Beginner’s Guide to Domain Investing

The internet is an ever-growing field for many entrepreneurs, investors, and even tech enthusiasts. 

As of late, one such new opportunity is domain investing, which is buying, holding, and reselling internet domain names for a profit. 

This form of investment may seem small. But the growth of digital companies as well as new startups has created a demand in Kenya as well for domain names which are marketable and easy to brand.  

Many people are now understanding and recognizing the opportunity in domain investing. 

You can make it to be your main source of income or just pursue it as a side hobby.

All you need is an understanding of local market terms and what makes a domain name valuable. 

This domain investing guide will help you learn every step and strategy needed to maximize profit while also providing a domain purchasing and management resource.

Domains and Their Value in Kenya

What is a Domain?

A domain can be defined as an address on the internet that is unique, for example, “www.example.co.ke.” 

It comprises of the name that is chosen, or “second-level domain” (e.g “example”), and the extension or “top-level domain” (TLD) such as .co.ke, .ke, or even international ones like .com. 

In Kenya, local extensions (.”ke” and “.co.ke”) are particularly important since they create a link to local audiences and businesses.  

Types of Domains  

1. Generic Domains

These domains use broad terms and keywords (e.g., cars.co.ke, shop.ke), and are often in high demand, especially if they relate to trending industries or keywords in Kenya.  

2. Brandable Domains 

These are short generic names that can be easily transformed into brands with ease (twiga.co.ke, mchele.com). These usually have greater long-term value as Kenyan startups and SMEs are interested in distinct names.  

3. Expired or Premium Domains

Domains that were owned by individuals or businesses that are no longer active may be lapsed. Such domains can be acquired and sold at a premium, particularly when they have a certain reputation or backlinks.

Key Factors That Determine Value

1. Memorability and Simplicity  

Domains that are channeling, easy to pronounce or spell, always fetch a higher value. For Kenyan audiences, short English, Swahili, or even Sheng names can be catchy if they have broad appeal. 

2. SEO and Keywords  

“Matatu”, “agri”, or “fintech” are some industry terms that would organically attract traffic to a website. Sellers who wish to improve visibility on search engines will find these domains useful.  

3. Domain Extension and Local Trust  

While .com is universally recognized, Kenyan buyers and businesses often seek .co.ke or .ke to show local legitimacy. These domains are also beneficial for SEO purposes within Kenyan search queries.  

4. Brand Potential  

A domain name is suitable for branding if it can be distinctive and flexible. This will allow it to attract new startups or existing companies looking to rebrand.  

Knowing these concepts will help you determine which domains are likely to appreciate and which ones might be ignored or undervalued within the local context.

What is Domain Investing In The Kenyan Perspective

Defining Domain Investing

Domain investing or “domain flipping” involves the purchase of URLs at low prices—new, expired, or undervalued domains—and selling them off at a profit. 

With Kenya rapidly shifting towards a digital economy, domain investing and flipping become increasingly attractive options as firms actively seek a robust online foothold to enhance their visibility. 

Approaches to Domain Investing 

• Quick Flipping: This strategy centers around purchasing trending or recently released domains. Quick flipping requires extensive market research as well as impeccable timing, but can be very profitable.

• Long-Term Holds: Investors betting on the appreciation of certain domains may hold onto those assets for months or years. Domains about rapidly growing sectors like fintech, real estate, health, and agriculture, which are predominant in the Kenyan economy, tend to appreciate rather quickly. 

Emerging Trends in Kenya’s Domain Market

The “Silicon Savannah” initiative is accompanied by a surge in new startup ventures, as well as the strengthening of online presences for existing brands.

Kenya’s transformation is creating immense potential for domain investors. The growing need for short, memorable, and reliable domain names presents an opportunity to cater to an expanding audience.

• Sector-Specific Domains: These are often targeted by local investors, who expect companies operating in these fields to be willing to buy their domain addresses: fintech.ke, property.co.ke, or education.co.ke.

