Do land barons get a tier discount?

[Paul Hexem]

I'm looking at a parcel for sale next to mine. Ridiculous expensive. I made him an offer that's more reasonable but still really really high, and he turned me down to stick with the ridiculous six digit price.

It's never going to sell.

And we see this all the time, parcels on the mainland for sale for years with no activity. How is that sustainable if tier is being paid on it? Operating at a loss full time doesn't make sense. There's gotta be some other factor.

[Istelathis]

I've wondered if some of them are inflating the prices of land so that other parcels they do sell, which are lower in price but still imo expensive look more tempting.  Who knows though, I have no idea how real estate works in real life or in second life.  I would guess that if they have the money to spend, they have the know how to make a return on it.

[BilliJo Aldrin]

2 hours ago, Paul Hexem said:

I'm looking at a parcel for sale next to mine. Ridiculous expensive. I made him an offer that's more reasonable but still really really high, and he turned me down to stick with the ridiculous six digit price.

It's never going to sell.

And we see this all the time, parcels on the mainland for sale for years with no activity. How is that sustainable if tier is being paid on it? Operating at a loss full time doesn't make sense. There's gotta be some other factor.

its been explained before, it doesnt matter if certain parcels never sell as long as there is turnover in other parcels

[Zalificent Corvinus]

2 hours ago, Paul Hexem said:

I'm looking at a parcel for sale next to mine. Ridiculous expensive. I made him an offer that's more reasonable but still really really high, and he turned me down to stick with the ridiculous six digit price.

It's never going to sell.

And we see this all the time, parcels on the mainland for sale for years with no activity. How is that sustainable if tier is being paid on it? Operating at a loss full time doesn't make sense. There's gotta be some other factor.

Oh dear, this has all been explained before but people just don't LISTEN.

 

On 7/27/2023 at 6:05 PM, Zalificent Corvinus said:

There seems to be this mad assumption that Land Barons "are loasing money hand over fist, i's a tax write off, and they get special rates, cos we can'ty figure how they hold onto land for so long, the tier would kill them IMOHO".

The problem is, none of the people saying this nonsense actually know any Land Barons, and basically have no clue how anything works.

 

Take a Fictional Land Baron.

His Excellency Baron Greedygutz von Laandenflippen.

The Baron is currently on the 100 Full Effing Regions tier band, all of which is owned through his bussiness land group, "von Laandenflippen Properties".

The 100 full effing regions of tier paid land is almost exclusively boring G & M rated drek, for sale or rent, and more or less breaks evven, thanks to tier band differentials.

The cost to Joe Nobody for a 4096, is $22 a month. The Baron pays $165 a month for 16 x 4096, or $10 and change per 4096, he can rent them out for $16 a month undercutting tier prices for ordinary home owners, and still make money on each parcel rented out.

Here's the crunch...

That 100 Full Effing Regions of Tier paid boring G & M rated break even land, gets the Baron 10 Full Effing regions worth of 100% Tier FREE group bonus land.

The Baron can buy two Zindran A rated 4096's a week, flip them for a $240 profit, and sit on them for a year, at no tier cost, until somebody buys them, on average he buys 2 a week, on average he waits a year to find a buyer, on average he sells 2 a week, on average he makes $240 profit per parcel, that's $480 a week, or $24,000 a year.

 

And that's just the "short term investments, there's still plenty of tier free land allowance to use for medium 2-4 year investments in Horizons, Bay City and Nautilus, and a few choice LONG term investments, like that nice waterfront parcel on the north coast of Satori facing onto the Southern Nautilus Straight, that he picked up for $500, 12 years ago, and sold last week for $3500.

 

That's how these people make money buying and selling in bulk, and keeping the slower to sell, higher profit plots as part of their massive amounts of tier free group bonus land.

And this doesn't include the earnings from renting out those higher priced parcels, typically a Horizons plot can bring in enough rental money to pay the tier, repay the aquisition cost over a few years, and make a profit, and they can STILL sell it for $600-$1200 if a buyer shows up.

 

There is no special tier discount, no losing money hand over fist, no tax write off. Land Barons MAKE money by knowing how the system actually works, and having the capital to exploit that.

 

There is your answer.

