Building a domain name collection can be an exciting journey. One may approach this undertaking as a part-time hobby or as a full-time, concentrated business endeavor. The domain name market offers many levels of opportunity. Consequently, it attracts novices, amateur investors, and heavy gauge professional investors from all walks of life.

Obviously, one should begin with an investment objective although this objective does not yet have to be well-defined. For beginning investors, it is important that you learn the game before jumping into the game. In other words, stand on the sideline and take things in, observe, and gain some perspective before you run out and begin registering domain names or buying them at retail prices in the open market.

There is considerable misinformation available on domain name investing as is evidenced by visiting any discussion forum on the subject. However, some of the forums are frequented by intelligent, seasoned domainers who offer balanced advice. Even experienced domainers have their own personal biases, likes and dislikes. As a new investor, you will hopefully develop your own unique point-of-view as you attain knowledge and identify the opportunities that interest you most.

What are the pros and cons of buying just one domain instead of assembling a full portfolio?

Pros: Basically, with one quality domain, your focus and attention are not divided. You are able to harness your energies and direct all your effort into full scale domain development. Many investors find this extremely rewarding.

If developing a domain into a real online business is your main objective, then you’ll be better served by limiting yourself to just a few quality domains and channeling your time, and money, into their development. This is an excellent approach that allows you the luxury of building your internet property bit by bit … at your own pace. The most important caveat to understand regarding this approach is to invest in the best quality domain your budget allows. There are millions of mediocre domains available, and you don’t want them! Believe this on face value.

Lesson # 1: Life is too short, time & money too valuable, to waste on sub par domain names. While it’s important to stick within your budget and not become financially over-extended, it is even more important to start out with good quality domains that fit your interests and objective.

Cons: Fortunately, there is almost no downside to the single domain approach (assuming you have a quality generic domain name). Domain investors usually find that they acquire an ever improving ability to spot great domain deals. It is difficult to pass on these opportunities when you come by them. So the “con” to single domain investing … is the possibility of missed opportunities.

What are the strategies for building a doman name portfolio?

There are a number of methods available for assembling a domain collection. Listed below are some of the more popular ones. No one approach is necessarily the best. You can be successful utilizing a single method (or a combination of them). Many successful domainers have utilized all of these approaches to maximize their ability to locate quality domains.

• Open Market Purchase - Buying a domain direct from the owner (registrant), or through the owner’s broker. Some domain owners prefer to turn negotiations over to their broker. Typically, you will contact the owner (or broker) via phone, email, or letter to inquire about the domain name, and to make an offer to purchase. Many domain names are bought and sold in this fashion. Most of them are private sales that are never made public, and may be subject to non-disclosure agreements.
• Domain Sales Sites – The are several large aftermarket sales sites on the internet. They warehouse large numbers of domain names on behalf of domain sellers. These brokerage houses allow you to make offers to purchase directly through their site, and they oversee the purchase transaction from beginning to end. This includes handling escrow for buyer and seller and insuring that the domain transaction is completed to the satisfaction of both parties.
• Basic Registration - Using a domain registrar to search for a specific domain, and then registering that domain if it is available. This is the least effective strategy by a huge margin. Why? Because all high quality domain names are no longer available via basic registration. If you’re a domain amateur or beyond, then you already knew this. If you are new to this industry, then this is a reality you should quickly digest and put behind you. That being said, you may occasionally find a useful domain through basic registration. Just know that all premium domains were taken long ago. Premium domains will never be available using the basic registration method.
• Drop Catch of Expiring Domains - Very competitive. For a variety of reasons, valuable domains sometimes expire (are not renewed), and consequently enter a time-limited drop cycle. This means that the domain will become available to a new registrant within weeks or months. Drop catch registrars, as well as domainers, know well in advance when a valuable domain is about to expire. The competition for these names can be fierce, and often result in rather high dollar auctions as domainers bid up the price in their quest to acquire an expiring name. Premium domains will be expensive. But, there are a number of nice quality domains with very good business use that can be obtained for reasonable amounts. For this reason, the drop catch process is followed closely by hundreds if not thousands of domainers.
• Direct Exchange (trade) – The old horse-trading technique can sometimes be used to acquire a desired domain name. Portfolio owners often have a core, niche interest that comprises a bulk of their domain holdings. For example, some domainers favor geo domains (ex. cities and geographical locations). However, they may also have good quality domains that fall outside of their primary niche. Occasionally, you may be successful in coordinating a trade with another domainer if you have a domain that fits well with their portfolio, or that closely matches their niche interest.
• Tradeshows & Conference Auctions - Every year, there are a number of domain industry events that are hosted around the world. Many of these tradeshows and conferences have LIVE on-site auctions in which a catalog of hand selected domains are auctioned off one by one. Some of these tradeshows run a simultaneous internet auction in which you can watch bids live online and enter the bidding process yourself. To do so, you are required to register ahead of time to be included as an online bidder, and sometimes required to qualify with a monetary deposit or through other means of verification. This is to insure that you are who you say you are, and to have you enter into a binding contract to fulfill the domain purchase should you become the winning bidder on a domain.
• Domain Discussion Forums - Many domainers are members of either public or private discussion forums. These forums are like a college campus with hundreds of domainers chatting about domain industry topics, exchanging news & views, and often buying and selling domain names. There are nice buys to be found in the forums.

These methods of domain portfolio building are a good starting point. Each path listed is best followed after a period of research and self-education. With opportunity comes risk, and mitigating your risk will pay significant dividends in most every case. Becoming familiar with domain investing do’s and dont’s is essential to making your portfolio a real winner. PremiumDomains.biz will be providing additional articles on domain investing and quality domain selection. Thanks for visiting the site.