The practice of buying and selling domain names has been around since the early 90's but the industry has really taken off over the last few years. Top domain name sales have reached into the millions of dollars and many domain name portfolios have made year-on-year returns of much over 100%. With the increase in big domain name transacitons there has been a corresponding increase in media attention of the domaining industry, and this has spawned interest amoung the general public with many people keen on learning how to get into this lucrative game. While domaining newcomers probably can't expect to make 1000% gains on their investments, it's not too late to invest in domains - the growth of the internet is only set to increase, along with the opportunities to profit from the demand for domain names.

Prepare to enter the domaining world

If you're one of the people that wants to break into the domaining industry but you're not too sure how to start, then this guide is for you. Follow these 8 steps and you'll be on your way to the world of domaining. Where you go from there, is entirely up to you.

1.) Evaluate your position and set your goals

Sure, some people are making millions of dollars from their domain name investments, but it's unrealistic to think you'll do the same if you're entering the industry for the first time now. The most profitable domain names were snapped up long ago so the days of easy money are mostly behind us. Domain name investing now takes money, time, lateral thinking, creativity and a lot of patience.

Before you dabble your feet in the water, decide how much money and time you can afford to invest. You can start off with as little as $15 but it's not likely to get you far. With the amount of learning and experimenting you'll be doing, it probably makes sense to plan on registering at least 5-10 domain names per month, and possibly many more. Decide up front how much you can afford to invest, and how much you can afford to lose.

2.) Brainstorm

There's no point in randomly registering domain names that you think sound nice. You need to think about what each name could be used for and how much demand there could be for it. To get things going think about what your skills are, what you know well, what you are good at, what you like. Think about your favourite websites - what are they called, what is their purpose, how many competitors do they have. Jot down some words - single words or two-three word phrases that relate to your interests.

Think about the value of names and how they could be used. In general your domaining income will come from advertising revenues and/or domain name sales. How many companies compete in industries related to your chosen words? Are they big companies or small companies? Do they have a lot of money which they spend on advertising? Can you see them or their competitors being interested in your words? You want big competitive industries, or highly targeted specific niches, but be careful; Stay away from trademarked words!

3.) Register some domain names

Now that you have a list of potential domain names it's time to check out if they are available, and to register some if they are available. While getting started it's best to register new domain names - ones that are currently unowned - since you can register them cheaply (around $15 for .com and $25 for .co.nz domains). With more experience and more money to invest you can also consider purchasing good second-hand domains on the aftermarket, but these could cost you several hunderd to several thousand dollars to acquire - something you want to avoid until you can more effectively judge the inherent worth of each domain name.

Run your ideas through the search forms at any major domain name registrar. For .com domains I use KingDomains.biz. If your words are already taken, then kingdomains will suggest alternative names which may be suitable. In general, the shorter the better - the catchier the better. In order to earn ongoing money from your domains you're going to rely on there being a certain percentage of the general public that will type your domain names directly into the web browser when looking for information, rather than using a search engine to find what they're after. For .co.nz domains I generally use 1st domains. They offer good prices on .nz domains but their .coms are more expensive than those of kingdomains.

Continue searching for good names that are available. .coms are best but there are already millions of them registered so you'll have a harder time finding quality .coms that are available. .co.nz is the king extension for New Zealand domains and there are still alot of .co.nz gems available. Register a few domains, as your budget fits, then it's time to park them in a money-making domain parking service.

4.) Sign up to a domain parking company

There are many domain parking companies around but they mostly offer a similar level of service. To get going in the industry it's probably best to stick to one of the larger companies since they've been around for a while and have established a pattern of paying out parking revenues on time.

I recommend you first check out NameDrive and Sedo. NameDrive is easy to use and allows you to customise the parked domain screens, meaning that you can have good looking "websites" for each of your domains. Sedo is also a good option since along with domain parking they also offer a world-leading domain sales platform so your domains may have a higher chance of being sold if listed with Sedo.

One of the earliest companies to provide a paid domain parking service is DomainSponsor. They are one of the pioneers of the industry but they are more selective in who they allow to enter their programme; you'll probably need a portfolio of at least 100 or 200 domains before they will accept you, though of course there is no harm in trying if even if you own less.

5.) Park your domains at the parking company

It may take a couple of days before you'll be approved at one of the parking companies, but as soon as you are approved you should begin parking your domains so as to maximise your revenue-earning potential. You'll need to follow the instructions given by the parking company for exactly what to do. There are two main ways of parking your domains: 1) changing the domains' nameservers, and 2) using URL forwarding. The instructions should be fairly clear but exactly how you change the nameservers depends on which company you used to register your domains. Contact the domain registrar if unsure how to achieve this.

6.) Sign up to a domain name marketplace

In order to increase the chances of selling your domains you should sign up to a domain marketplace or domain listing service. Sedo is the market leader for domain sales, but their minimum commission on .nz domain sales is relatively high at €150. In fact, at the time of writing this, there are no established .nz marketplace leaders. Most sellers of .nz domain names tend to build their own website listing their domains for sale. TradeMe is another option though they charge a fee for listing domains even if no sale is made. I would recommend listing all of your domain names with Sedo in order to get a good international exposure then, in addition, build a website to list all of your your names, if you know how to.

7.) List your domains at the marketplace

This step should be fairly straight forward once you've signed up to a domain name marketplace. Follow the instructions provided by the marketplace and set your minimum price and expected price for each domain name. Note that although domains stand a better chance of being sold if the expected price is listed, most domainers leave the asking price open just in case someone comes along with an unexpectedly large offer.

8.) Monitor, Analyse, Be creative, Be patient

That's it. You're up and running. Now it's up to you to monitor your domains - check the statistics, reply to sales inquiries, spot the trends. It would not be unreasonable to expect your first batch of domains to perform somewhat below your expectations. Don't worry, treat everything as a learning experience. Study your decisions and their results, then aim to register a better batch of domain names next time.

Last but not least, be patient! Domaining is a form of investing - it's rare to get quick results. Work on building up a portfolio of domains that increases in value while providing some ongoing income. This is definetly an achievable goal and one which will set you up for a profitable future.

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