 

[Love Zhaoying]

1 hour ago, Zalificent Corvinus said:

The cost to Joe Nobody for a 4096, is $22 a month. The Baron pays $165 a month for 16 x 4096, or $10 and change per 4096, he can rent them out for $16 a month undercutting tier prices for ordinary home owners, and still make money on each parcel rented out.

Here's the crunch...

That 100 Full Effing Regions of Tier paid boring G & M rated break even land, gets the Baron 10 Full Effing regions worth of 100% Tier FREE group bonus land.

The Baron can buy two Zindran A rated 4096's a week, flip them for a $240 profit, and sit on them for a year, at no tier cost, until somebody buys them, on average he buys 2 a week, on average he waits a year to find a buyer, on average he sells 2 a week, on average he makes $240 profit per parcel, that's $480 a week, or $24,000 a year.

 

And that's just the "short term investments, there's still plenty of tier free land allowance to use for medium 2-4 year investments in Horizons, Bay City and Nautilus, and a few choice LONG term investments, like that nice waterfront parcel on the north coast of Satori facing onto the Southern Nautilus Straight, that he picked up for $500, 12 years ago, and sold last week for $3500.

 

That's how these people make money buying and selling in bulk, and keeping the slower to sell, higher profit plots as part of their massive amounts of tier free group bonus land.

And this doesn't include the earnings from renting out those higher priced parcels, typically a Horizons plot can bring in enough rental money to pay the tier, repay the aquisition cost over a few years, and make a profit, and they can STILL sell it for $600-$1200 if a buyer shows up.

 

Question: Should any of these "$" figures be "L$" figures? Or, are they all "USD $" figures?

Thanks in advance!

 

[Zalificent Corvinus]

7 hours ago, Love Zhaoying said:

Question: Should any of these "$" figures be "L$" figures? Or, are they all "USD $" figures?

Thanks in advance!

 

I would have thought that was self-evident.

Tier on a 4096 tier band is $22 a month, NOT L$22 a month.

Good luck convincing LL to rent you a full mainland region for L$165 a month.

 

[Raspberry Crystal]

I am not sure if this entirely answers the question.
As @Paul Hexem says, some parcels are priced so they will *never* sell. In my case I am talking about those ordinary mainland parcels, away from roads or coastlines, and not islands in the middle of someone else's property.
I realise that some are up for rent, but definitely not all.
Some have been for sale for years.
They clutter up the map when searching for property, and are often completely empty.
My feeling when I see them is like encountering old grafitti with 'Baz wuz here.' written in aging, faded spray paint on a crumbling motorway underpass.
What are these, a kind of 'up yours dead grandfather' thing?

[Sid Nagy]

There can be other reasons for the high prices, but I think @Zalificent Corvinus explained exactly how it works for barons and land flippers on the mainland.

If I had a parcel somewhere at mainland and I would not want to sell it, because I use it myself, I might put up a ridiculous high for sale price as well. It gives bragging rights and if a complete fool shows up to pay that kind of money, it would be me laughing all the way to the bank.

And there are the old life time accounts, who have some tier free land rights. To them putting up their land for sale costs them nothing, even is it is for sale for the rest of SL's time span left. They even might have forgotten all about SL by now.

Edited December 1, 2023 by Sid Nagy

[Qie Niangao]

1 hour ago, Raspberry Crystal said:

I am not sure if this entirely answers the question.
As @Paul Hexem says, some parcels are priced so they will *never* sell. In my case I am talking about those ordinary mainland parcels, away from roads or coastlines, and not islands in the middle of someone else's property.

Something like this happens with land that's just set for sale to draw attention to it, not because any sane person would consider buying it. I'm thinking of some parcels acting as banner ads for the owners, and some advertising the parcel's availability as a rental, and some just hoping to draw visitors, any visitors, to look at what stuff the owner rezzed there years ago. (Look around the Zale station on the SLRR for an example of this.)

As you say, though, there are also totally barren parcels, not for rent, where none of this seems to apply. In some cases I imagine the tier may be covered by one of the original "founding" accounts, where the owner lost interest and set land for sale at the astronomical price it would take to bring them back to SL long enough to cash out. (They're probably long dead now, the empty land perpetually on sale, an ongoing monument to ennui.)

