How do people afford it

I just learned that Caledon is owned by one person and consists of about 35 sims (with many more to be added soon). I must admit, my rl jaw got all wobbly and frozen for a few seconds after learning that. That's something like $7k/month, right?...

ermm ... maybe it will be easier for Des if someone introduces him.

Desmond Shang owns Caledon, and is very active on this forum. He has been VERY open about the economics of operating islands for profit, and very helpful to new island owners thinking of trying it. He makes a RL income from his business, and Caledon is lovely. In creating the whole Steampunk gig, Des has spawned an entire, very vital, subculture in SL, and many many other businesses and gigs for content creators. He's making good money, but not a celestial income

Look up some of his posts on this topic, they're great.

he won the lottery and had 90 campers on each new island so people would find it

j/k

as far as i know, it started with a dream of a victorian themed mini continent (planned far ahead) and people loved it and while time passed, a reservation list was born while he expanded caledon step by step, keeping quality over quantity

from what i`ve gatherd, there are still plans going to some where 2009

Beautiful place.

I don't have the business head to do this but hats off to anyone who CAN make money here.

/me does a write-in for Desmond in the primaries.

As Des will readily tell you, he is far from being the biggest island owner around - I know of one with over 70 sims to her name (and not AC lol); and I don't think she's the biggest.

Some of Caledon (and my own micro-empire) is made up of Opensims, so 4 of those cost the same as a regular one. And I *think* (but don't know for sure) that some of Caledon is Class 4 server based, so that's $195 a month rather than $295.

However it may be, yes the tier for multi-island regions starts getting a little teeth-tightening when one starts to think about it - mine is now a sizeable fraction of my net RL income. (Just to talk about me for a minute - my favourite subject hehe - personally I've gone for slow organic growth, never ordering a new sim until the income from existing ones are covering tier, landscaping the whole lot so it looks like RL geography, which so far has attracted a goodly number of people. Thankfully . And I keep 3 month's tier in reserve just in case a chilly wind starts to blow....

But yes, Des has done a fantastic job with Caledon and hats off to his achievement. There are any number of lessons to be learned by the aspiring empire builder just by taking a wander round and reading the covenant.

Inc

In creating the whole Steampunk gig, Des has spawned an entire, very vital, subculture in SL, and many many other businesses and gigs for content creators.

With all respect to Desmond, I would say "made it more mainstream" as opposed to "spawned" as it existed in SL before on a smaller sub culture level. I love what he has done for it with Caledon.

I heard he bought 1,000 slaves from the Gor Masters and genetically modified them into steam engines, all that raw sexual energy produces a lot of steam, that's how he can afford to run so many islands

Thank you for the information I find it very interesting!

While far from the executation stages I have been pondering getting into the real estate business. Thinking of purchasing some mainland plots (next to each other) and renting them out. then as rents afford buy more, rent out, etc. Until I can make enough income to afford tier on a island (my ultimate goal owning a island). Would you say that is a good long term plan?

I would say its a good enough plan as any, you do need to calculate the minimum amount of land needed to make a return though, starting really small will probably mean early progression is painfully slow, if that makes sense

Thank you, I didn't know that!

It's always great to hear from more experienced SL residents, I often wish you-all would speak up more.

I have to stop by the Mausoleum someday!

better be non EU or have a way to err... "make it cheaper" as competition is pritty hard

also mainland is alot cheaper then an island, downside is that mainland is more expensive to purchase and not have full control over it
if you can manage to have tier coverd with mainland rentals, i`d say go for it but just know it is very hard for newbies to jump into it, also what i see more and more these days is no land purchase costs but a higher monthly tier fee to compensate for the island purchase
has a + and - side for owner and rental but mainly you don`t get "stuck" with land while having full benefits

it`s really something you need to try and figure out on your own with doing all the math and what you can afford to throw away in money while having empty lots for sale

Desmond deserves a lot of kudos for what he's got going. On multiple levels

If I ever thought about getting into the sim-owning buisness, he'd be the first person I'd talk to

Oooh can we write him in for Chairman of the Fed?

Starting small and building up sounds like a good idea. You could use the mainland parcels to develop content and work out how you are going to differentiate yourself from other rental owners ... the 'themed' sims seem to be easier to get going than just more tropical or generically "nice" well-put-together land.

However, be aware that mainland estate management uses somewhat different tools, has different rules, and may have different problems and a slightly different customer base than islands. So you'd be climbing both learning curves if you do mainland first, then islands.

Were you on the thread where Des most recently talked about island profitability?

/327/b9/234910/6.html#post1836066

I'll chime in that while yes, Desmond does have a very sound grasp of ecomnomics, buisness sense, and how to run his islands in relation to the theme, builds, and stores there that seel items, there is one overriding factor that puts him at the head of the list in my personal view.

He's human.

Not his avatar, but the person sitting at the keyboard. He CARES. For his own islands, for his Residents, for old friends and new accounts, even for LL. It's something that can be felt after looking over his islands, or reading his well written posts. It's not something he does just to gain anything. It's simply who he is.

