current state of mainland real estate Just starting a small rental company with a friend. Is this still feasible on the mainland?

[sunderezz]

We have invested in a few parcels on protected water in Heterocera , Sansara, & in Zindra.  The learning process is fun with a very steep learning curve.   We see hundreds & hundreds of absolutely lovely unoccupied rentals in all continents.   Is mainland real estate still potentially worthwhile for small companies.  

[sunderezz]

Thank you for your response Klytyna, I take that as a "not so much" 😏

[Teresa Firelight]

A friend of mine recently bought a couple of nice location mainland properties, landscaped them nicely and then sold them for more than she paid for them. So I would suggest this, if the rentals dont take off, try doing a nice/desirable landscaping on them and then selling them. At least that way you can recover your investment.

(I should also mention it took a few weeks or so for them to sell.)

Me personally, I dont think I SL real estate is something I would ever try.  I am more included towards products and have a hair store.

[sunderezz]

Thanks so much Teresa 🥰

 

[belindacarson]

Don't forget the new homestead thing, that'll kill the rental market

[Eowyn Southmoor]

Whether or not mainland rentals are worthwhile or not really depends on two things

1: What you're offering (location, smoothness of terrain, neighbourhood, lag level etc etc)

2: The price (most people who find two rental parcels that meet their criteria will usually always choose the cheaper one)

You are right in that there are plenty of un-rented places around on mainland, so the question then becomes "what is making these rentals unattractive.. point 1 or 2 ... or maybe something else entirely ?

[Alwin Alcott]

44 minutes ago, belindacarson said:

Don't forget the new homestead thing, that'll kill the rental market

i don't think it will be a real gamechanger
for europeans with monthly p+ the yearly cost incl vat are 2093 euro's, and 1819 euro's with yearly p+ .
Never in my life time when i can rent a homestead for less than 1300 .

Edited October 24, 2022 by Alwin Alcott

[Prokofy Neva]

On 10/20/2022 at 6:17 PM, sunderezz said:

We have invested in a few parcels on protected water in Heterocera , Sansara, & in Zindra.  The learning process is fun with a very steep learning curve.   We see hundreds & hundreds of absolutely lovely unoccupied rentals in all continents.   Is mainland real estate still potentially worthwhile for small companies.  

Welcome aboard!

I've been doing Mainland rentals for 18 years. Yes, it's tough, and the economy is particularly bad now, but it's rewarding.

When occupancy is less than 80-85% yes, you start losing money fast. Some companies just want rentals to offset their costs, to share a sim with their friends. Others do it as a sideline. It's impossible to make a living on Mainland rentals, I would say; for that you would need bulk numbers of private islands.

Not sure the new plan for homesteads will cut into Mainland rentals, just as Bellisseria doesn't really compete against my rentals, either -- there is always a market for people who want more prims than Belli gives them, their own house, and flexibility. Mainland rentals are much cheaper!

Sounds like you are starting out with the right kind of land, good luck!

I would say my biggest piece of advice is to keep changing, keep trying different things, be flexible. AND also have some areas that never, ever change, because you get all kinds of customers.

[Prokofy Neva]

On 10/21/2022 at 8:05 AM, Teresa Firelight said:

A friend of mine recently bought a couple of nice location mainland properties, landscaped them nicely and then sold them for more than she paid for them. So I would suggest this, if the rentals dont take off, try doing a nice/desirable landscaping on them and then selling them. At least that way you can recover your investment.

(I should also mention it took a few weeks or so for them to sell.)

Me personally, I dont think I SL real estate is something I would ever try.  I am more included towards products and have a hair store.

The main thing to learn about land in SL is that it is not an investment; it's a recurring cost center.

[Prokofy Neva]

19 hours ago, Eowyn Southmoor said:

Whether or not mainland rentals are worthwhile or not really depends on two things

1: What you're offering (location, smoothness of terrain, neighbourhood, lag level etc etc)

2: The price (most people who find two rental parcels that meet their criteria will usually always choose the cheaper one)

You are right in that there are plenty of un-rented places around on mainland, so the question then becomes "what is making these rentals unattractive.. point 1 or 2 ... or maybe something else entirely ?

