set of solid all-round metrics, as this stronger indication that the asset has real potential to deliver SEO benefits.

But remember, aside from the metrics, a buyer will also look at the link profile of the domain to determine if it has toxic backlinks, so once you have determined that a domain has the right all-around metrics, you cannot overlook a manual analysis of the domain’s link profile to make sure it has no links from adult, gambling and other type of sites generally regarded as toxic backlink sources.

Now that we know what to look for, let’s dive into how we can determine the price we will pay and then sell for our “ugly” domain.

How to Determine the Price of an “Ugly” SEO Domain

There are many ways to perform a valuation on SEO domains, but I personally like to use the following parameters to determine the value and price I will pay for a domain name:

Trust flow: If the domain has a Majestic TF from 10-30, I will assign a value of $40-$80.

Domain Authority: If the domain has a Moz DA from 20-50, I will assign a value of $50-$100.

Domain Rating: If the domain has an ahrefs DR from 15-50, I will assign a value of $80-$200.

Spam Score: If the domain has a Spam Score higher than 30, I will usually discard it unless it has some really amazing “super backlinks” in its profile.

Link Profile: If the domain has toxic backlinks, then my advice is to discard it. But aside from checking for toxic backlinks, this part of the evaluation is also about checking for “super backlinks”, so if I find one or more of these, I will assign $25-$50 for each of these links.

So, for example, I would pay up to around $225 for a domain with the following metrics:

ExampleDomainName.com >> TF15 ($50) – DA25 ($50) – DR20 ($80) – SS7 + a clean link profile and 1 Wikipedia backlink ($25) = $205

Obviously, if you can get it for less it is even better. I often find domains with this level of metrics or even better for $150.

Now, a domain with these metrics can be sold for $400-$500 or more. Indeed, I have seen domains I sold for $480 being later resold for often times double or triple the price I got for them, so you not only have end users buying these domains, you also have domain flippers interested in these assets, which expands the pool of potential buyers even more.

As a rule of thumb, always aim for a selling price at least double what you paid for.

Wrapping up

So, what are the steps to a steady “ugly domain” flipping business?

Step 1: Use a database of expired domains or domains in the secondary market that offers all the metrics you need (TF, DA, DR and Spam Score) to find potential prospects:

Suggestion #1: Our own SEO domain database which contains domains from expiring domain auctions as well as domains available in the secondary market with all the important metrics such as TF, DA, DR and SS, and it is 100% free to use for our members.

Suggestion #2: Expireddomains.net, which is also free and provides some metrics such as TF, however, you will have to run your own analysis to get DA, DR and spam score.

Suggestion #3: Paid services like Spamzilla, Domain Hunter Gatherer or DomCop.

Step 2: Filter the domains with the best metrics making sure all assets in your selection have good all-around metrics (at least TF10+, DA20+, DR15+ and Spam Score below 30),

Then, use ahrefs and “Multi Find: Search and Highlight” chrome extension to weed out domains with toxic backlinks and set a side assets that have “super backlinks” built to them.

Step 3: Determine the reasonable acquisition price for each asset and try to secure it at or below the maximum price you set based on the metrics and guidelines we provided above.

Step 4: Sell your domains using Aftenic.com, Dan.com, Sedo.com, Facebook or your own website.

Bonus option: Build websites and monetize the domains, then sell them for a higher price to maximize your profit potential.

That’s it, get to work on building your portfolio of “ugly domains” with SEO value and start profiting at a higher rate from a more consistent and stable investment in the world of domaining.

Free Expired Domain Database With Metrics