Rent or buy land?

For me, renting is the way to go.
I found a great deal at the right time on an estate sim and jumped on it. 4096M2 for around $25US/month. Cant beat the price plus our covenant is EXCELLENT. It's a residential only sim, FULL terrafom allowed (+100/-20) and everybody has the ability to do pretty much whatever they choose with their land. No clubs, no casinos etc....

Add to this the fact I pay in L$ rather than out of pocket and it's even sweeter.


Oh, and to dispel the rumor once again... I was premium for awhile when I started renting and still got the FULL stipend... dont listen to those who are saying stipend is tied to land rental somehow.. it's simply not true. Your stipend base is tied to your account status.

So my wife and I buy first land (L$512 for 512m IS a gift, arguments to the contrary are only semantic in nature) each with annual premium membership, and get the tier free in addition for that membership.

That means 1024m of land with a special someone; and over the course of a year, either at virtually no cost to us, or even at a slight profit (i.e., LL is paying us).

I'm not sure why there is debate. Can't be simpler.

There is debate because people are losing sight of the original question and are arguing about tangents. First Land has nothing to do with the overblown prices on the mainland, other than that the flipping of First Land to land barons is part of what is fueling the high prices.

When land barons stop paying noobs 10k for the fresh 512 plots (necessitating a markup of at least another 1k-2k, probably), then the math involved in renting or buying becomes harder, as the value of intangibles matter more relative to the cost in Lindens. As long as mainland is this overpriced, it will be cheaper to rent than buy, so long as the upfront cost of obtaining island land is low.

True, that is my opinion. Let me rephrase that to say that as long as mainland prices remain at this level, or if they increase, it will be cheaper to rent than buy. But the value of the intangibles, such as the guarantee of not being evicted without cause is something each person has to factor in for themselves.

And not all islands sell at a discount. There are plenty of them with high upfront costs. Look at all the Dreamland plots for sale, for example, with 5 figure "sale" prices on top of the monthly tier. Haha, no thanks...

The original question is to rent or buy. First land, stipends and premium membership are all factors in this "debate." Buy an annual membership, along with "friends", group, buy first land and you will pay nothing. No debate, just a fact. I won't argue it any further, it is obvious.

So between you and your wife you pay $20 a month which gives you $10 worth of lindens and 1024sqm of land

so in effect the land costs you $10 a month. I pay $25 on land (2.5 times what you pay) but recieve 3.5 times the land, or to put it another way I pay $7.14 per 1024sqm per month.

Last time I look $7.14 per month was cheaper than $10 per month.

So I could rent from my island owner a 1024sqm plot at $7.14 and buy $10 lindens every month and have the same as you but for less, and I would also be L$1024 better as I wouldn't have had to 'purchase' the First land.

Your math is off.

If Darius and his wife are annual members, they pay $12 a month, combined. They recoup 30600L (15300L per person, or 300x51 weeks) over the course of a year in weekly stipend. They also get 2000L as their combined signup bonus. Using an exchange rate of about 300L per USD, Linden Labs pays them 108.66 dollars combined to play this game. So they have a net profit of $88.66 a month from playing this game.

Huh. Imagine that.

Ok, while everyone is arguing math, I guess I'll actually answer your (actually quite simple) question .

The reason the rental is lower than tier for the same amount of land is that tier for a given amount of land decreases as you own more land. Do a quickie math test on this theoretical scenario (yeah, ok here we go with the math again lol... bear with me, it's easy)... Tier for a full sim is currently $195. Ok, tier for say, 4096 which is 1/16 of a sim is $25. Take that $195, div it by 16 and you get $12.19. So someone owning a sim can rent that 4096 for $20 and still make profits (yes, the purchase price of the sim is a whole other equation that I'm not going into because motives for owning a whole sim can vary vastly). Easy, no?



Actually the original question was why can you rent for cheaper than tier.

Your math may be a little off, and only works if Darius and his wife pay month to month, and not at the discounted rate.

If Darius and his wife are annual members, they pay $12 a month, combined. That is $144 paid to LL. They recoup 30600L (15300L per person, or 300x51 weeks) over the course of a year in weekly stipend. They also get 2000L as their combined signup bonus. Using an exchange rate of about 300L per USD, Linden Labs pays them 108.66 dollars combined to play this game. It costs them a combined $35.34 to own 1024 a year. That is $2.95/month for that land in the first year.

In the second year, they recoup 30900L combined. 103 USD at the exchange rate above. They pay a net $41 to play the game. $3.42/month to play for another year.

That beats your $7.14 any day. So will a quarterly membership, which will come out to $180 combined membership cost per year. Land ownership will cost them $6/month in the first year, and $6.41 in subsequent years.

