Brian from TeenDomainer.com has a post today that brought up some good points about selling domain names to end users rather than to other domain investors. He is right in some respects, but that isn’t the full picture. My primary clients are and always have been other domain investors, and it makes sense for my business.

If I buy a domain name for $10,000, my goal is obviously to sell it for more than $10,000. I can either try to hit a home run and sell it to an end user for much more, or I can settle for a single and sell it much more quickly but at a lower profit margin. While many people like to hit home runs and make huge sales, it can be more lucrative over the long run to make more domain investor to domain investor sales.

If I sell the domain name to an end user for $20,000, that’s a great 100% profit, but it could take months to move it. However, if I sell it to another domain investor for $12,500 within a week, I now have a profit in my pocket and the ability to buy an even better domain name with that base amount.

Yes – selling to end users can be much more profitable. However, you need to consider your time finding the end user and closing the sale into that equation. I generally find it less appealing to sell to end users as a result. My question for Brian is, how many end user sales have you made, and has it been worth your time? This isn’t a knock, but I have been down that road and generally find that end user sales take up much more time and have a far greater rejection rate.

I strongly believe that a person could learn about the domain industry right now, do some research, make a small investment, and make a profit. I don’t think it’s accurate to say that only people who started 10+ years ago can have success in this business. I also don’t think you necessarily need hundreds or thousands of dollars to start.

If I had to start all over again today, and I was only willing to spend $50, I think I could still make a profit. It would certainly take time to make an impactful amount of money, but that is the same as just about everything else.

So how would I start today with $50? I would focus on two things.

1) I would look around to find companies that own a whole lot of domain names in their vertical(s),  and I would see what types of names they own using a Reverse IP tool or by looking at the names that reside on their nameservers. There are quite a number of companies that own hundreds or thousands of long tail domain names, and I would try to find unregistered names that are similar to what they already own. One company that immediately comes to mind is Vacations To Go, although I haven’t sold them any names.

Before registering the names I found, I would do some research to find out who at the company would buy the names. If the company is small, I would contact the CEO. If it was large, I would probably not waste my time. I use the company’s website management page, tools like LinkedIn and Facebook, information on press releases, Whois information, and other sleuthing tools to find the CEO or owner. Once in touch, I would ask if the company is currently buying good domain names. Nothing more, nothing less.

If the person on the management team says the company is buying, I would then register 3 of the best domain names I could find from my previous research. I wouldn’t try to hit a home run and name a ridiculous price on these names. If I paid $10, I would probably offer them for $150/each. It’s a huge profit margin, but not too expensive for the company. It’s also not an amount that would require a lengthy contract or ownership confirmation, which would reveal the recent registration date. He or she will just buy if they like the names. If the company isn’t interested, I would list them on a place like DNForum for $40 just to recoup the investment and move on.

The key is to make sure the domain names make sense and are actually good names that a company would want to buy.

2) I would do geo-keyword research to find unregistered geo profession .com domain names and email people in those professions. I would offer to sell the names for $150/each, again because the price isn’t too high that it would cause someone to take a lot of time to think about. There are a ton of solid names that have been dropping, and I think a person with some time could do well by registering a few and contacting people who are in the field. Many of these types of names were coveted by the professionals in the field, but they were previously owned by large domain companies. You can now buy these names at registration fee, and try to re-sell them at a profit.

Take a look at your local phone book and see what types of urls lawyers, doctors, real estate agents, and other professionals are using, and see if you can find similar names for other cities. I know a large law firm in my hometown that uses NashuaLaw.com as their domain name. I also know there are a bunch of CityLaw.com names unregistered.

There is still a lot of money to be made in this business, whether you started 10 years ago or 10 minutes ago.