This is a puzzle I deal with daily, and I go through a checklist, and still don't understand some times, and then I might offer it one month for free in my VP group, and it still doesn't move, so then I ask: what's wrong here?

o Music - nothing bums people out faster than hearing a stream they hate, and they won't grasp that they can change it, and will leave - no music is best

o House - people either want to change it to their own, or don't like it and want you to change it, and if you don't have that flexibility, you will limit the number of customers

o Land settings -- no-build left on so that even joining with the ability to build (in my rentals), they can't -- they leave. Mesh bounce, very common, they leave. "Payment info on file" set -- they can't enter the lot or their friends can't. I try to keep these all adjusted.

o Tree or earth in the house - this is fixable in a second, but they won't stay to find that out.

o Cost - once their shopping money is sunk into a house, they may refund when the next event comes along.

o Other tenants - big issue, and fixable only by rules, and enforcement of them

Most of the time when people move out it's because a) they are out of cash b) a friend has offered them a free place c) they are leaving SL, often after a bad relationship. You can't fix these problems, but by having low cost rentals they can refund from, you may see them return when their problems lessen.

Edited October 25, 2022 by Prokofy Neva

[Ingrid Ingersoll]

There are lovely mainland rentals that never even get seen. Finding a place to advertise is tough, and unfortunately there doesn't seem to be a way to unless it's on the marketplace. I would say that's a big hurdle, but if you can get seen, and your rentals are in a nice spot, you will likely find a tenant.

[Caroline Takeda]

On 10/21/2022 at 12:17 AM, sunderezz said:

We have invested in a few parcels on protected water in Heterocera , Sansara, & in Zindra.  The learning process is fun with a very steep learning curve.   We see hundreds & hundreds of absolutely lovely unoccupied rentals in all continents.   Is mainland real estate still potentially worthwhile for small companies.  

No.

Renting on the mainland is simply not a good deal.

Why would I rent a parcel , when I can simply go premium, buy a parcel on an auction and pay tier to LL? 

Pitch me. Convince me.

Edited October 28, 2022 by Caroline Takeda

[Marianne Little]

28 minutes ago, Caroline Takeda said:

No.

Renting on the mainland is simply not a good deal.

Why would I rent a parcel , when I can simply go premium, buy a parcel on an auction and pay tier to LL? 

Pitch me. Convince me.

VAT. Add 25% on tier. Paying with L to another resident - no VAT. 

It is no VAT on annual payment of Premium. Let us say I want 4096 m. I need to pay 4 times annual Premium. In once.

Perhaps you say I can pay for one Premium, wait a month, pay Premium for an alt, and repeat. How can I be sure I get new land next to mine, in the same region?

I do not want abandoned land in the middle of nowhere. So I have to pay big for land by water or road. That is also an investment.

I rent 4096 m double prims on Horizons. No Premium needed. To buy land with double prims, I would probably have to pay a half million in §L.

For 2812 prims, I pay 1500 L rent/weekly.

I can pack up and move when I want, and rent another place without the hassle of buying and selling. I do not have to worry about selling the old land to the same price as I paid for it. 

I see Premium as the best deal for those who need only 1024m land, or those who don't have to pay VAT, or those who lives in a skybox and can buy the cheapest land possible.

Edited October 28, 2022 by Marianne Little

[Marianne Little]

I do not know if the new rules for Premium Plus will change the rental business.

Premium Plus members can buy a Homestead without buying a full region first. This is supposed to start from the next month.

But those who can't afford 249 US in Premium plus, 149 US to purchase a Homestad, and 109 US monthly, will still rent land.

Land business for small parcels on the Mainland will probably continue as before. Those who rent out Homestads may experience that people buy them instead of renting.

[Caroline Takeda]

23 hours ago, Marianne Little said:

VAT. Add 25% on tier. Paying with L to another resident - no VAT. 

It is no VAT on annual payment of Premium. Let us say I want 4096 m. I need to pay 4 times annual Premium. In once.

Perhaps you say I can pay for one Premium, wait a month, pay Premium for an alt, and repeat. How can I be sure I get new land next to mine, in the same region?

I do not want abandoned land in the middle of nowhere. So I have to pay big for land by water or road. That is also an investment.

I rent 4096 m double prims on Horizons. No Premium needed. To buy land with double prims, I would probably have to pay a half million in §L.

For 2812 prims, I pay 1500 L rent/weekly.

I can pack up and move when I want, and rent another place without the hassle of buying and selling. I do not have to worry about selling the old land to the same price as I paid for it. 

I see Premium as the best deal for those who need only 1024m land, or those who don't have to pay VAT, or those who lives in a skybox and can buy the cheapest land possible.

I have 4096 on Zinga for Takeda Media.

