Domain Leasing

Domain leasing I feel will continue to be one of my main focuses this year while others tick over, I am either having more luck or business owners are more receptive to new ideas in challenging times, either way I feel after a year or so of working quietly I am beginning to reap some of the rewards.

The premise for domain leasing for me for the most part is to buy a good product based generic UK domain, build it out as much as can be justifiably done to get it indexed and possibly ranking and then offer it as a second storefront to existing businesses, show them the advantage of a generic, high recall & recognition value especially when advertising, easy to spell, niche dominance and market credibility as well as some traffic.

The first year was mostly working on getting some good domains and after a great early lease it’s been odd pickings here and there to finally end up at £775 per month in income at the end of last year for a business built literally from scratch. 

This year needs to be the year I take this side of my business up a notch, the basic strategy which I have detailed on the blog is sound and I’ve tested it out enough times to feel happy with the principle. I decided in January my goal for this year will be to get up close to around £2000 per month from leasing which will be a pretty decent sideline, you have to remember that if I get it up to £24k annual income by the end of this year then not only is it a business earning pretty much £24k net passively, it also has assets that amount to far more than that, the lease itself increases the value of the domain hugely.

I’ve been asked once or twice to list domains for others and lease out for others but that’s not on the cards just yet, for now I need to ensure I’m getting a decent payoff for investing the time & effort needed to see a domain through from purchase to lease and that means ignoring the £15-£45 per month price bracket. One of my better domains was leased out this week for £500 per month, it was 2 long months of waiting to conclude the deal but it’s done and I’m very happy to have it wrapped up, I’m happy to say that for the most part I’m still working on the general rule of trying to get my capital invested back in around 12 months on a lease of 2 years+

Already done some more research and bought 2 domains, one for £600 & one for £800 which I feel are good candidates for leasing out at around £100 per month and I feel I have the inventory here to push on. Like I mentioned earlier I have had good feedback in the last few weeks when approaching companies, one agreed to lease 3 domains for £360 – not sure if it will come off and I can’t include it until the paperwork is done, I’d really like to get a few done this year around £100-£200 as they would add up quickly, however for now the confirmed passive leasing income stands at £1275 per month.

Edit: I created a category for domain leasing which started with this post some time ago!

Lease for others, I’d rather not.

I have been asked a few times if I would list or lease other people’s domains, it’s not something I am particularly interested in at present, a pretty good example of why not happened this weekend and went like this:

I enquired about a nice one word UK domain, offered some money but the owner who had the domain since 1996 and ran a small unrelated business on it wanted £40,000. Far too rich for me but rather than walk away I decided to ask if he would consider letting me broker the domain for lease or sale as his asking price of £40k was not entirely unreasonable and I had a couple of people I felt I could hit up and offer the domain to.

So I needed to know 2 things
1/ What’s the lowest you would take for a sale, to which he replied £35k
2/ Would you consider a lease to buy, for example lease it for £400 per month with an option to buy built in for £40k thus enabling a buyer to build on it and buy once they got going, YES the owner replied.

I worked over the weekend sending emails and answering questions on this domain and yesterday agreed a deal with a pair of businessmen, they were happy to lease the domain on a 2 year lease for £500 per month with an option to buy for £50,000 written into the agreement. Pefectimondo I thought, this was much better than I had suggested and should surpass the owners expectations. Even though I would take 15% commission this would still give him £425 per month and a possible domain sale of £42,500

The domain owner agreed to phone me this afternoon and after thinking it over he decided that £500 per month probably wasn’t worth changing his stationery and moving his buiness, this completely contradicted his earlier conversation where he told me he was looking to sell the domain and had been actively moving all the important things away from the site over the last 12 months. So now the deal is dead and I’m pretty annoyed, it’s my own fault for acting in good faith and believing what I was told, I’m also going to look like a twat going back to the businessmen and telling them the deal I offered them is not going to happen. :(

2 more domains leased

For those of you keeping up with my domain leasing attempts I have 2 more leased out in the last couple of weeks, both @ £50 per month, one on a 2 year lease, the other on a 3 year lease, one domain was caught for £5 the other cost me £700. That takes the total to 5 domains leased out @ a total of £775 coming in per month.

Overall thoughts on buying domains to lease recently are pretty much unchanged:

1. Make sure the domain encompasses a whole or substantial part of a business, it has to be attractive to an end user to build a second store front on, don’t try to get into too small a niche.