• Local Language Domains: As the Internet becomes more popular in rural and growing urban areas in Kenya, there is likely to be increased activity in domains that use slang and Swahili.

Common Misconceptions

Some people think domain investment is a quick way to make money. In practice, it is smart planning, waiting, and having the right instincts to seize opportunities ahead of everyone else. 

In this case, Kenyan investors must also be mindful of trademark and copyright laws when registering domains to avoid legal challenges.

With knowledge of the general idea and trends specific to Kenya, you will be positioned to devise a bespoke investment strategy tailored to your market.

Key Benefits of Domain Investing in Kenya

Profits Possible

Perhaps the most appealing aspect of domain investing is the opportunity to earn a very attractive profit. 

A well-picked domain, such as property.ke or insure.co.ke, could fetch thousands of dollars, with registration fees of just a few hundred shillings. 

While not all domains will bring in massive returns, smaller sales plus larger volumes tend to create profit. 

Stream of Income

• Domain Flipping: Selling domains directly to buyers can translate to a single purchase at a considerable financial reward.

• Leasing: Some investors prefer to lease domains to small and local businesses. For instance, if you own a keyword domain, it can be leased to a Kenyan business on a monthly or yearly contract.

• Domain Parking: By parking your domains on ad-driven services, you can passively earn income as visitors landing on your page click on various ads.

Low Entry and Maintenance Costs

Investing in domains is not as costly as physical real estate or a retail business. 

In Kenya, the registration fees are relatively cheaper, starting from KES 400 – 1,500 per year for .co.ke domains. 

Domain upkeep is simple— renewing registration and keeping an eye on relevant industry developments is all it takes.  

Adaptability and Growth Potential

A part-time domain portfolio can grow into a substantial investment. Like most assets, domains are digital; therefore, their entire portfolio can be remotely managed and sold anywhere in the world or concentrated on the Kenyan market.  

Increasing Digital Footprint

A domain serves as an essential tool of branding and marketing for any business. 

Attractive, keyword-rich, or credible domains aid businesses immensely by lowering the time and financial resources spent strategizing. 

Profiting from reselling these domains is rewarding because you are helping to expand Kenya’s digital footprint.

How to Begin Domain Investing in Kenya  

Step 1: Research the Local Market 

Identifying Trends and High-Value Niches  

Begin by analyzing what’s trending in Kenya. Google Trends, keyword research tools, and industry news can be helpful. 

Focus on areas with rapid development like information technology, telecommunications, education, healthcare, agribusiness, and e-commerce. 

Even novel slang terms or emerging local brands can provide motivation for valuable domain acquisitions.  

Tools and Resources  

• Domain Auctions & Drop Lists: Keep an eye on the market for expired .ke and .co.ke domains on GoDaddy Auctions and ExpiredDomains.net, as well as local auctions.  

• Keyword Planners: Identify domains using high-search keywords with available variants through free or paid tools.  

Step 2: Evaluating and Picking Domains  

Evaluating Domain Potential  

What domains to take from the list you compiled using the tools in the previous section? Consider:  

• Relevance: Does the domain capture the Kenyan market or consumer interests?  

• SEO Value: Domains with high-search, low-competition keywords are more appealing.  

• Suitability of Extension: .ke and .co.ke are preferable for Kenyan visibility.  

• Legal Clarity: Make sure the domain meets all legal requirements of not infringing local trademarks or brands.

Strategies for Managing a Portfolio

Start with a small and manageable set of domains that you are confident in. Expanding should be gradual. Make sure to diversify. It’s important not to concentrate all efforts in one industry, sector, or keyword.

Step 3: Domain Purchase and Renewal Management  

Truehost, Safaricom, and Webhost Kenya, are some of the leading domain registrars in Kenya. 

Select a reputable registrar that meets your local support and pricing needs. 

Some registrars offer better terms than others for competitive pricing, streamlined registration processes, and local support.

Administrative Efficiency  

• Auto-Renew: To protect from the risk of losing your domain, enable auto-renewal set for every year.
• Organized Records: Use a spreadsheet to track dates, costs, and renewal schedules to keep all relevant information organized.

