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Land Tier Fees Breakdown


chunkygravy
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I was just checking to see if my math is right on this?

This assumes everyone is Premium Member and buy the Yearly Membership

And includes the payback from a 300 L$ weekly stipend.

i didnt bother trying to calculate the 10% land increase for group, which i think youlr reduce top tire prices some

Please let me know if this looks correct or of anything i can do to reduce intial investment or any other costs

 

$72 - (300*52)=15600 L$

15600 L$ / 262 L$ = $59.5

- $72

=$12.5 year ($1.05 a month)

SL Price Entire Region  65,536 sqm  15,000 US$195 


initial investment of $9216 for you and 127 perople  minus stipend 7616 = 1587.5 year (132 mo) thats $63 off a month

 

SL Price 1/2 Region 32,768 sqm  7,500 US$125 

4608-3808=800 or $66.6 mo  (47% off)

 

1/4 sim (32people)  16,384 sqm 3,750  US$75

$2304-$1904=$400 yr $33 MO  (56% off SL Price)

 

1/8 (16 people) Region 8,192 sqm  1,875 US$40 

$1152-$952=$200 yr $16.7 mo (58.25% off)

 

1/16 Region (8 people)4,096 sqm  937 US$25  (my rent is $15.25 mo)

$576-476=%100 yr $8.3 mo (66.8% off)

 

1/32 Region(4 people) 2,048 sqm  468 US$15 

288-238=50 yr 4.16 mo (72% off)


1/16 example for rent with 4 tenants

Your Cost 8.3 mo * 262=2175 L$ mo
1172 / 4=293 prim count (includes prim 25% increase)
Minimum break even rent price= 136 L$ wk
a Rent Price of 300 WK=2625 MO profit ($10)

 

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It's a bit cryptic, especially the rental example at the end (not saying that's wrong, I'm just not clear what you're calculating down there).

Anyway, in general yeah, this is the same direction I remember listening to a land baron "discover" sitting in Jack Linden's in-world office back in 2007. Premium "bonus" tier on the annual plan is by far the cheapest land deal in SL, if you're equipped to juggle enough alts and cash all the stipends to pay fees.

Couple of other considerations: That initial outlay is significant, as you note, and once the new president-elect in the US start spending, global bond markets are likely to go crazy -- we're seeing some of that already -- and so cost-of-money may get significant again, for the first time in a long time. (Or not. As others point out, nobody else has been able to generate inflation, so even his drunken sailor deficits may just run up debt to no monetary effect.)

Also, tier is paid in US$s but your renters will pay in L$s. That means, first, that you'll need to eat the Lindex cash-out exchange fee (3.5% or so, IIRC), and second, you're very much exposed to currency exchange risk. That's true of all SL landlords who rent in L$ terms, but because you're actually calculating a "profit" line, it's among the things you need to consider.

Much graver risk, of course, is vacancy rates, especially just now as LL is flooding the market with Horizons sims. It's not that those sims compete directly with regular Mainland, but it's all very nearly a zero-sum game, so eventually even landlocked granite Corsica will be a little more abandoned as the effects filter down-market.

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Qie has given you good advice. Your 'business plan' is a bit off.

You have to take into account your initial investment buying the land.  The more prime the land and therefore the most attractive to tenants, the higher it will cost.

Your vacancy rate will probably be higher than you may think.  Even the most well run and beautiful estates have vacancies.  I live on a sim on the Blake Sea and the landlord charges a very reasonable rate compared to other Blake Sea rentals.  Renters get full ownership rights except the right to use ban lines  We can ban individuals though and use a security orb.  This sim does have turnover and vacancies on what is considered the most prime rental land on the mainland.  So some months you will be paying some out of pocket tier.  You have to figure profit on an annual basis for that reason and take into account vacancies.

Don't count on tenants who are premium members to contribute any of their free tier or stipend to a land group unless they also have some control of the group and get the equivalent discount on their rent.  Especially contributing stipend to someone and trusting them to use it to pay the tier is iffy.  In fact there is no reason to be a premium member if you rent mainland, unless the other benefits are attractive enough to the account holder.  Groups that own land and contribute their tier discount and stipends are most always groups of really good friends, or alts.

Also note that the majority of people that rent in SL live on private estates.  You will therefore have a limited market for people who want to rent on mainland.

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chunkygravy wrote:

15600 L$ / 262 L$ = $59.5

262 L$ exchange rate is a bit optimisitc to put it mildly. Say 270.

Until recently. the model you're suggesting was marginally more lucrative than simply paying tier for a whole sim, at least if you didn't take into account the increased workload managing such a complex setup. Last time I did the calculation - only about two weeks ago - the total cost for the two models seemed to be all but identical. What happens in the future is anybody's guess but don't expect either model to be much cheaper than the other.

The real advantage of the multiple-premium-alts solution is that it's scaleable. The advantages of a single big tier are that it s much easier to manage and doesn't require such a big initial investment.


chunkygravy wrote:

Minimum break even rent price= 136 L$ wk

Qie and Amethyst have already mentioned vacancy rate. Expect 90% vacanices first year, 75% second year, 50% third year and from then on about 10-30%. If you're lucky and work really hard recruiting renters that is. Be prepared to spend at least 10-20 hours of promo/recruitment work for each long term tenant you get.

You're trying to enter a declining market that already has far more supply than demand. Even the big, well established actors are cutting down now. What do you have that they don't? That is always the Big Question for any new business, you got to have something that sets you apart from everybody else. It doesn't have to be much and it can be anything. But it has to be something and the multiple accounts model is not it.

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