2. Make sure the niche you choose has a lot of players or potential end users, your going to need a big audience to find the right person with vision, I sent out around 30 emails last week and in one reply where I was asking for £75 per month the reply stated he would buy it for £75! When speaking on the phone to another potential end user he was shocked the domain I was trying to lease cost me over £1000, those are hurdles that still need to be tackled.

3. Again if there is a fee paid for the domain which is usually the case with good domains I try and get that back or most of it back within 12 months and therefore look to lease out for 2 or 3 years.

4. The domain needs to be ranked for it’s name, of the 5 leased out, only one was not ranking top 10 for it’s name, it’s that added value that helps make a deal just now.

That’s probably all the progress I’ll make with that side of my business this year, next year I need to crank it up and I have a lot in the pot that I have been working on all year quietly so I really want to aim to take it above £1k a month and towards £2k a month. it’s certainly not get rich quick but once the time & effort is invested if I have 10-20 valuable domains leased out in the future making an income of 4 figures a month it would make that side of my business pretty valuable considering the investment would have paid itself back within 12 months, that business would be valued on a multiple of it’s income and the fact that the capital assets appreciate in value each year. It may be an option to sell the busines as a going concern one day or just live of the income.

Recap/timeline on the last year for domain leasing.

  • It was August last year I made my first post where I considered the idea: Become an internet landlord
  • 2 months later in October I had my first domain leased out
  • In January 2008 I put in my to do list for the year “I would like to progress with leasing a bit more so would look to have at least 2 domains or sites leased out on long leases to expand on what I have started there and prove to myself it can grow.” 
  • I knew ranking and buidling some value into the domains would take time and hamper progress in 2008 so it was nice in May to lease out my second domain.
  • After leasing out the second one it really opened my eyes to the added value this gives a good domain.
  • It would be November before my 3rd, 4th & 5th lease would come, no surprise, I expected a year of buying and working on them before I could get down to realising them as assets.

All in all from a standing start around a year ago to get to £775 per month is fair enough, the first year is certainly the hardest and next year should offer more opportunities with more money being spent advertising online. Almost all my domain buying has been done in the last 12 months – it’s been a big shift for me but I think the fact that I have detailed a great deal of it on this blog shows it’s certainly not too late for anyone, there is opportunity if you have motivation.

New domain leased out with option to buy

The credit crunch may be hitting hard but it can have a positive effect in that businesses work harder to secure their dominance of a niche and are open to new ideas.

I have talked before about domain leasing and having some good domains ranked being my preference and for some of those I have been using aeiou.com which at $250 for a mini site isn’t cheap, I have 3 sites done now by aeiou.com and 2 more in production, all 3 rank which raises their profile and makes them more desirable.

Just agreed a deal on a domain to lease it out for 3 years at £100 per month with an option to buy it written in for £30,000, even with spending $250 on the minisite it means that after 2 months I’ll be paid back completely and at the end of the lease agreement I’ll be £3400 up with the possibility of an end sale of £30,000 or the lease could get renewed. As per my last lease I added to option to raise the rent a maximum of 50% and first refusal to renew to protect the lessee.

It’s a great deal for both parties and again shows that there is a demand for this if it’s done right, it’s slow progress though, this is my 3rd lease and again it took me sending out quite a few emails to make contact, it’s not easy and not for those that lose interest quickly.

2 of my lease deals have options to buy in them so at present the state of play is:
£675 per month in lease income (with £37,000 in options to buy written in)

Talking of leasing I decided yesterday to get my head down and start working on lease cars, it’s my second voyage into using WordPress and I think this site is looking good, it was a very productive Sunday but entering the 600 car models is proving really boring which I’m meant to be doing today and tomorrow, kind of looking for any excuse to take a break :)  .. still better get back to it……. “I’m a one man band”

The true value of domain leasing

Before I leased out my second domain I had sent out a fair batch of emails to likely companies looking to flip the domain for a good price, bought for £450 I was looking for something in the £2000 kind of price range which would give a nice profit, it was not a domain on the development list.

I keep going back to leasing because it seems the most attractive and sensible option to me for a market where it becomes increasingly difficult to replace any domains you buy and subsequently sell.

Buying a domain for £450 and selling it for around £2000 would on the face of it look like a good deal, however I have now leased the domain out, I leased it to a company heavily involved in the keyword market and they were happy to pay £75 per month on a 3 year lease.

Funnily enough I just heard back from one of the emails I sent 2 months ago, a company is now interested in buying the domain, they have offered the £2000 I was looking for, but after leasing the domain out what is the true value of that domain now?