But what @Paul Hexem was talking about, I think, is different, involving land barons who are doing something else. It's really not just offering a range of different margins with different expectations of turnover rates: Sure, that happens, but that's not relevant to what we see when commercial sellers set prices that are simply ridiculous, clearly never intended to sell, not for rent, and not serving any evident advertising purpose. I can imagine a few of those being useful to seed the idea that SL land prices are just random amounts of spacebux, so don't hesitate about buying these other overpriced locations. But there seem to be too many of them for this purpose, and that message seems more than adequately conveyed by other chaos-players in the market.

Anyway, whatever the rationale, there's a recent thread whining about how the Mainland market has frozen up. To the extent that's true, one might ask these ever so clever land barons: How's that working out for you then?

[Sid Nagy]

1 hour ago, Qie Niangao said:

Anyway, whatever the rationale, there's a recent thread whining about how the Mainland market has frozen up. To the extent that's true, one might ask these ever so clever land barons: How's that working out for you then?

My guess is, that as long as their investments show a plus, they don't give a peep about how people think about the Mainland market.
They are not in it to beautify SL or to make other users happy campers. They are in it for the USD that can be made with SL.

Edited December 1, 2023 by Sid Nagy

[Qie Niangao]

23 minutes ago, Sid Nagy said:

My guess is, that as long as their investments show a plus, they don't give a peep about how people think about the Mainland market.
They are not in it to beautify SL or to make other users happy campers. They are in it for the USD that can be made with SL.

Okay, but if they're so profitable, I wish they'd whine a bit less.

[Sid Nagy]

1 minute ago, Qie Niangao said:

Okay, but if they're so profitable, I wish they'd whine a bit less.

There will be winners and losers in the land game, just like with everything.

Bellisseria for instance will have its influence on the Mainland market business, no doubt about that and now that Belli starts to connect with the Mainland continents it will influence the prices of land directly connected to the seas. But mesh clothing crippled the flexi dress market too. The platform evolves. Things change.
 

[Prokofy Neva]

On 11/30/2023 at 9:56 AM, Paul Hexem said:

I'm looking at a parcel for sale next to mine. Ridiculous expensive. I made him an offer that's more reasonable but still really really high, and he turned me down to stick with the ridiculous six digit price.

It's never going to sell.

And we see this all the time, parcels on the mainland for sale for years with no activity. How is that sustainable if tier is being paid on it? Operating at a loss full time doesn't make sense. There's gotta be some other factor.

If they do, it must be at a level of sim ownership way higher than mine (never more than 14 sims).

The only discounts I know of are:

1. Grouped land, generating 10% extra tier to cover yet more land

2. After you tier an entire sim for $166, the next quarter sim is only $40 then.

Not much of a discount.

I've heard there are discounts for islands at a high bulk level, but not Mainland.

I think what a lot of people don't realize is that after you have the $166 discount (every next quarter is only $40), then you can tier land for US $0.0030 per meter -- the cost of the tier factoring in the fee for converting Lindens to dollars to pay tier.

So it seems like the person is crazy, but do the math. Let's say they want a 4096 to go for US $250 on prime Mainland or in Zindra or $500 in Blake Sea. They are only paying US $12.28 per month to hold that piece and keep it out for sale. Do the math. At that rate, they can keep losing $12.28 for many months before it doesn't make sense any more, if they collect US $300 or more at the end of the long wait. So let's say they wait an entire year, paying $12.28 for 12 months. They still net about US $103. That's why you see it for sale forever. At a certain point, such land barons start reducing the sales price. But you may not notice that happening.

Edited December 2, 2023 by Prokofy Neva

[BilliJo Aldrin]

4 hours ago, Prokofy Neva said:

If they do, it must be at a level of sim ownership way higher than mine (never more than 14 sims).

The only discounts I know of are:

1. Grouped land, generating 10% extra tier to cover yet more land

2. After you tier an entire sim for $166, the next quarter sim is only $40 then.

Not much of a discount.

I've heard there are discounts for islands at a high bulk level, but not Mainland.

I think what a lot of people don't realize is that after you have the $166 discount (every next quarter is only $40), then you can tier land for US $0.0030 per meter -- the cost of the tier factoring in the fee for converting Lindens to dollars to pay tier.

