Domain Leasing – Become an Internet Landlord

Look into my eyes..I’m going to lease you your new home ;)First I have to quantify this post by saying I don’t know anything about domaining so these are my thoughts on the subject but that doesn’t mean anyone should take it as advice or the like 😉

Domain names, well certainly the good one’s, brandable one’s and generic one’s are all snapped up, more and more people come to the internet each day looking to make money, build websites and start businesses. It seems to me that perhaps it is early days now but the domain market will mature at some point.

Good domains should rise in value, I think most people would agree with that, I also think there should be a lease market that will develop at some point. Think about the high street in any major city that you know of, how many for sale signs do you see up in the main shops? Very rare. People/businesses that own shops know that rather than sell a shop in a prime location for a quick buck they can lease their shops to generate an income, all the time owning an asset that can continue to rise in value.

Side street shops come on the market just like poorer less desired domains but high street premium real estate shops & also domains are rarer. I don’t think it would actually cost that much money to build a portfolio for the future and become an internet landlord.

Sticking with .co.uk domains you can get good domains that would fit a specific niche for £50-£300 quite easily, I bought replica weapons on Sedo last night for a couple of hundred, that type of domain fits the bill for what I plan to test out.

Step 1
Get some decent domains that you can lease, they have to be the obvious & best domain in their niche and in a market that lends itself to selling nationwide and of course online.

Step 2
Do some research, look for specialist magazines and especially companies that advertise in these magazines but don’t show a website address. If you think everyone has a website of some form nowadays, you’d be wrong.

Step 3
Contact companies offering them the prime online real estate in their genre for a fair set monthly fee.

Couple of initial thoughts spring to mind;

What would the length of the lease be?
Lease the domain for 1 to 2 years at a time with a renewal option to give security to both sides. Possible option or first refusal to buy the domain should it ever be for sale. Termination penalties or lack of would have to be agreed upon.

What if the person leasing the domain uses it poorly and gets the domain banned?
If I bought a domain for £200 I would be looking to lease it out for around £50 per month so the domain should long since have paid itself back, although misuse & provisions against certain content could be written into a contract. Advice can be given to avoid misuse by mistake.

How to add extra value to a domain for lease?
Get it indexed and ranking for it’s main term. If someone wanted to sell led bulbs and I had ledbulbs.co.uk for lease and it ranked in the top 10 in Google.co.uk that would have to be an attractive proposition.

I’d be happy to hear your thoughts on this, probably to early in the evolution of the internet for it to be mainstream but I will be taking a few of my domains and I will do research and legwork to see if I can lease any of them out, I’d rather try it and fail than not try at all and wonder.

Rather than park domains or develop them it would be very satisfying to own 50 leased domains that rose in value and generated an income that wasn’t dictated by Google or rankings, why sell a domain for a quick cash injection when you could lease it to recoup your full investment and still own the domain that rises in value. It would also solve the problem of finding real content for domains.

Ach..I’ll give it a shot… to infinity and beyond!

About Scott Jones

Scott hails from the north east of Scotland and started earning online at the end of 2000 building websites for local businesses during which time he won an award from Lord Alan Sugar for Excellence in Enterprise. After having quite a bit of success with domaining Scott mainly runs educational evergreen websites which generate over 3 million visitors per month but is always on the lookout for a fresh thinking out of the box way to turn a buck. Follow on Twitter.

Comments

  1. The main problem with this plan, is that the one who leases the domain takes a big risk.

    Of course a leasing contract should be signed for many years, but yet is hard to invest in a site that you don’t actually own the domain.

    In the real estate market this works because people find you from your advertisements, telephone, catalogues or even your web site. But we know very well that in the internet market your domain is everything.

    • True Nick, I think having the domain rank in Google would probably be the bait that was needed. An empty unit in an offline shopping centre has passing trade to help justify it’s price.

    • The first time I learned about the guys who buy tons of domains – it made me a bit sad to think of all those nice domains not being used to their potential. With you leasing option I can now see hope for their eventual build-out since a well named domain adds tons of value to a well built site.

  2. I know of at least three domains that are leased out and one is a very generic and in my opinion valuable .co.uk.

    It works well for both parties, the ‘landlord’ gets a very fair rent for a prime .co.uk that already has top rankings and traffic for its main keyword.

