Imagine selling a domain name for $35 million. For those out of the loop, that’s actually happened. In fact, two domain names have topped $35 million internationally.

That’s an impressive investment strategy, considering most domain names retail for under $100.

Just like the property and housing market, online real estate has become increasingly valuable as savvy investors seek diversification online.

This means if you were the forward-thinking person to snap up www.vacationrentals.com, you could have sold it for US$35 million in 2007 to rental website HomeAway. Likewise, the domain www.insurance.com was sold for $35.6 million.

Australian domain name investments 

In Australia, the highest reported .com.au domain name was the 2011 sale of www.investmentproperty.com.au for $125,001. The lesson for punters here is that the name was only sold at auction after the owner let the name expire – a costly mistake.

In 2013, a landmark package of capital city domain names went up for auction. It’s unreported as to whether it sold, but the package, which included www.sydney.com.au, www.melbourne.com.au and www.adelaide.com.au, was reported to be valued above seven figures.

To put that sale in context, www.melbourne.com sold for $700,000 in 2007.

Savvy investors thinking outside-the-box have already taken advantage of the huge profits to be made from domain names in Australia, sometimes making thousands or more in a single trade.

A recent article in The Courier Mail showcased Brisbane lawyer Neil Lawler’s move into domain name trading.

After learning of domain name trading from a friend, Mr Lawler increased his own business through buying up related domain names and redirecting traffic to his own site. He also purchased domain names he hopes to resell for a profit in the future.

Mr Lawler warned other business owners to be cautious of “cyber-squatters”.

“You’ve got to be careful when you’re starting a business, before you start talking about it too much you should not only register a business name but also register a domain,” he told The Courier Mail.

Online investment experts recommend buying short, generic and easily branded names that can add value and instant credibility to a business. For example, a florist can see great value in www.flowers.sydney, likewise a pizza restaurant with www.pizza.melbourne.

When the www.carloans.com.au domain name was acquired by a car loan comparison business formerly under www.beep.com.au, the company’s turnover surged from $60 million a year to more than $100 million.

Founder Shaun McGowan attributed the growth directly to the domain name change.

“We don’t have to tell people what we’re doing – people know to go to www.carloans.com.au to get a car loan,” he told AusRegistry.

“Our marketing budget has significantly reduced because we don’t have to educate consumers. The education is already done in those eight letters – that’s the power of a domain name.”

While the market is already fighting over pre-registered domain names, there are now even more options available for investors to get in early with .melbourne and .sydney. The bonus of the .melbourne or .sydney domains is that they tie a business to one of Australia’s most recognisable cities.

High profile people such as the Federal Member for Melbourne Adam Bandt have already snapped up their domain names: www.adambandt.melbourne.

These new top-level domain names have opened doors for investors and businesses looking to profit from premium domain names, like www.carloans.com.au. While the domain names are now relatively inexpensive to register, a savvy take on a name could lead to great profit in the future.

Image attribution: Money by Got Credit, Licensed by CC BY 2.0