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(Updated since the reduction in Stipends to L$300/week)

(Update: due to the recent shortage of of first land, and the amazing high prices of new land, this guide needs to be revised, which I will do once things have stabilized and the Lindens put out some word on first land, meanwhile read the article on land bubbles here. First land is available, but you must act quickly when you see it).

Premium membership in SL is $72 annually (a much better deal that $9 per month). With this, you get a parcel of "First Land", which is 512m of land, and you get a weekly stipend of $300L per week. A 512m parcel of land has an intrinsic value of $6.62L per square meter at current prices; you will certainly get $3400L for it when sold.

So, lets do the math:

So if you purchase a lot of Lindens for your own entertainment in the world, an annual membership gives you a slightly better rate than the current Lindex rate for purchases of Lindens - you make a slight profit. If you are stingy and only want to sell Lindens, you incur a loss of $3.73, however you own 512m of land in the mean time: land you can enjoy for a house, or for a shop (512m is adequate for many kinds of stores).

Contrast this to what it would cost you to rent 512 from Anshe Chung: she will charge you $30 U.S. per year for 512m tier -- assuming you can even find a plot this size with her. She does not pay the stipend, and she will charge for the land purchase too; so her best deal will still cost you $26.27 more than with Linden Labs. (Update: Anshe Chung has stopped offering 512m tier subscriptions).

Now suppose you want 1024m of land. You can band together with an alt a "friend" in Second Life to group your 512m tiers together (and in fact this gives you 1120m of tier due to a group bonus). Anshe will charge you $8/month for 1024 or $96/year, Linden will charge you $7.46/year for 1120 (annual membership minus your stipend value). So -- suddenly Dreamland does not look so cheap.

Quick recap: you can own 1120m of land for about $88 less per year from Linden Labs versus 1024m of land from a land baron.

Of course if you choose to spend that money, it may not wind up in your pocket at the end of the year, but even so you have way more spending money. At the very least, you will want to spend $499L for SLTunes, so you can use iTunes for your land's radio... ;-)

Oh, and by the way, does should now make sense that Anshe Chung is now a real-life millionaire (in $U.S.), and is moving to employ 50 people in her company. She, and land barons like her, are exploiting the scale of there own land purchases (they pay a lot less per square meter for tier than you will), and the fact that most people won't do the math.

Anshe Chung is rich because she understands exactly what I am saying in this web article.

Naturally the financial balance changes with different tier sizes, my main point to you is do the math, and decide if that nice-sounding island purchase is really a better deal. And considering the following issues:

• Are there zoning restrictions I can't live with (or maybe you like the restrictions so you don't get stuck next to trailer-park-guy)? Do you want to convert it to a shop in the future?
• Can I resell the land to anyone, or am I only limited to selling of other customers of [insert land baron's name here]?
• There is no contract enforcement in SL; do I trust [insert land baron's name here] as much as Linden Labs? Will I be fairly compensated if the land baron decides to sell the island from under me?

Important Tips When Buying Land

• Look at the cost per unit of land when buying -- $5L per square meter is good, $6.6 is parity, $8 is bad, and $12 is a complete ripoff even for roadside or waterfront.

• Land bordering roads or other protected land (or sea) cannot be block on all sides, and therefore is worth a little more. Often you can find land bordering protected areas at the same price as regular areas.

• Take a look at your "Statistics" bar, viewable by clicking on your "World" menu. It will tell you the number of active scripts, and the number of script instructions (a measure of how much work the computer driving the sim is doing for scripts) executed in a frame. If the number of scripts exceeds about 3000, or script instructions exceeds about 100,000, you are in a sim that will lag with no hope of recovery. This is often the case for a sim with a large club in it.

• Ironically, because these are laggy areas typically, land near a busy club, if found cheaply, can be resold when you choose to for a higher price. People want land near busy places because they want to open stores and sell. I'm not sure, however, stores near clubs really help sell -- use SL Exchange, you will make many times the amount of sales than you will on your podunk property.

• For the most part, aesthetics matter. If you buy in a new sim, where there is no one established, you may be able to pick a good spot, and will definitely enjoy low lag for a while. But you can't pick your neighbors. My suggestion if someone moves in that loves crap spinning cubes and random junk all over the place, or mega towers, just wait them out. Usually those with no aesthetic sense don't last paying tier fees, it seems those personality characteristics often coexist in the same person.

• However, if you keep looking you will find both a sim that is not overloaded, and a location with decent neighbors. It may not be the oceanside view, or the plot next to a busy club, but buy it! It will be a place you can enjoy (and also your guests).

Becoming a Land Baron

I've made some good and some bad choices when buying land, although I've always made a decent profit. I started by buying a 512m plot of land between a teleport hub (now extinct), and a busy club -- then I set the buy price to 2x what I paid. I put in the listing "Busy route from telehub, great store land." I built my house, then boom, it sold. The trick was to find land near a busy location (popular clubs after the teleport hubs were taken out), then right a glowing blurb. I'm not a land baron, I did this mainly for fun. As it turns out, it paid not only for tier fees but World of Warcraft subscription fees and a few (small) odds and ends on eBay. Actually I earned more selling things I made though so I gave up, and found this is infinitely more satisfying anyway.

Most people in SL seem to hold Anshe Chung and the few top Barons in esteem, but seem really negative about "Baby Barons", players who buy and sell land on a smaller scale. I think Baby Barons should be encouraged because they actually do great good by keeping the market liquid and competitive -- the big players can't charge what they like because others will quickly fill the gap. It costs $1000 US to buy a sim at auction (maybe a little more). You will need one month of tier fees at a minimum, bringing your up front cost to $1200 US. Land, according to Linden statistics, sells for an average of just about $6.0L per square meter, and one sim contains up to 65536 square meters. So if you sell at parity with the market, that will gross $393,216L, or about $1300 US. However at least some of the land can be sold for a premium, particularly if it is a waterfront parcel or such. Conversely some sims have a road running through it, which trims down the land you can sell by a few thousand square meters. You do the math. I don't necessarily recommend this, but I do know of a few folks who have built up several million Linden this way.

Alternatively you can also buy an island sim, and rent the land or "sell" it and charge your tenants tier fees. You have to put a fair amount of work into this (and island sims can't be parceled up if you decide you only want a part of it), but hey -- if you are successful like Anshe you too can outsource your land empire's management to the 3rd world. I wish you good luck, I really do hope you make it!

Copyright 2006 Infomyth^TM

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