So it seems like the person is crazy, but do the math. Let's say they want a 4096 to go for US $250 on prime Mainland or in Zindra or $500 in Blake Sea. They are only paying US $12.28 per month to hold that piece and keep it out for sale. Do the math. At that rate, they can keep losing $12.28 for many months before it doesn't make sense any more, if they collect US $300 or more at the end of the long wait. So let's say they wait an entire year, paying $12.28 for 12 months. They still net about US $103. That's why you see it for sale forever. At a certain point, such land barons start reducing the sales price. But you may not notice that happening.

You still miss the point, as long as other parcels  are selling it doesn't matter if a particular parcel NEVER sells.

One parcel using some of their free tier has no effect on their tier payment, so there is zero pressure to ever sell it.

[BilliJo Aldrin]

22 hours ago, Sid Nagy said:

There will be winners and losers in the land game, just like with everything.

Bellisseria for instance will have its influence on the Mainland market business, no doubt about that and now that Belli starts to connect with the Mainland continents it will influence the prices of land directly connected to the seas. But mesh clothing crippled the flexi dress market too. The platform evolves. Things change.
 

Mesh vs flexi prim clothes is not a fair comparison to mainland vs Belli.

One is a competition between creators, the other is LL using their power to distort the market.

[Qie Niangao]

There's some magical thinking that keeps getting trotted out as an "explanation" for letting land sit for sale forever because it's just using "free tier". Nobody can afford to run a business that way. The 10% bonus tier just goes in the same bucket with the paid tier, all the land comes from that same bucket, where the group owner contributes 90% of the "sticker price" (actually, 90.91%) per m².

What is certainly true is that an effective land baron must keep as much of that tier in use and for sale as much of the time as possible; there's no way to recover costs on unused tier. But even so, leaving tier tied up on land so overpriced it will never sell means sales of all the other land must cover the ongoing cost of that unsold land, and that puts pressure on the rest of inventory to turn over faster and/or at a higher margin than would be necessary if the unsold land would instead perform.

There is no such thing as free tier; parcels priced far too high to ever sell must be serving some other purpose because otherwise they are absolutely cutting into the land baron's overall profitability. Thing is, that would be true even if the land baron got tier at an enormous discount—unless, I suppose, part of that discount were contingent on keeping some land overpriced to somehow benefit the discount-giver (which seems implausible).

[Sid Nagy]

@BilliJo Aldrin Markets evolve. One has to adapt or die. That was my point.
Who is behind the evolution doesn't matter much. There is always someone to blame.

Edited December 2, 2023 by Sid Nagy

[Sid Nagy]

3 minutes ago, Qie Niangao said:

There is no such thing as free tier;

Oh Yes there is.
The early adopters who have bought lifetime accounts don't pay tier for a certain amount of land.
They can price land for whatever they want and leave it empty as long as they want, without losing a penny or a cent.

[Qie Niangao]

1 minute ago, Sid Nagy said:

The early adopters who have bought lifetime accounts don't pay tier for a certain amount of land.

True, and I mentioned that in my earlier post (and decided not to complicate it with the new generation of "Second Lifetime" Premium and Premium Plus accounts), but that "free tier" isn't really relevant at land baron scale.

[elleevelyn]

there is also the smaller fixed cost person. A Premium account who takes a camper and then buys a 512m parcel. A Premium Plus in same situation who has 1536 tier to play with. (Edit what Qie said)

this said, a while ago now was some person who for quite a number of years had masses of Zindra in their "real estate business' and pretty much single-handedly was able to dictate buy prices on Zindra

was any number of people, including me, who idly speculated on how they were able to that given the tier they must have been paying.  Coffee Pancake (as it all turned out to be most likely true, given that one day the real estate business abandoned pretty much the entirety of their holdings )  said that the simplest answer is most often the case. This person was in the business of generating a small RL fortune, by starting with a large RL fortune 

Edited December 2, 2023 by elleevelyn
dups

[Sid Nagy]

How one calculates as a baron isn't really important. Goal always is to make a profit in the end.
Big spenders have more wiggling power than small potatoes, just like everywhere.

[Love Zhaoying]

1 hour ago, Sid Nagy said:

@BilliJo Aldrin Markets evolve. One has to adapt or die. That was my point.
Who is behind the evolution doesn't matter much. There is always someone to blame.

