Are .CA names and income
producing websites a good investment?
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By Ingvar Grimsmo -
Canadian
Domains and Websites
I have been in the internet business since
it all started. I operate hundreds of small and medium websites with AdSense
as the main revenue source in addition to helping clients create
client-magnet websites that do well on search engines.
I own about 500 domain names, 110 .ca
names. Up until recently I have sold very few domain names. For the simple
reason that most of them had websites on them, or were parked and generating
income. So why sell cash cows?
The formula I use is this: If a domain
itself sells for more than 1.5 times annual revenues of a web site I will
consider selling it to make room for new projects. I am more of a "setting
up" guy than a maintainer. I will sell a revenue producing website for
1.7-2.5 times annual income pending on the growth potential and the
intrinsic value of the domain name.
For a buyer of an
income producing website it can be a good way to get started, or
to grow the portfolio. Think about this: Say a website has been producing
$2,500 per year for a solid two years. It is very likely it will continue to
do so, and grow with a little work. So you buy it for 2x annual revenues =
$5,000. The cost of running the website is say - 10% of revenues (hosting
etc.) So your gross profit is then $2,250 per year, a 90% return on your
investment.
Probably worth the risk. That's why good,
established websites are actually selling for 2-5 times annual revenues.
I recently moved back to Canada from the
US. I can say from experience that domain names is truly the real estate
of the internet. You don't have to research a lot to realize what some
of the top domains have sold for. Those are of course .COM names.
To register a new .ca domain
name at a good price:
CLICK HERE
How about .CA domains?
In a recent conference talk in Vancouver
Bill Barnes, VP of the Canadian internet research company ENQUIRO stated
that Canada is 2-3 years behind in internet development. On the other hand,
Canada is one of the highest internet users in the world. To date, (04/08)
.CA registration has not reached 1,000,000. What an opportunity. In my
humble opinion, .CA names are like the early condos in Vancouver after Expo
1986. And I am buying more .ca names.
I am listing some at AfterNic, but as you
know - world domain buyers can't buy .ca domains unless they have some
relationship with a Canadian firm. So the value on the international market
is reduced. But on the Canadian market - more and more individuals and
companies will be looking for keyword-rich, brandable domains for their
businesses.
I guess I am like a real estate investor
now. I have the knowledge to ferret out potential high-value .ca domains, I
put a website on them to see how they do and then make them available to
people who want to profit from the future. We both win.
In addition, there are - so far - few
professionals in the Canadian domain name business. The market is growing,
and wide open.
So yes, I think .CAs are a great
investment. But as all investments, due diligence is needed. You need to
understand where the value of a domain is. Type-in? Brandable? Memorable?
Keyword rich for search engine indexing? Connected to a well known and
search for entity?
Ingvar Grimsmo
Vancouver, BC
April 3, 2008
OLGC
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