~Jessy

I don;t know how they do it either
all I can figure is that to get started they must either take out a RL loan, or they have deep pockets with the expendable cash to do such a venture

I know I can not do it, would love to have that kind of cash

but I struggle making a 15 US tier a month, let alone purchase an island and cover that tier eeek


(and I might have to up my tier soon, the sim I am in sorta sucks LOL, might have to relocate which means the land on loan to me, I would not have anymore...)

blah, I hate shopping for land LOL

My advice is to not play into the fear factor. I put off buying my first island for months because I was so scared it wouldn't be profitable. The funds were there and each month I contemplated it and came that much closer to pushing the button. Once you do it you'll be more comfortable. Just keep your focus. I'm sure you will do fine...it's just that first step that's a doozie.

It's not about having faith in the service as I first thought. It's about having faith in your own abilities and your own desire to succeed. Buy your island knowing what you are capable of and there's no reason you won't be successful.

I look forward to hearing about your 200 plus sims next year!

Best of luck!

Sorry that was meant for the op. I was not paying attention LOL.

An island is a very significant outlay that you typically can't expect to make back in a year unless you "sell" individual plots or charge a fee for the right to rent there, because profit margins are very thin. Even a half mainland sim takes a significant amount of time to pay for itself because of the high tier and thin profit margin.

You have to have the desire to put that money on your credit card. Some people don't have the credit. Some people can't afford to have that kind of debt hanging over their head. Some people don't mind, they are solvent enough to handle the debt. Some people have the disposable income to pay it off immediately. Many don't.

Even though it can be profitable, it is still disproportionate to the amount of time you will put into managing it. As Des recently said, you basically have to put no value on your time. That sure as hell is the truth.

I guess you could say that. But "deep pockets" is a relative term. If you can lay out $2,000 to $3,000 for a new computer or laptop, or for that matter a new set of living room furniture, it's not too hard to consider using the same money to buy a private estate and get started in the rental business.

Actually, I'd rather start a little larger. Five or ten sims, say. That's less than the price of most new cars. And as soon as you get them set up and rented, your investment is earning income, not sitting in the driveway depreciating. The startup costs don't seem out of line with the costs of starting other businesses that have the same sort of profit potential.

Let's do a little math.
10 sims @ $1,695 = $16,950
tier reserve for startup: 2 months x 10 x $295 = $5,900
3 month operating tier reserve: 3 months x 10 x $295 = $8,850 Note that this money isn't spent. It sits in the bank as a safety cushion.
Cost of buildout. This varies a lot, but let's estimate L$40,000 per sim. Convert to USD: L$40,000/270 x 10 = $1,481

Total startup: $16,950 + $5,900 + $8,850 + $1,481 = $33,181

Income from sales: Assume that, like Caledon, the sims fill up (at least at first). We ask an upfront purchase price of $92.00 (L$25,000) per 4096, which is 1/16 of a sim.

$92.00 x 16 x 10 = $14,720. Nice. We can use that to pay back some of our startup costs, or use it towards buying additional sims.

Income from rentals: We assume (again following Desmond's advice) that we have a 50% vacancy rate in the long term, as a safety factor. Typical monthly rentals on estate land run about L$7,500 per month for a 4096 parcel.

L$7,500/270 x 16 x 10 x 0.5 = $2,222.22 per month, or $26,664 per year.

Expenses have to come out of that. They include advertising, annual Premium membership fees, ISP charges, and computer upgrades. I won't estimate these in detail, but let's say the expenses come to $2,000.

Net income: $24,664. Subtract taxes of 20%.

Income after tax: $19,731 (and, if our vacancy factor was too conservative, we could make as much as twice that).

Not too bad...we pay off all the initial costs within one to two years. And note that, if you grow the operation by a factor of 5, you're making a six figure income...all from playing a computer game!

Class dismissed. I have an appointment with the Small Business Agency about a startup loan...

A noteworthy concern to someone just starting out in the business is you can very carefully plan out your monthly expenses, your income, how much land you will initially buy and your theme but LL can make sudden changes to any part of that equation at any time for any reason or no reason. A simple tier increase or policy change can leave you sitting with expensive land and nothing to do with it. Despite the fact that LL wants the world to take SL seriously--they don't seem to take it seriously *themselves* sometimes.

Don't get in so deep initially that if *all* of your land was vacant you couldn't afford the tier on it--at least for a few months.

@_@

*faints*

...wow people... am soooo embarrassed here thank you


let me compose myself and I'll post some numbers or something in a few minutes. Didn't expect to log into forums and see this thread at all

Des

/me kneels and waits silently for the master to speak.

I'm trying to follow Lindal's math, but where is the monthly tier fees subtracted? I see 2 months set aside, and 3 months reserve...but not the other months.

Estimating US$2,222.22 a month in tier rentals, but paying US$2,950.00 a month in tier to LL. That's a loss of US$700+ a month if you only get 50% rental.