Darius,
No flame war intended here my friend. I just disagree with your stance on Islands. I see your point about the free 512...but 512 is not much land....neither is 300 lindens per week. Look at Jonathan's math.....that makes more sense to me.



Oh, now here is a good example to look at. But not because of your math....

Anshe obviously knows her land in LL. I agree. But, how much mainland do you see her dealing in these days? Hardly any! Thats a BIG change from even just November! Back then she had almost as much mainland listed for sale as she had PI's. Not the case now at all...she has pretty much stepped away from the mainland business (at least for now).

Any wannabe land barons/land speculators that are reading this....take heed. Anshe become a real life millionare with SL land. Love her or hate her you have to admit she's the best virtual land speculator SL's ever seen. Now, why do you think she's getting out of mainland if there's money to be made in it right now? Hmmmmm!?

I agree with you on this Darius...the land price bubble will burst. And, when it does there will be a lot of people loosing money on mainland and selling it cheap. THEN maybe i'll invest in mainland again myself...but until then.... island rental is IMHO the best option for quality, quantity and economical land use for people needing land......premium or non-premium accounts.

LOL!!! Exactly what I mean, do the math (and I'll adjust for todays stipend rate):

My wife and I have annual memberships at $72 per year, that is $144. In return for annual membership we get: 1024m of land at L$1024 cost, a L$1250 signing bonus, L$300/week stipend. That means over a year for $144 US we get: L$32676, plus 1024m of land, plus tier paid in full for that land. If I do a Lindex sell order, that gets me back $113.84 US at today's rate. But wait: I also have the land, which I can resell when I no longer wish to be part of SL, I also have "free" tier, and frankly use a "Limit Sell" as opposed to a "Sell" order to get a better rate.

So for $31 U.S. I not only outright own 1024 of land (worth more than $31 even at historic prices), my tier is covered. Let's say 1024 is worth $31, that means I have paid nothing over a year to enjoy 1024 of land (more than adequate size, btw).

So let's compare with Anshe Chung:

She will charge you L$9000 per 1024 plot to "buy" (no enforceable ownership either, its even in her TOS), and charge you $6 US/month. So with Anshe (not picking on her, just an example) you spend $72 per year, with an unknown ability to resell the land. But lets be generous, and say that you can get back your L$9000 for Dreamland or whatever.

That means you pay $72/year MORE with Anshe than mainland. Do the math.

And my other advice for a newbie: start small anyway. Decide if you like owning land. Most people buy land, but discover that they never spend time there, and don't host parties there, so outside of the egofactor of owning get no value.

And one last thing: when you now factor in the 10% group tier bonus on the mainland, a membership referral fee of L$2000, and the ability to group with an unlimited number of friends (some have alts for just this, but I don't as I have RL family and don't like doing stuff like that), suddenly you can see a widening economic argument.

Total cost of ownership, everything from stipend to resale for a one-year period: free for Linden (worst-case), $72US for Anshe (best case).

You can lead a horse to water, but you can't make them drink...

I almost agree with this, but if you get first land (and you can, just need to watch and be quick) the economics still favor mainland. The only reason to rent in my opinion is to "try" land "ownership" for a month to see if you find a use for it. Many don't. And to wait out the land bubble. Prices will crash.

But rental or not, please understand that my main point is not about which is better, it is that you should look at all factors (meaning every time you open your wallet and give money, every time you get money) for some fixed period, and add it up. It may surprise you. Heck, it surprises me that people will spend $300US per year on Second Life and get no pleasure from their land (and no commercial use).

Thats great for you Darius I can see where you are coming from, but for me it wouldn't work.

I don't have anyone to buy land with (or want to buy land with),I want my own space so could only buy a 512sqm plot of First land. and for me a 512sqm plot would not be enough size of space nor enough prims to build a comfortable size house with furniture and space around it so as to not get in the way of the neighbours. I need the space I have 3600sqm. So to do this I would have to buy at full price. This along with tier makes renting for people in my circumstances cheaper.

Yes I could buy first land sell it for a L$8500 profit, but I'd have to spend at least L$36000 on buying the contigous plot of land I require.

It also means that as the island owner is running it as a residential sim he has landscaped some very nice areas on the sim just for us renters to use. I don't have to worry about a club opening up next door or getting surrounded by floating cubes with advertisements on all sides as could happen on mainland without recourse to getting them removed.

There are benefits and downsides to both, but it depends on what you want from your land and your circumstances

Exactly, now we understand each other I hope this helps the original poster. He shouldn't feel obliged to dive in at 4096, and should understand the economics.

