Feb292008

MoneyWhat do you do when the perfect domain name comes along and you do not have enough cash to purchase it? Well, in part 1 of this post I mentioned that leasing might work, but what other options do you have? The first idea that comes to mind is to take out a loan, but since we are discussing creative financing we will not discuss the traditional business, personal, or home equity loans. If you are looking for loan and you own a strong generic domain name, companies like digipawn.com will let you use a name you already own as collateral and then lend you the money you need. If you do not own a strong generic, but you have enough to cover 20 to 25% of the purchase price, you might be able to get the remaining financing from a company like domaincapital.com.

If you do not want to lease or take out a loan, there is still another great option for you in the form of a custom escrow transaction. In a traditional escrow transaction, a domain is moved into an escrow account and payment is made to the escrow account, then the domain is moved to the purchaser’s account and the money is moved to the seller’s account. With a custom escrow transaction, you can modify both the terms and the payment schedule. For example, I recently used a custom escrow transaction to split the purchase price of a domain name into 12 smaller payments over the term of 1 year. In this situation, the domain was moved to the escrow account, and then I submitted my first payment. A portion of the first payment covered the the Moniker escrow fees and the rest was disbursed to the seller. The domain name remained in the escrow account until all payments were made, but I was able to change the DNS and develop the name after the first payment. I was also able to recover some of the cost of the purchase by monetizing the domain while making payments on what is the equivalent of an interest free loan. 😎

(For more great information on creative financing, also check out this great post by Sahar entitled “Pricing Is NEVER An Issue!“)

Feb192008

Lease a domain nameThe sale prices of premium generic domain names are often out of reach for the average domain investor. If you cannot simply write a check or send a wire transfer to pay for a name, it is important to know that there are other options available. One of these options is leasing the domain name with the option to buy at the end of the lease. Elliot has a great post about domain leasing and how you can benefit from a well structured deal. The most important component as a lessee is to have a solid contract in place with the option to purchase the name at the end of the lease agreement for a set price. Ideally, one would make enough money during the course of the lease to pay for the name at the end; however leasing is just one of many options that you could consider. In part 2 of this post, I will discuss some other creative financing options that are available.

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