Domains are not easy to value, almost impossible, you can only deal with the facts.
The fact was 2 months ago I might have sold that domain for £2000
Today the domain is on a 3 year lease worth £2700 and at the end of which I will still own the domain and it will likely be renewed for £4000 over the 3 years after that, at the end of which I will still own the domain.

That shows the true value of domain leasing, it can turn a £2000 asset bought for £450 into one worth £10,000 overnight.

Second domain lease in the bag!

Phew, lot’s of emails and lot’s talking back and forth with business owners has taken a small step forward today with my second lease now signed and sealed.

I have a small furniture domain that I found for sale last year, I emailed the seller and he said he was open to offers, thankfully my first offer of £450 for it was accepted right away and it was added to the portfolio.

There are quite a few companies that specialise in specific types and styles of furniture and this domain was a type of wood, I sent out around 25 emails for this one to the top ranking sites and those using Adwords and had 2 interested companies within 2 days, this domain isn’t ranking yet so perhaps a bit early but I though worth trying.

As I am learning and speaking to people the details of the contract evolve so that everyone is happy, so the main changes I had to make and agree to were

  • A 3 year lease on the domain name
  • First refusal at renewal so they knew another company wouldn’t take it
  • Maximum 50% increase in the lease fee at renewal

Those are pretty acceptable terms and I was happy to write them in, the lease fee I decided upon was £75 per month. That means for a domain that cost £450 I will get £900 in the first year and £2700 over 3 years while still owning it.

Why £75? I would usually intend to get the cost price of the domain back within the first 12 months, so started at a price I could negotiate down from if needed.

What’s next?
A bit early as most of my domains are not ranking, I had one agree to £250 per month on another furniture domain that was ranking top 10 but it’s lost it for now so put that on the back burner and I have another someone is considering for £100 per month. Just yesterday I did manage to buy

  • ashfurniture
  • redwoodfurniture
  • cherryfurniture

All for £300+VAT and all .co.uk domains so they would be good candidates for this type of deal, on the whole I have found many quite responsive to the leasing option, I still got asked if I would sell and to give a price but sticking to my guns I prefer not to sell assets that I find too difficult to value, I’d rather lease for 3 years and see where the world is then and in the meantime build an income that is stable and create a business that is profitable and rich in assets.

Domain lease income : £575 per month

Domain Leasing Q and A

Khalid asked a question in the comments last week that I would like to cover today.

Can you please post how you actively find clients for your domains and what you say in your e-mails to them?

Firstly, to date I only have the one lease, it’s a big one at $1000 per month but I need to work hard to build on that and show it wasn’t a fluke. Finding clients is certainly hard, I have sent lots of emails and contacted lots of people with little response so it can be a bit disheartening, I am quite stubborn though and don’t mind persevering, the main ways I have used are just the obvious one’s

1/ The top 30 or so ranking websites if they are a business, just because they have an organic listing does not mean they would not be interested in another so always worth approaching them, especially if your domain ranks.

2/ Adwords – I contact the Adwords advertisers, they already see the value in the keyword and spend money on it so should be more responsive.

3/ Look for and purchase magazines dedicated to the niche, you can then find more potential clients who perhaps are stuck with print advertising and may not even have a website or email address.

For sending emails it really varies, if the domain does not rank then something short like this:

Good morning, I own {domain name} and am looking to lease the domain out which could be used as a second storefront for your business.

The domain is a prime generic term, lease would be £75 per month based on 2 years with an option to renew for a further year at the same price.

If you are interested or have any questions please get in touch

Regards
Scott Jones
Lease A Domain

If the domain ranks then I would bring in some recent stats for the last 30 days and include how much based on that traffic would have cost them and also mention the main keywords, so for example

Good morning, I own {website} which is {description}, I am however looking to lease the domain out, website can be included.

I am sure someone in the industry like yourself would be able to monetise this site and perhaps use it for their own sales & stock or you could charge for listings or use the traffic for your own related ventures, the site is almost 5 years old and ranks top 10 in Google UK for things like ‘main keyword’ and generates traffic from keywords like:

xxxxxx
xxxxxx
xxxxxx

Some basic stats on the site are:
Last months stats from Google Analytics

4459 visits
25,982 Page Views
5.83 Pages per visit

So if you don’t want to start a brand new site, suffer the sandbox and deliberate over SEO here is a chance to walk right into an old established website with traffic.

