Mortgage

Good stuff, that Mike's.

Keep in mind that current land prices is serious coin in China and parts of Korea, and there are plenty of SL users from both countries. Land prices are going up and the poor are complaining. I'm offering a way to obtain land affordably. Anshe has 8,192m2 in Geneva for $L37,999.

That's $136USD + $40USD for Tier or so. Yikes, where's my savings and loan bank? I need a 4 week mortgage for $176USD or an 8 week for $216USD or a 12 week for $256USD ...

Why? Because if I walk away from renting, I'm left with nothing. I can resell a mortgage note.

If I have a venture needing 8,192m2, I'd rather mortgage, develop, see how it goes by week 3 or 4 and pull the plug if it doesn't pan out. The alternative is to buy the whole enchilda at one go, have no money left for building, and eat the whole thing (FULL TIER INCLUDED) until I can resell if my income goes south.

Which works if you have the money right now, and the cashflow right now to afford tier. If you don't... Well, then you might miss the land/house of your dreams.

I'd be willing to bet that if there were enforceable contracts in SL, then mortage banking would be a big business. (Even bigger if tier could be split between lender and borrower in proportion to the amount of principal paid.)

Well with the way land prices are going up there may well be a market for banking, but the issues I would look at very hard is the forced sale value rather than the current market value of some land.

Not sure about Pawn shops but the general idea has merit. However while content providers create on a no transfer basis I think this would mean it would be limited to land alone.

By the way, have you seen the thread about first life business in Second Life? Many people (which includes me) are of the opinion it may be better to use real rather than Linden dollars for many transactions. That point might assist legal enforceable lending against security

Or just rent for Tier or less from any number of people, and pull the plug after a month. Instead of going to a bank, go to a landlord.

Notice though, that if I rent and pull the plug after a month I have nothing to show for my investment. If I've made a mortgage payment that month I can resell *my* land/mortgage to a willing buyer, potentially at a profit.

People buy and sell mortgaged houses all the time in RL. You have equity, you have something tangible you can sell. You rent you have nothing, you flush $ down the toilet every month. Just like RL.

This is why people use mortgages to purchase big ticket items like land. The difference in SL is that property tax (read TIER) is quite high. To compensate for this, I'd factor the TIER into the mortgage to cushion the buyer, i.e. bank pays tier until full payment. If I force sell either as a bank or as a landowner, I'll take a hit in the event of a "firesale". Banks don't actually like to foreclose for that very reason. In the event of a foreclosure both the buyer and the bank suffer financially.

It's in everyone's best interest to complete a fair transaction and for the buyer to be financially successful.

The trust issue is also huge. What stops a landlord from evicting you on a whim, right after taking payment? What if they don't want to refund your prepayment when the sim is suddenly sold/dissolved? What recourse do you have?

A: Nothing, tough, none.

A Neualtenburg business is different. You have a notarized document and access to the binding arbitration of the courts of your choice. You also have the full faith and backing of Neualtenburg itself. *If a Neualt business is found to have wronged you, you will be compensated by either the offender or by using the offender's escrow money held by the city.* Contracts are binding: the non-paying offending company dissolves (and/or the citizen deported), loses escrow and possibly land if found to be at fault.

The Neualtenburg government has painstakingly created institutions and put laws into effect that allow enforceable contracts. With enforceable contracts, you can conduct real business, even in $L.