My background is this: I have been a resident for 2 years or so. I had 512m for the first year or so. That 512m seemed restrictive, but in fact for every use I had in mind it was do-able, I just had to stay away from the 42 prim couch and other wonders. But doable absolutely. It made me a *tight* builder. It was enough also to establish a small store. I didn't sell much, but found I turned a profit. My wife jumped in, and for a while I had (shared, really) 1024m of land (then 1680m), which IS enough for most with no cost.

Now I have 3700m of land divided between a store, a home, and a mini-sandbox. It is princely. I pay $15US to LL. The store makes enough money to pay all fees (couldn't have done a store in a zoned sim). I enjoy the hell out of my land. I did buy a few months ago when land was averaging L$7/m. My belief is that it will return to this level when common sense replaces greed and land prices crash. So either first land or wait. Crash, it will. I watch nearby plots of land, and when they switch owners it is ironically from one land baron to another, rarely do I see "regular" users buying.

No matter how good the covenenant on rented land, you're always at the owners mercy and they can change the rules on a whim. For example, at Everlast Estates, the owners method of dealing with a griefer attack was to take posession of the afflicted land, clear it out, and sell it back to the owner--granted at a low price--but the lindens could have done the same thing at NO cost.

Once again.....know a little about who you are renting from and thier reputation with other people in SL. One good dead giveaway is to read the covenant. Basically see how strongly worded it is...it can give you a good sence of how anal they are about things.

Alan, how does a newbie "know a little about who you are renting from and thier reputation with other people in SL". Do you just go into a wecome area and say "Hey, is this landlord trustworthy?"

How do you find out about a person's reputation at all here, if you don't know a lot of people who have dealt with them?

I'd be afraid to just post a question here on the forums asking about a specific renter. If a bunch of people start responding about bad experiences with a landlord, can that landlord cause any trouble? I'm not too sure on the rules about lambasting a specific person here.

What would you advise a newbie to do?

*blinks*

O_o ?

So... a griefer attacked a tenant, the owner "cleared out" the land and then sold the land back to the tenant at a 'low price'?

This sounds... odd.

I can't imagine any tenant staying *anywhere* unless the land in question was returned for $L 0 after a cleanup. Maybe there is some understood small service charge or something, I don't know. In my experience, sim owners and tenants are mutual allies against griefing, and will fall all over themselves trying to help each other with that kind of thing.



I do agree with your general point though. The biggest question is solvency. In other words, is the land even going to BE there in 3 months, simply because the landlord got tired of spending 3 hours a night in SL and isn't energetic or competent enough to break even in the land business.

At least with some of the bigger outfits, it's unlikely that anyone would walk away from a million dollars of income, or perhaps even only five or ten thousand USD a year.

Yes, renters labour under the onerous yoke of our landlord masters who will evict us with scnat notice, then charge blood-from-a-turnip rates to return to what was once the Common Ground of past Edens! Renters of the World Unite--Blood of the Capital Classes shall run Thick in the Virtual Streets one day!!

Oh, why look-- it's my Landlord. Why heeeelllloo, Mr. Shang, good day to you. *curtsies, tucks copy of Das Kapital under crinolines*


In all seriousness, it depends. I am no good with Real Estate in RL, I doubt I would be in SL if I tried. So I just looked for a fun sim to reside in--I am a Victoriana Obsessed Individual, so when I found an existing Island that catered to that (Caledon), I started renting there as soon as I could. I pay by the week, so even in the unlikely event that it went under tomorrow (do pardon me whilst I get vapours at the thought!), I would lose naught but my weekly rate of $375L for a 1024 plot. That is, what, a little under $2USD a week? I have a RL job (sad to say, but true), I can afford it.

Serenarra,

What i would recomend you do is this:

1. IM people living on the island and tell them you are considering renting there. Ask them what they think of the owner and of the sim.

2. Post a message on this forum and ask people to IM you thier thoughts on the sim owner. Of course to be fair I would get more than one opinion of the person in question.

3. Read the covenant. Does it sound fair? Does the covenant have things in it that would make it a nice community and appealing to you?

4. If you are in question of anything in a covenant IM the owner. Does he/she respond in a resonable amount of time? If they don't respond well now that will tell you a little about them if you had to IM them about something you were having a problem about. Most importantly, if you don't know anything about them talk to them directly in IM's or in person. You can learn a lot about a person by just visiting with them for a few minutes.


Hope this helps...Good luck!

P.S.
I don't know what size land you are looking for but I think I have a couple of lots coming available on my island tomorrow. They would be 4000 sq.m rental plots. If you think you would be interested in those IM in world.

Oh dear. Oppressive Victorian labour conditions spawning social unrest... who would have thought!?

*grins*

I blame the coming of the railways

Anyone actually seen a train in SL?

Oh yes.... I have even been in one!!!!!!!!!!!!

Morwen.

I have to dodge the Caledoneon Trolley all the time when I am out cycling. Really must get a railway schedule.