Question for Island owner

I am a newbie and I am wondering in average how much land I need to rent out in order to break even the monthly cost. For example, if I get a small island, can I break-even with 90% of it's land rented out ? I would like to get an island but don't want to carry the full monthly cost.

Thanks

Well you have to do the math. It's easiest if you round off the numbers. Lets say an Island is aproximately 65000sqm. Let's say you divide that into 2000sqm plots and rent them each for 500L$ a week. (I'm not sure what the average rental fee is, so I'm guessing here) That comes to aproximately 66000L$ a month. The Lindex figures for today show that you'd get about 240 to 245 US$ for trading that. An island tier fee is now 295 US$ a month.

You could divide it into smaller plots, you could charge higher rent, but in the end you'll still likely be lucky to break even. The people who make real money in rentals don't really do it with just one sim. They do it with multiple sims and multiple plots of land in various places and by both selling and renting, renting large plots and malls, etc.

In the past you might have been able to cover tier and make a few extra bucks, but it seems with the new land fee costs, you're better off looking in other areas for money making opportunities.

I don' mind to spend some money for the monthly cost, just want to have some land to build my own stuff and not carry the whole cost. Or maybe I am just better off to buy land in the mainland?

Thanks again

As a newbie you are entitled to buy "first land" for only 512L$ and get 512sqm. This is the cheapest plot of land you will ever buy. After that first land you then have to deal with paying market value. The smartest bet would be to get yourself your first land and use it while you're still learning and getting to know SL.

Btw welcome to Second Life and enjoy.

Also important, your 512 sqm of mainland won't cost any tier. You just need a premium account for L$10 monthly.

If you need a larger plot of land you should have a look at http://secondlife.com/whatis/landpricing.php. It doesn't have to be an island right away

Keep it simple. You could divide the sim into four, and then rent 2 or 3 plots out. If you rent out half the sim, you will take (setting prices equal to LL tier) 2 x 75 = 150 and so pay 45 a mnth yourself, or your could rent 3 of the 4 and and actually collect 30 more than you pay in tier. This is all based on you paying tier of 195 bucks per mnth, so you would have to either purchase an island from the land store before 15th Nov, or purchase a second hand one before Feb 1st to avoid paying 295/mnth tier.

When I design a sim for a customer, I try to design it such that the sim pays for start-up costs and monthly maintenance fees when 75% of the available parcels have been sold or rented out. In other words, I design it so the number of parcels that can be purchased and the price that we set for purchase and for maintenance should cover what it costs to buy and to maintain the sim, without it having to be completely 'sold out'. Most sims do NOT always run at 100% occupancy. If you don't advertize, it's difficult even to maintain 75%, no matter how wonderful your sim is.

I don't split a sim up so 100% of the land is available for sale. I always leave a certain amount of land as initially owned by the sim owner, and I try to have at least some unallocated land adjacent to most of the parcels that I set up. This allows a buyer to expand a parcel slightly, if they need just a few more prims. It also allows 'prim pool parcels' to be carved out of less desirable areas in the sim (like a steep slope between two parcels, or an area that is under water), so people can purchase more land for prim count. I also reserve part of the sim for a central 'public access feature', like a swimming pool or other attraction, that all sim residents and guests can use.

Having a decent business plan for how a sim will meet its expenses is a very good idea. I've seen a lot of sims struggle and fail because the owner didn't price the parcels at a rate that would pay the bills with anything less than a completely full sim.

In the long run, a successful sim is a lot more than just raw land area for sale. Good terraforming, publicly accessible and fun features, zoning, and good customer service can all add a great deal of value versus the same area of land somewhere else.

Well I have made what I feel is a success of pretty much the opposite of what you have stated here Ceera. When I started, I added extra 'value': beautifully terraformed sims, public areas, etc. It wasn't long before I realised that the sims containing just 'raw land' were by far more popular. It soon became evident that the most important factors were: raw land that is terraformable within limits set out in zoning, good CC, simple but constantly enforced zoning, and the reputation of the landlord/lady (some of which I acknowledge you also agree add important value).

I have managed to maintain an occupation rate of over 95% constantly for nearly two years (incl prev av), very rarely advertised, and all land in each sim is rented out (no public land - 'borders' are provided via zoning).

Of course there are many residents who want more than just 'raw land', and so the type of sim you have suggested certainly offers a lot to SL. I'm just pointing out that keeping it simple is not the doom and gloom business model that you hint at, and in fact in my experience, is actually more sought after by residents.

Alternatively, you could learn to make things, sell them, and cover your tier that way. It takes a little longer, but is a different way to go about it and doesn't leave you dependent on the whims of the SL real estate market for your tier. I just bought an island last week and will cover the tier entirely through SL sales of things I make. I do have to put in a disclaimer that it takes time to build up a business in SL, it won't happen over night.

There is, in my opinion, a danger to getting into the sim rental game right now. With the coming price increase, a LOT of islands have been ordered. When those islands come online in the next month or so, the real estate market will be flooded with available rentals. LL isn't saying just how many island orders they have received, but it is at least hundreds - by the same token, island prices will go up on Wednesday and anyone thinking of buying has about 3 days to make up their minds. So, buying right now is a gamble and carries lot of risks that should be weighed carefully before you hit the "confirm" button. If you are going to do it, it needs to be done before Weds, Nov 15.

I think there are several business models that work - and oddly, are different enough that they really don't compete that much with each other.

I've been running 95% full easily myself, and while I advertise a little bit, I find that I'm turning away about 5 people a day lately, which makes me sad. I don't dare advertise much more than I do.

I generally keep about 1/32nd to 1/16th of a sim for roads, train service, landmarks &c - just enough so people can circulate and enjoy each other's areas without having to hop yard fences.

For me the golden rule is: community is everything. People come online to be with other people - old friends, new friends, family, and everything inbetween. Hiro is right, raw land is more profitable and there is no real 'need' to do what I do - but I do my thing anyway, just because I like to.

* * * * *

With regards to 'making money' - let me put it this way. If you love dealing with people - LOTS of people regardless of income - get into the land business. If you don't - then run far far far far away!

Unless you have dozens of sims, it's really more of a hobby activity. Why? The amount of time you have to put into the land business makes it one of the least profitable dollar per hour activities you could do - I'd recommend leaving the grid and getting a job at Del Taco if you wanted to make the same money over the same amount of time, with less effort. Don't believe me? Write down your real hours spent on it as you go.

What he said ^

Spot on, Desmond

Thanks a lot for everyone's answer, they gave me a good insight.
One of the reason I would like to get my own sim is to take advantage of the current price before Nov 15.

Thanks again for all your help