Purchase price: 10000 L$

Monthly tier: 22 US

Another one for Candy's Hotel

Purchase price : 4200 L$

Monthly tier 35 US

Total cost including premium fees: 67 US /month (not counting the weekly stipend)

More then enough prims

No VAT (EU VAT number provided) and the invoices tax deductible as business expense (registered ltd)

More rights on the parcel then a tenant and not having the risk that my landlord goes bankrupt or kicks me out.

Edited October 29, 2022 by Caroline Takeda

[Caroline Takeda]

23 hours ago, Marianne Little said:

Premium Plus members can buy a Homestead without buying a full region first. This is supposed to start from the next month.But those who can't afford 249 US in Premium plus, 149 US to purchase a Homestad, and 109 US monthly, will still rent land.

 

This is interesting!

[Marianne Little]

4 hours ago, Caroline Takeda said:

This is interesting!

I know! 😄 I read about many people that wanted to buy a Homestead without a region.

VAT is still a problem for me, since I have no business in SL. I am strongly considering to rent a Homestad, just to try out textures and such.

As it is now, I must pay 109 US to LL as tier for a Homestad, but also 25% VAT. 

[xDancingStarx]

I think mainland rentals will become more viable in the future when LL has implemented their improvements on mainland usability, which will most likely not be restricted to making the process of buying mainland easier but also renting out.

Hard to say what the impact of the  Premium Plus Homestead option on mainland or mainland rentals really could be.

There are a few hundred (near) full sim mainland parcels at the moment. Among these you have big rental companies, mainland projects like airports, other commercial sims, premium locations at the blake sea, clubs etc. Only a very few mainland region owners will be willing to downgrade to a homestead.

Then you have those (more than the above) who own a lot of mainland parcels that in sum add up to (near) region size or more. A lot of these parcels will also be more premium land like protected water, making it less interesting to get rid of these. You also have mainland dedicated people among them. It will depend on how happy or unhappy these people are with their current mainland parcels to have them consider switching to homestead. Recession may be a small factor here, too. I suspect that it's to hold these people on the mainland why Patch announced the upcoming mainland pricing changes, whatever they will be. Or at least to make it cheaper for others to hold the parcels that are gonna be given up in this process, because of course you may also have those people that currently own less mainland, are not as invested, and more willing to upgrade to a homestead.

In the end I think that LL will be interested in keeping mainland an option, and situation for rentals can only improve.

Edited October 29, 2022 by xDancingStarx

[sunderezz]

Thank you so much to everyone for taking the time to share your experience & knowledge.  Your answers have been incredibly helpful to us 😊

[Mar Scarmon]

On 10/28/2022 at 4:14 AM, Caroline Takeda said:

No.

Renting on the mainland is simply not a good deal.

Why would I rent a parcel , when I can simply go premium, buy a parcel on an auction and pay tier to LL? 

Pitch me. Convince me.

Because when you own the land you are committed to the tier payment.  When you rent you can leave whenever you please without needing to sell the land to recover your tier fees.

[Caroline Takeda]

On 10/31/2022 at 9:21 PM, Mar Scarmon said:

Because when you own the land you are committed to the tier payment.  When you rent you can leave whenever you please without needing to sell the land to recover your tier fees.

There is no difference between abandoning rental or property. In both cases you lose what you have paid in tier or rent. But with a property you have at least a chance to get some money  back.

Plus on a property I have full estate rights, on a rental I depend on the service quality of the estate agent for a lot of things.

[Lewis Luminos]

On 10/21/2022 at 3:03 AM, sunderezz said:

Thank you for your response Klytyna, I take that as a "not so much" 😏

I wouldn't worry about it. Klytyna's only contribution to the forum is to laugh at everybody. 

That said, renting out mainland is only going to work as a business if you own the equivalent of a whole region, and rent out in small parcels with full occupancy at all times. Otherwise your customers will decide than buying is cheaper, or you'll have to drop your price so low that you'll lose money.

There's a reason that many rental agents turned to the dreadful model of stacked, nearly empty skyboxes offering a tiny amount of LI per customer. Please don't do that though. It's a blight on the mainland.

[Prokofy Neva]

On 10/29/2022 at 3:44 AM, Caroline Takeda said:

I have 4096 on Zinga for Takeda Media.

Purchase price: 10000 L$

Monthly tier: 22 US

Another one for Candy's Hotel

Purchase price : 4200 L$

Monthly tier 35 US

Total cost including premium fees: 67 US /month (not counting the weekly stipend)

More then enough prims

No VAT (EU VAT number provided) and the invoices tax deductible as business expense (registered ltd)

More rights on the parcel then a tenant and not having the risk that my landlord goes bankrupt or kicks me out.