    The tenant gets traffic to the prime domain, the chance to develop it further and generate sales on the domain.

    I think your idea is workable Scott, although perhaps you could take it a step further and offer the ‘lease’ of a suitable website alongside the domain, this way you have some control over the content of the domain.

  3. It would work great only if the leaser wants it as a landing page.

    For instance you have the domain webmasterforums.co.uk which has great SERPs for webmaster related stuff. I could use it to promote my webmaster forum, and make it a landing page for it. This way even if I lose it it wont harm me.

    On the other hand developing a site on a leased domain would be a huge risk (at least for me)

    • Well it would of course depend on the terms of the lease, if as the ‘tenant’ you have a security of tenure, either in the form of a long lease or guranteed option to renew the lease its not too much of a risk.

      Although, personally it would’nt be for me either, i’d prefer to buy my own domain, but if you target the right market, it may well suit!

      • It would pitched at offline/startup businesses not proficient webmasters like you two 😉 I would also think that in the early stages my advice could be an added value bonus to secure a lease. After all I would aim to have the domain ranking before it was put for lease and would naturally keep an eye on a leased domain.

  4. I have recently rented a few domains and my advice would be to ensure that the contract is bulletproof.

    Remember that the actions of a domain user can alter the value of the domain, even as far as someone else filing a claim against it.

    It is a great avenue for those who want top domains for startups etc, just make sure you protect yourself!

    • Nice one Rob, if I get any further down the road I had thought about contacting you for advice to see if you had already done it :) The contract would be the key & sticky point that I would have to do work on, I can rank domains, I can buy domains and I am pretty sure I could sell a lease but getting a decent contract would be a hurdle.

  5. Thats a really interesting idea, I think it could work really well if you had enough domains that are too much to develop into sites yourself.

    If I was leasing a domain though then I’d want a pretty solid contract as the last thing you want is to build up huge amount of links and authority to find the domain owner deciding that now is a good time to kick you off the domain and use it themselves.

  6. I’ve thought about this before, but never really thought it would be viable. Seems there are sites built up around this idea already, for example http://www.rentdomains.com/

    Man, wish I had thought of that a few years back…

  7. I like this idea, and if there was a contract hammered out that was good enough, you could probably make a mint selling it. It would obviously need to cover minimum terms, termination clauses, terms of use etc. but if all that was nailed down, I’d be up for this…

  8. The idea of domain leasing is not a new one for the uk market. It was brought up at the first uk domain conference this year and will no doubt be there at the next one.

    It’s a valid concept and an option to resale. Sometimes a better option. With contractual and legal bindings it can work well.

    Setting a pre-lease buy clause should imo be part of the contract where the leasee gets first option to buy at a fixed price post lease or during any point of the lease period, and also should have safety in that the domain will be active for the whole lease period.

    For the domain owner there should be safeguards that the domain will not be used for illegal purposes (a contract breaker), and in these days of DRS, not breaching any 3rd party copyright/trademark, and that if the lease is not renewed/bought then any traffic generated from the site is immediately available without penalty by the domain owner.

    Of course, the domain remains the ‘property’ of the registrant at all times.

    Stephen

  9. Domain Leasing :) Now theirs an idea i have not heard of before :) The concept is excellent & I realy like the idea of getting the domain ranked for its main term first,

    I would also add hosting to the picture so allowing the chance to make a few more bucks.

  10. Please note that we are selling domanlandlord.co.uk from our auction at http://www.sedo.co.uk.

  11. So, if I lease a domain name, do I have any control over the use of the name as a trademark. And if the leasee is actually the first to “use” the domain name, as a trademark, might I be exposing myself to the risk of having the leasee, assuming the leasee held the trademark for first use, sue me for damages if I later use the domain name, or attempt to lease it to a third party? Might the leasee, if the leasee owns the trademark, subsequently sue me for cybersquatting if I refuse to lease to said leasee?

    Any information would be appreciated, as the idea of being a domain lessor is a new one to me.

    Ken

    • Part of my lease agreement states that at the end of the lease all rights to the domain, rankings, goodwill are passed back to me, there is also a section where the lessee declares they understand and agree not to infringe on anyone’s rights or trademarks.

Trackbacks

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