NEW! – DOMAINS FOR LEASE FAQ
TYPICAL TERMS OF A DOMAIN LEASE OR RENT-TO-BUY AGREEMENTS
Domain leases are usually between 2 years – 10 years in length. Monthly or quarterly payments are standard.
Some Lessors demand that the lessee pay a non-refundable down payment at the start of the lease.
Lease Payment Amount:
The periodic payment amount for leasing the domain.
Most domain name leases have some sort of purchase option (lease option) allowing the lessee to buy the domain name by paying the lessor a predetermined sum. Domain Leasing can include the option to purchase the domain within the lease period, at the end of the lease period, or both.
Sarah wants to buy the premium domain name Example.com to start a new business. Historically Example.com earned an average of $250 a month from parking. Sarah and George (the owner of Example.com) agree on a sale price of $60,000 but Sarah doesn’t have the cash to buy the domain. Sarah and George then agree to a domain lease containing the following terms:
Domain Lease Period: 3 years (36 months)
Down Payment: $0.00
Lease Payment Amount: $500
Let’s examine the benefits of domain leasing to buyers and sellers using the above example:
Easier than financing:
Because the terms of the domain name lease are created directly by the seller and buyer, John avoids the hassles and high costs of domain financing. If John had to take out a traditional domain loan he would have had to put down $24,000. It would also cost him 15%-25% annual interest. Once John has paid the total amount of the domain sale price the name servers and control account are transferred to him. If payment is not made by the 5th of each month there is a $25 a day late fee. After 10 days the domain name servers are locked as unresolvable until payment is made, domain is paid off or a new payment plan is agreed upon. After 30 days we retake possession of the domain and put it back up on the market.
If you would like to add DNS managed by us there is a additional cost of $5.00 per month added to the lease or rent-to-buy agreement.
Option to buy is Rent-to-Buy:
John has the opportunity to buy the name at anytime for $75,000. He can exercise this option anytime within the lease period.
George greatly increases his chances of a successful sale, something he has been trying to do for several years. He will potentially be able to get way above his asking price ($75,000 instead of his $60,000 asking price).
Earn high lease payments:
While George waits for Sarah to buy the domain he collects a monthly lease payment of $500. That is 200% higher than the historical monthly earnings from parking ($250).
Increased domain value:
During the lease period the domain’s value increases as Sarah builds a great site that gets traffic, search engine rankings, links, and PageRank. If Sarah defaults or decides not to buy the domain, George will get it back and retain all previous payments.
DOMAIN LEASING ISSUES
Buyers are concerned about the seller disrupting the transaction (canceling it or changing the DNS settings) during the lease term.
Sellers are generally concerned with how the buyer uses the domain while they make monthly payments. The buyer can do a number of things to devalue the domain including unauthorized use of trademark or copyright material, using the domain for any illegal purpose, using the domain for SPAM, or conducting “Black-hat” SEO techniques.
Were still researching the best way to continue forward with this option, if you have any suggestions or can help then feel free to speak up here in the comments section below.. More to come soon…
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