Caroline, not everyone has US $40 to buy land, or US $22 to maintain it every month. SL is filled with non-Americans and non-wealthy people. People for whom even US $1.50 or US $2.50 *per month* with *no premium cost* can be a struggle as the minimum wage and the consumer baskets in their country can be lower or higher than in the US. So the Mainland is good for them -- and the new premium account for $5.99 -- because they don't have to spend so much cash -- in a setting where they are asked to spend US $12 just to look nice enough not to be ejected from a club. So do put it in context.

Your numbers are also inflated because you are on Zindra, because the land is more expensive there. You also insist on "adult".

But not everyone needs to have the rights to public, adult, commercial activity which is kind of what the gestalt of Zindra is. They are content with "Mature" where private adult activity can be accommodated if in a skybox especially. Or they are even content with "General," because they aren't using SL for adult activity -- yes, not everyone does. 

It is possible to spend 4096 or 8192L on the old teen grid in General and pay only thus the equivalent of about US $16 -- not $40 -- for the same 4096. And have a very nice coastal land with the same tier now of $22 if a direct owner or rent it for even US $12 from a landlord. You could even find Mainland coastal in Mature that won't be US $40 (10,000L) - it exists because I not only occasionally see or even buy it; I see others buying it and selling it constantly; look at the map and look at the auctions.

When you cheerily describe deducting VAT as a business cost, you're not taking into account that not every person in SL, even in the wealthier world region you live in, wants to register a business, keep books, keep records, and work with a CRA to keep their business legal and avoid fines. You deduct VAT when *you register and maintain and report on a business*. SL isn't a business for everyone but *entertainment*. They just want to play store or play house or play war (the three uses of virtual worlds). They want to play store only to pay the costs of their SL -- they may never cash out. If they do cash out, their revenue may never exceed their costs or the amount required for Linden Lab theoretically to have to issue them a 1099 (or for themselves to conscientiously file the information -- and now PayPal will file 1099s on Business Accounts so be mindful if in the US).

In short, not everybody is you or me; not everybody fits every situation and given all the situations of all the types of products in SL, there is no question that Mainland is the cheapest. Bellisseria requires an outlay on a premium account. Islands require greater outlay in tier or rentals. Mainland is purchasable for $1L per meter from the Lindens or from other residents sometimes for as low as $0.02/meter! When people rent on the mainland, they don't pay tier to the Lindens; the landlord does.

Your invocation of the idea that landlords are going bankrupt or kicking you out all the time is simply based on a "hysterical hypothetical" or your anecdotal evidence. Not the hard facts of the Mainland. Huge swathes of the Mainland are abandoned; but huge swathes are in organized, maintained Mainland rentals as well. I know because I've run a rentals agency for 18 years, but my company is small -- I see dozens -- hundreds! -- of other companies and individuals renting Mainland out all over the contiguous grid.

You can enjoy your own experience in SL without feeling the need to slam that of others. At least when you *do* slam it, cite facts. I'm aware of one major Mainland rentals agent, beloved by all, dying in RL recently; his tenant and his RL son worked to minimize the damage and kept many customers. I'm aware of another new and small company struggling and going out of business but not stiffing any tenants. I have of private island empires that bit off more than they could choose disappearing and leaving customers. But even they are rare. I don't see the phenomena you claim: angry tenants left in the cold by heartless managers because if it were true, I'd have a lot more customers.

Finally, a simile so you can understand why few people will bother with this enterprise. My grandfather left me his stamp collection he had worked on his whole life. He had thousands of stamps, ranging in no value to high value, some from countries that no longer exist; some damaged, some in good condition. My grandmother said before she died that she didn't mind if I sold it. But I haven't sold Grandpa's stamp collection. Why? Because after researching, I found that to get the stamp collection appraised, accepting a certain amount of risk; to get involved in either finding the right buyer for the entire collection or to take out individual pieces and struggle to sell them on e-bay just wasn't worth it!

That's the only attitude my RL son can take, who helps me occasionally with my rentals, in surveying this problem. If I die suddenly, he has 30 days in which he must either sell my land by parcel or by group (more efficient). The headaches, costs, time etc that he'd have to endure would not be worth the US $9000 or whatever he might wrest out of the situation. He has many other ways he could make that money faster and with less pain. No one comes to Second Life and does Mainland rentals -- or even island rentals -- to make money on the Internet. Watch all those stupid YouTube ads for other ways to make money if you need help grasping this.