Lease would be for 2 years with an option to renew for a further year at the same monthly price.

Lease would be £xxx per month, taking the last months stats that works out at under £0.0xp per visitor for very targeted traffic with full control over the site.

If you are interested please get in touch.

Regards
Scott Jones
Lease A Domain

It’s been a tough sweat trying to convince people but I believe in what I am trying to achieve so will stick at it.

Also, how do you value how much a domain is worth per month? You recently spoke about Fuel Cell Boilers, what if you owned a domain relating to that, once it was ranked in the SERPs how would you value it because it is a new technology?

Future technology would not be the types of domains I would try and lease, certainly buy for the future but for leasing you really need to look at what is popular now so that potential clients can lease and expect to get a return, after all potential clients should be in a position to better monetise any traffic with actual product sales rather than you earning a few cents per click with Adsense.

For valuations again it depends on whether the domain ranks, if it does you may make money from Adsense/aff sales just now, if I was making £300 per month from a site I would look to lease it for £450 ish, I would prefer a stable income and one that is better than it performs just now. If it’s just a domain with little/no traffic so far I have been trying to get my purchase price back within 12 months.

I am pretty close to leasing out a small furniture domain that does not rank, it cost me £450 to buy it and the lease is for £75 per month which is £900 per year meaning after 6 months the domain has paid for itself and is generating some income. I also use Adwords data, if you generating traffic you can look up what advertisers pay per click and show value that way.

Finally, with regards to SEO, don’t domain ranks automatically drop when you change the content of the site completely? So you have a landing page for “BedroomFurniture.com” that sites 1st in Google then its leased and the lessee has a crap site with no SEO…how do you ensure your domain doesn’t lose its position because the lessee isn’t actually doing anything wrong?

Not in my opinion, the backlinks plus domain name plus age should keep a site there but if it’s weak then yes a complete change could harm the ranking a bit but I would expect it to recover, either way you are not selling a ranking, you are leasing a domain. You can make no guarantees as to the traffic or any present organic listing for which you have no control, I would always offer advice at the start/changeover anyway but once the lease comes into effect you have to step back.

Domain Lease Agreement

Lease agreementToday I am going to outline the main parts to consider in a domain lease agreement, this is not intended as legal advice, if you were to lease a domain you should get a professional opinion, if you want to buy an example lease agreement please go here. Furthermore the lease agreement I have used is aimed at UK domains so if it were another extension you would have to replace Nominet and their domain dispute resolution service with the equivalent.

Frontpage
Full name and address for the ‘lessor’ who owns the domain and the ‘lessee’ who wishes to lease the domain.

Subject of the matter
Detail the name of the domain

Term
Detail the length of the lease usually in months stating when it would commence and expire.

Rental
Detail the amount of the monthly payments and cover whether that would include VAT, the fact that payment is due one month in advance and the day each calendar month the payment should be made. Also note that if a payment is missed or not completed without prior consent the lessee is deemed as giving notice to cancel the lease.Continue Reading

Domain research for investing & leasing

Domain ResearchOK today I’ll jot down very quickly what I have been doing with some success as regards looking for domains, finding one’s that may be suitable and backing that up with data.

We can all look at a generic domain and agree that it has value and may be brandable but I am not really on the market for them at present, I want domains that are product based, domains that if ranked someone would search for which means I can generate traffic, income and possibly look to lease the domain at some point.

With that in mind it is still hard looking for inspiration and that is what I’ll cover today.Continue Reading

Lease a domain and triple it’s value

MoneyI’ve only gone and done it! – leased out my first domain :)

After my shenanigans with replica weapons I got the wife on board so that she could research and email companies and we signed up a deal that rewards all our efforts very well indeed.

Leasing a domain is something I am going to put more effort and time into, I think that if I can gather a good collection of domains just now and rank them in Google then they could be promoted and leased out for a couple of years at a time whilst still owning them and offer a stable and long term income and at the same time if chosen wisely the domains themselves will appreciate in value.

LeaseThe market is still quite young and it isn’t the easiest thing in the world to do but it is very rewarding. Better than owning houses and leasing them, domains are low maintenance and have the potential to rise in value faster offering an ultimate exit strategy at some point when they could be sold off as either a going concern or individually.

Do you know what the real killer is about doing it this way? – Rank a domain with a mini site on it and you can get 3 to 4 times more profit by leasing it to the right people than you can by traditional methods of either PPC or selling it.Continue Reading