So you want to invest in domains? Domain investing can be very profitable if you have a good business strategy, a little time to devote to research and some patience. It’s a business you can operate in the privacy of your own home to generate some income and produce a product that services a real need.

But not so fast…there’s a lot of work and research to be done! Domain investing was very “hot” years ago; practically anyone with a dot com name of anything could register it and make money. Even today, every fifteen minutes a domain name is reserved! So it’s difficult if not impossible to come up with an original domain name that someone hasn’t already registered. The market for domain names has markedly diminished these past few years. The combinations of remarkable words to describe any given business have been pretty much been exhausted and thus, prices for some domain names remain high. Everyone wants a unique, memorable domain name but alas, not everyone can get one.

Domain investing can be very profitable if you have a good business strategy, a little time to devote to research and some patience. It’s something you can do in the privacy of your own home to generate some income and produce a product that services a real need.

Taking the demand for domain names into account, how does one invest successfully in domains? The first premise of investing is to have a product that people want or need. Domains fit that requirement–everyone who conducts business online needs a unique, memorable domain that customers can easily find, so an investor needs to have domain names that buyers are willing to pay for. And without a clear vision of how you will track down buyers for the domain names that you own, you’d best steer clear of domain investment!

If you want to start from scratch and create domains, remember that anything, including a domain name, is only worth what someone is willing to pay for it. And in the case of domain names, supply far outstrips demand. The first thing you’ll want to do after thinking of a domain name is to check if it’s already taken! One of the many sites where you can find out is http://www.worldsgreatestname.com

Certain industries have more commercial appeal than others, making descriptive domain names easier or more difficult to create. A medical practice, for instance, will have a hard time getting a unique domain name while a business that exclusively sells a certain type of orchid will have more of a choice. The value of the business also dictates the price of a domain; eorchid.com, for instance, will not command the price that doctorsoncall.com will fetch. The revenues of the orchid business is a mere fraction of the cash flow of a medical practice, thus it’s much easier to create an original domain name for the orchid business.

One thing in your favor will be that the market has swung from favoring one word names to “longword” domain names. Domains like fish.com used to sell like hotcakes while longer domain names were put on the back burner. Now, those longer and more descriptive names are in demand so you can now market bassandtroutfarm.com and generate revenue! When choosing a domain name, do not use hyphens. People don’t type them and search engines don’t pick up on them. Baseball-fun-night will not generate traffic, baseball-fun-night will!

Once you create a domain name and make sure no one else has dibs on it, it’s time to register it so that no one else can use it and thus make it worthless. There are two types of registration, public and private. Public registration gives your name and address to anyone who should inquire who owns the domain. Private registration protects this information. All inquiries go through the registrar, who forward the inquiry to you to act upon or not.

If you decide that you’d rather buy existing domains, a bit of shopping around is in order! There are businesses that sell domain names. These are usually domains that already have some traffic, a known quantity as it were. The sellers can show you stats on traffic and return visitors and revenue. You can make an informed decision on whether or not a domain of this type and name is a good investment.

Another way to buy existing domains is to pursue an expiring domain. When a website owner is considering letting his domain lapse from lack of traffic, you can buy the domain from him but make sure that it is a marketable domain. Beaniebabies.com will get you nowhere these days but cheapgasnow definitely will!

Fixer-uppers are websites that are slowly dying from lack of traffic. These can be very lucrative investments if you’re willing to invest your time and creativity to increase traffic to the point where it’s valuable. Then, as in the real estate market, you can “flip” it at a profit.

Buying an existing domain, whether it’s a dying website or a fixer-upper, entails more than just cosmetics to make it valuable. You must generate traffic! There are several ways to do this but SEO (search engine optimization) is one of the best things you can invest your time and effort in. If people can’t find the domain there will be no traffic and thus, no value to your domain. The nearer the top of the the search results page your domain is, the more traffic will generate. SEO may require you to juggle around the HTML on your domain so unless you’re a whiz at that, you may want to hire a business that specializes in SEO to tweak your site and optimize your domain’s search results.

Another way to increase traffic on your site is PPC (pay per click) or PTC (pay to click). For a usually low price, you can advertise on a PTC/PPC site that pays users to click on ads, usually for a fraction of a cent per ad. If they see something that interests them, they will usually visit the site and perhaps investigate or buy the product.

You may want to increase the traffic on your newly acquired domain by advertising other products on your site. People looking for a certain product or service will be led to your site by the ads you’re displaying, plus the advertiser pays you for the space.

You may also elect to “park” your domain with a company that will promote it and increase traffic until you’re ready to sell it but they will take a big chunk of your profits. If you are short on time and willing to give a percentage of your income from the domain towards its development, parking may be a viable option to increase the value of your domain.

In short, domain investing can be fun and profitable if you’re willing to do a bit of research and work.