Step 4: Documenting the Value of Domains

“Parking” or enabling basic content for your domains can enhance their perceived and actual value. 

To improve potential resale value, some investors build simple landing pages that outline the possible uses of the domain websites.  

Step 5 Listing for Sale, Buyers, and Selling  

• Domain brokers and marketplaces: Truehost Domains, AfriNIC, and GoDaddy are global and Kenyan platforms where you can list your domains for sale.  

• Direct Outreach: There are businesses, startups, or individuals who can be approached directly to whom your domain can perceive value.  

• Social Media and Forums: LinkedIn and local business forums can also be used to market your domains.  

Kenyan domain investors have been noted to conduct thorough research and combine it with savvy purchasing and aggressive selling strategies to maximize returns.

Risks And Legal Aspects To Consider For Domain Investors In Kenya

Typical Risks

1. Market Trends And Dynamics  

Domain investing has its challenges, and one of them is market risk. What is in vogue now can be out of style in an instant. 

Kenyan trends are often shaped by technology, government policy changes, or even pop culture.

2. Carrying and Renewal Costs  

Along with active sales, domains have holding and renewal fees. If a domain name does not sell as quickly as anticipated, your costs will start piling up. Purchasing too many domains at once can exhaust your budget.

Legal Responsibilities  

1. Trademark Conflicts  

Registering a domain that is similar to a well-known Kenyan trademark will invite legal issues. 

It’s important to conduct adequate trademark searches and avoid using names that belong to known companies.

2. Compliance with the Kenya Commercial Regulations  

Registering .ke domains comes with requirements that are regulated and overseen by the Kenya Network Information Centre (KENIC). 

Ensure that the registrar you purchase domains from is KENIC accredited and consider other future domain regulations that may impact your business.

• Privacy Issues: Some Buyers Would Want Anonymity in Kenyan domains. Review your registrar’s services in this domain.

• Legitimate Use: Do not engage in illegal or fraudulent activities with your domains, as this will lead to blacklisting or termination of the domain.

Minimize Your Risks  

1. Research every domain you want to register to understand its implications.

2. Hire purchase multiple domains to register under other types, niches or categories.

3. Keep all records of transactions, renewals, and legal statuses in an orderly manner and up to date.

Looking for Domain Investment Opportunities in Kenya

Target Kenyan Market Extensions and Keywords

Domains with extensions .ke and .co.ke are held in high regard by local clients and businesses. 

Kenyan customers are also familiar with, and respond well to ,local, Swahili, or Sheng names and phrases. 

The more straightforward it is for a business to develop a catchy name around its domain, the quicker it can get a sale.

Watch Out for New Growth Areas

Position yourself strategically by targeting new areas of growth such as edtech, health tech, agri-tech, and digital payments. 

With increased digitization, new lexicons and brands will emerge at a breakneck speed—be the early bird.

Participate in Local Networking Forums

• Tech Events: Participate in the many digital and networking forums hosted in Nairobi to get new ideas and contacts.

• Online Communities: Kenyan Facebook groups and other WhatsApp business communities are great for trend spotting and for learning the ropes as well as identifying buyers.

Domain Pricing Policy and Payment Methods

When selling domains to a local buyer and overseas, use both shillings and dollars.

Offer secure methods of payment, which include M-Pesa, a common and reliable means of payment for Kenya.

Patience and Persistence

In Kenya, many domainers and entrepreneurs are known for making larger-scale transactions, only after waiting periods as long as a few months. 

Domain investing requires a person to have strong skills in portfolio management and networking. It is not just about making a quick sale.   

Start Your Domain Investing Journey with Truehost Domains!  

Truehost Domains serves as an ideal starting point for people looking to build an investment portfolio in domain investing. 

Truehost enables easy registration for .ke domains, along with providing local support and domain management services.  

Start your journey towards attaining financial freedom today by visiting Truehost Domains and securing yourself a Kenyan domain.  Wishing you the best in your domain investing journey in Kenya.