According to a recent study, the average domain name bought and sold by domain name investors realized a 377% profit. In addition, the average domain name was sold in 12.5 months. Domain Name investment has now become big business.

Domain name investing involves getting domain names that appear valuable, and waiting with the domain in hopes that someone will want to purchase it in the future. They may be newly registered by the investor or purchased off someone else in the AfterMarket. With a great domain name like business.com , fund.com or sex.com, this can yield huge returns. Business.com was sold for over $7 million, fund.com and sex.com for over $9million each.

When domain name investors buy a domain name, they often put up a webpage indicating that the domain is for sale. This becomes a sort of free advertising, whereby someone interested in that domain name will naturally check out the site to see if it is a competitor, or if the domain can be purchased.

But selling the domain is not the only way domain name investors make money. In addition to advertising that the domain is for sale, most domain investors park their domains with a domain sponsoring service. These services store a domain with a simple website for free, and place content sensitive advertising on the parking pages. They share advertising revenue with the owner of the domain. In this way, domain name investors get free website hosting for their domains, along with occasional advertising revenue.

While in the past some investors have made significant money from parking domains the revenue which most parked domains generate from advertising clicks is now quite meagre. Thus new styles of advertising is becoming more popular with referral selling sponsored by firms like Clickbank.com and CPA (Cash per Action) remuneration plans.

There are important considerations that must be taken into account before embarking on a domain name investment career. While it is always advisable to purchase any really high quality domain name available, actually making a stable income from domain name investment can require significant resources. It will cost a considerable amount to purchase the domain names necessary to make a stable income, and it is certainly no get-rich-quick opportunity.

As a domain name investor, you need to carefully analyze the domain name registrars and communicate with them about bulk purchasing opportunities. A domain name investor will be buying many – perhaps even hundreds – of domain names daily, and should therefore find the best discounts on domain names. Many registrars will allow for domain names to be purchased in bulk at substantial discounts. Taking advantage of these opportunities could be the difference between success and failure at this type of enterprise.

Deciding which domain names to purchase can be challenging. It is very difficult to find high quality .com names. But don’t rule out country-specific extensions. As countries get their own extensions, a new world of high quality available domain names is opened up to investors. New top level domains are being created all the time, and most recently a .jobs domain name was created. A name like computer.jobs could prove very valuable in the long term.

While a lot has been mentioned of purchasing names like Microsoft.com, this practice is not particularly productive. Trademark laws allow corporations with trademarked names to take domain names that violate their trademarks. So rather than getting a big paycheck for registering a company’s trademarked name, you’re likely to be served with a lawsuit demanding you forfeit the name to them.

Domain name investment should be viewed in the same way with other investment opportunities. There are risks and rewards. Like all investments domain name investment returns will be predicated on the wisdom and decision making skills of the investor.