We landlords are here for a variety of other reasons -- maybe only to offset our own "game costs"; maybe to make communities around a theme or activity and offset costs; maybe to experiment in international living (my motivation); maybe to test out various hypotheses and rule them out which you can do in a virtual world where you can prototype quickly without cost. Etc.  

It's also important to remember that Philip Linden, the founder, and the other Lindens *encouraged us to buy and rent out or sell land*. This isn't an evil aberrant activity; it's the product, if you will, that enables them to keep having a land model for revenue, as must as they hate it. They put in private islands to solve the problem of Mainland blight; they put in Bellisseria to solve the problems of island cost and risk and thus competed with their own customers; at some point Mainland sales and rentals will no longer serve their interests. By that time we will all have our own software pack and join our virtual world in some federative system like Mastodon -- or not, we'll be in a big corporate dream like Meta.

Let's just hope we all have legs.

 

Edited November 30, 2022 by Prokofy Neva

[Prokofy Neva]

On 11/18/2022 at 8:36 AM, Lewis Luminos said:

I wouldn't worry about it. Klytyna's only contribution to the forum is to laugh at everybody. 

That said, renting out mainland is only going to work as a business if you own the equivalent of a whole region, and rent out in small parcels with full occupancy at all times. Otherwise your customers will decide than buying is cheaper, or you'll have to drop your price so low that you'll lose money.

There's a reason that many rental agents turned to the dreadful model of stacked, nearly empty skyboxes offering a tiny amount of LI per customer. Please don't do that though. It's a blight on the mainland.

That's not accurate, either (I agree on the first point but on the rentals math).

You can own the equivalent of only 4096 and still rent some of it to cut costs.

It depends on your goal.

To "make money" you must rent at least a full sim to thereafter get the better rate of tier, which isn't all that different a rate, but still, better (and now somewhat better still but only by 5%). Then you group your land to get the 10% discount. You are now ahead of the individual consumer paying the individual rate.

The customer will not decide buying is cheaper because he now has these costs:

o the premium account at $11.99 plus tax if in the US

o the cost of the land itself which could be $1/meter or more, most likely

o the ongoing tier

The rental customer only pays rent that therefore covers the cost of the land for the rental agent, and then adds more for him to be able himself to pay tier to LL. His one-time cost of land purchase could have been made at better or worse days in SL but he makes it back, in a year, in two years (yes, it does take the long, really). Thereafter, it is not "gravy" because he has the continuous drumbeat of tier.

It's not the landlord that bails out of this difficult proposition; the customer bails and leaves him with less occupancy -- the customer leaves for all sorts of reasons -- would rather spend on clothing, would rather have a Bellisseria house, has found a boyfriend to live with for free, etc.

I have done blogs on rentals math many times and I won't bore you. But rent is always cheaper; if the agent can manage to keep the boat afloat given the costs. Some do, some don't.

I don't use the stacked skyboxes over ONE PARCEL ONLY as I find it dreadful -- the customer can't have their own radio, ban list, etc. But I do use a pretty landing and skyboxes on top of it staggered over the sky. Someone else might do it differently. It's not easy. 

Edited November 30, 2022 by Prokofy Neva

[Prokofy Neva]

On 11/18/2022 at 8:14 AM, Caroline Takeda said:

There is no difference between abandoning rental or property. In both cases you lose what you have paid in tier or rent. But with a property you have at least a chance to get some money  back.

Plus on a property I have full estate rights, on a rental I depend on the service quality of the estate agent for a lot of things.

Well, don't move the goal posts. You implied at first that rental agents bailing makes all renting worthless. But only a small percentage bail and the existence of hundreds and thousands of sims for rent on Mainland and private islands then disproves your point.

If you invoke "service" implying another person will always handle land worse than you, again, you are not seeing the wider customer base of people who can't put up skyboxes, can't even rez a house, or simply don't want to, and prefer another resident to provide that service. It would be nice if they learn; I try to teach people. But SL is hard, and people are selective with their attention.

My rentals are on self-service; I tell people that if at any time they are unhappy with the service they have provided themselves, they can refund. That's really the bottom line. I can add some touches or help them out and make it a more pleasant service, but nobody pays me to RP landlord with you at the rate you are paying me, let along concierge for the Taj Mahal, you know? 

Mainland rentals pretty much give tenants every right except reparcelling and selling, for obvious reasons.