On what principle do estates profit?

[Alen Hian]

On what principle do various land estates profit on Second Life?

Wouldn't it be cheaper to get land directly from LL, or go to whoever has the current cheapest price?

Yet at the end they still exist for years so I am a bit confused on, how and why?

[Amethyst Jetaime]

No it isn't always cheaper to buy land from LL.  Mainland costs money to buy, sometimes a LOT of RL money for a prime location, then you have to pay tier on anything over 512sqm plus the membership fee.  Most estates, you pay only the first week's or month's tier. 

Estates profit because most people can't afford to buy a sim of their own or prime mainland.  They charge a total rent for all lots on the sim a bit over the amount they pay to LL for the tier on the region.  Most people rent land from estates, not only because it's generally cheaper but many estates offer extra amenities.  People also like that fact that there is a covenant that restricts what neighbors can build or do with their land to keep the sim looking nice, so they don't have to worry about a commercial ugly and laggy build being put on the next lot, unlilke mainland where anything goes.

 

[Alen Hian]

Thanks,

How about renting land, the prices seem quite similar to LL ones or even cheaper in some cases.

[ChinRey]

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Alen Hian wrote:

Thanks,

How about renting land, the prices seem quite similar to LL ones or even cheaper in some cases.

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That's a very good question and one we've discussed in several other threads here recently

There are several reasons.

One is that many rentals are on homestead sims. Homestead sims have much lower prim quotas than full sims and since it's the prims, not the land itself that really cost money, these are much cheaper.

Another reason is that landowners can "oversell" a little bit, renting out more prims than they actually have. Not everybody in the sim will use the whole prim quota they pay for so there is a little bit extra money to make that way.

Then there are the grandfathered sims. A few years ago Linden Lab increased the tier but they decided to only do it for new sims, not existing ones. Land owners who have been in the business for long enough can have quite a few sims they still pay the old lower price for.

But all of that is big landowners must also get serious quantity discounts from Linden Lab. Even with all those factors, there's simply no way they could stay in business with the current rental prices and the official tier.

Even so, the most important reason is maybe that they're all desperate to recruit tenants. These days there is simply far more "generic" land for rent in SL than there is demand for it so everybody are cutting their profit margins to the bone to fill up their sims.

[Amethyst Jetaime]

Renting is certainly an option.  The advantage is that there is no acquisition cost and you aren't 'tied down' to a particular lot and can move easily without losing money because you can't sell your land.

A landlord can kick you off your land for any reason or no reason.  There has been more than one person who rented land from an unscrupulous landlord and lost money paid in advance because of this or because the landlord doesn't pay the tiers and loses the land.

When you rent land it is always a good idea to do a bit of research about the person or company you rent from.  Choose a landlord that's been around awhile unless you know the person well personally, because they are the ones that treat their tenants fairly, offer good customer service and are financially stable.  Don't pay rent in advance unless you get a good discount for it, or you will be away from SL for a while and want to keep your land.