But..but..if markets evolve, there is the possibility people will stop buying microparcels! What a terrible thought.

[Paul Hexem]

5 hours ago, Qie Niangao said:

parcels priced far too high to ever sell must be serving some other purpose because otherwise they are absolutely cutting into the land baron's overall profitability

That's the part that gets me. Even if we assume the explanations in this thread are true- they're definitely plausible- the concept is so weird. A flipper that only flips some of their parcels is objectively making less money than a flipper that's flipping all of their parcels. Considering what people will pay for water parcels, that's a lot of money to not want.

[Zalificent Corvinus]

19 hours ago, Qie Niangao said:

There's some magical thinking that keeps getting trotted out as an "explanation" for letting land sit for sale forever because it's just using "free tier

Oh here we go again.

You said this worthless nonsense in another thread, you were wrong there, you're wrong here.

OK SIMPLE version.

You're a land baron paying US $ 16,500 a month, if you buy that $16 4096, your tier will be $16,500 a month, if you DON'T buy it, your tier will STILL be $16,500 a month. Owning that extra 4096 costs you NOTHING a month. So you can afford to sit on that 4096 for as long as you like and it results in ZERO ongoing costs., but you can sell it for a nice fat profit.

 

19 hours ago, Qie Niangao said:

But even so, leaving tier tied up on land so overpriced it will never sell means sales of all the other land must cover the ongoing cost of that unsold land

This is the point you keep missing. There is NO ongoing cost for that land.

 

19 hours ago, Qie Niangao said:

that puts pressure on the rest of inventory to turn over faster and/or at a higher margin than would be necessary if the unsold land would instead perform.

But it DOES perform, you just don't understand why and how. The "Tres Des Res" parcel on the Bingo Straight coast, that sits empty for 12 years with NO ongoing costs, and sells for 600% of what you paid for it, produces

an average annual ROI of 50%

as opposed to your pile-it-high-sell-it-cheap-and-fast mentality which produces maybe a 5 or 10 % ROI. THAT's why land barons do this, in spite of you claiming it's "non-performant".

As for parcels at insane "never-sell" prices, they too have a purpose, it's an actual RL property investment tactic. Investors buy up reasonably priced properties, and LEAVE them empty, effectively removed from the market, to DECREASE SUPPLY AND DRIVVE UP PRICES.

It's why DeBeers stockpile hundreds of millions of dollars worth of "non performant" diamonds in their vaults. To keep prices artificially high.

With "insanely overpriced land" they remove it from the supply for normal customers, inflating overall price levels, while still having the possibility that some noob with more $ than braincells will buy it for a juicy bonus.

 

13 hours ago, Paul Hexem said:

That's the part that gets me. Even if we assume the explanations in this thread are true- they're definitely plausible- the concept is so weird. A flipper that only flips some of their parcels is objectively making less money than a flipper that's flipping all of their parcels. Considering what people will pay for water parcels, that's a lot of money to not want.

It's RL not-a-law-at-all-of-supply-and-demand thinking.

This actually happens in RL.

In the UK, on residential property, you only pay "property tax on the home you actually live in, not any other homes you own. Some years back, people noticed that high earners, the kind who get $200,000 as an annual bonus, were buying new apartments for $150k -$200k while the market was depressed and prices were "cheap", and sitting on them, empty and TAX FREE, waiting for an upturn, when they could sell for "HUGE PROFITS!".

 

This also works in SL, where instead of TAX FREE, they can have property that is TIER FREE.

 

Edited December 3, 2023 by Zalificent Corvinus

[Paul Hexem]

27 minutes ago, Zalificent Corvinus said:

So you can afford to sit on that 4096 for as long as you like and it results in ZERO ongoing costs., but you can sell it for a nice fat profit.

Yeah, but we're not talking about 4096, we're talking about parcels that are 8k or 16k or more. That's a huge chunk of the tier you're paying for that's not doing anything except costing you money, paying for that tier level instead of a lower one. And we see these flippers holding massive swaths of hundreds of thousands of sqm. There's no way LL's not collecting tier on that. You keep saying there's no ongoing costs, but there are- the cost is in using the higher tier level.

Unless... Like I asked, there's increasing discounts after a certain point, not shown on the Land page us normies see.