How to make more money?

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Submitted by kev374 on September 21, 2016 - 10:49am

Work as a Sr. Software Engineer, pulling in six figures as a fulltime, given the absolutely shocking cost of living in SoCal (mostly because of the real estate) the salary level just seems very dismal.

The going contract rates are not that great either with employment agencies being cutthroat and not offering more than $80/hr (and that is hard to get as these agencies try to pocket as much as they can for doing nothing and try to play dirty games by promoting cheaper candidates that benefit their bottom line..anyway that's a rant for another day!)

Not a homeowner but would like to invest in something, 3bd, 1600sqft are around 750,000 with monthly HOAs of $350 or so, that just sounds shocking for something that isn't that fancy.

I think the only solution may be to see if I can make more money but not sure how.

As ironic as it sounds, perhaps getting into real estate may be a good option? I don't know how saturated that market is or the prospects. How about being a mortgage broker?

One of my main downsides is that I am single income and most people going the homeownership route are either wealthy individuals with family wealth or strong dual income professionals (both six figure earners)...seems like this area is inundated with these types so very difficult to compete.

I think a fair assessment is that in Orange County, if you want to live in a good area, such as Irvine, and want to afford something comfortably one needs at least $200,000/yr or higher household income..and that is at a minimum.

Thoughts?

Submitted by The-Shoveler on September 21, 2016 - 10:59am.

You are probably looking in a coastal area, maybe look further inland (or maybe further north).
Don't be too picky.

The reality is not everyone can fit into the most desirable areas. it is just not really a possibility.
Even though the planners have grand plans for high density development I would not hold my breath (or future).

Submitted by kev374 on September 21, 2016 - 11:03am.

Irvine is not coastal... coastal area would be Newport Beach, which is in the multi millions not $750k!

Submitted by The-Shoveler on September 21, 2016 - 11:07am.

LOL not everyone can fit in Irvine.

I wish you well in your quest for more money maybe someone else will have a good Idea.

Me I would just Look further south or north or maybe inland.

Submitted by moneymaker on September 21, 2016 - 11:21am.

I feel your pain kev374. Just looked on SDLookup and it's pretty sad that most starter houses that are "affordable" have window units, single pane windows, no garage, old appliances, with tons of deferred maintenance i.e. they look like they have been rental units for some time. Lucky for me I bought when the buying was good, right now it seems like a bubble to me. P.S.- most of the ways I think up of making more money border on the illegal side which is not worth it either. Many people are living with 3 hots and a cot because they made poor decisions but I would not recommend that route.

Submitted by FlyerInHi on September 21, 2016 - 11:39am.

I have a friend who bought a 2/1 condo in Huntington Beach for about $350. It's old but with a good remodel it will be very comfortable. She did FHA.

Submitted by flu on September 21, 2016 - 11:54am.

Again kev... I said it before I'll say it again. If your heart isn't in it other than for the money, in all likelihood, you aren't going to be very successful in what you do.

Lastly, your best investment is to invest in yourself and your own home first. It makes no sense to be thinking about investing in rentals and at the same time bending over paying a landlord in rent, especially when rates are so ridiculously low and rent prices are ridiculously increasing. And when things really can't cashflow that well in CA as a rental...and it would be even more absurd to try to juggle an out of state rental, especially if you are still tied to a 9-5 desk job, especially.if you have no prior experience even locally. Not saying you couldn't do it, but your probability of success? Every year you wait and continue to wait taking care of yourself is one more year you aren't moving ahead.

Submitted by bearishgurl on September 21, 2016 - 3:01pm.

The-Shoveler wrote:
You are probably looking in a coastal area, maybe look further inland (or maybe further north).
Don't be too picky.

The reality is not everyone can fit into the most desirable areas. it is just not really a possibility.
Even though the planners have grand plans for high density development I would not hold my breath (or future).

Agree with Shoveler here, kev. I distinctly remember finding you a couple of well-built 1400-1600 sf active SFR listings in Buena Park on this forum a few years back. One was extremely well-located, methinks, because it was situated within a 5-6 minute walk from a major hospital and the second one had a HUGE backyard, IIRC, but you didn't care for either of them, stating they had "too much work" (neither had MR or HOA). Sure . . . you probably would have had to get stickers from the city for any vehicles you chose to park on the street as a resident there, but still . . . these charming ranchettes had location, location, location (esp the one close to the hospital).

Because you have been "fence sitting" during the ensuing years, you have now likely been "priced out" of lowly "working class" Buena Park with its older but well-built stock of SFRs. I am now suggesting to you to try shopping over in the armpits of Fullerton and Placencia for SFRs and Yorba Linda or Brea for condos (you're likely priced out of SFRs in those cities). Brea is, by far, the most "upscale" of the four cities, IMO but you will likely have to purchase a condo there (w/HOA dues). Of course, you will be spending a minimum of $175 month on electricity just to run the necessary A/C over in that neck of the woods and that is just for a condo.

Otherwise, you need to head on back to the likes of Buena Park and keep your eyes peeled for any prospective gut/remodels . . . that is . . . if there are any left which aren't snapped up by cash investors before they hit the MLS :=0

I also think you should focus on buying your own residence and forget about being a RE investor for the time being.

Submitted by Coronita on September 21, 2016 - 3:09pm.

Also, you don't need to change your career to make $200k in CA, BTW kev. You just need to be at the top of your game. Plenty of people in tech do that, in even down here. And don't oversimplify being a RE "investor". Not everyone does well in it, especially if you really don't want to do it. You are looking at the problem backwards. You're looking at compensation first of people, without understanding those who are making those compensation most likely enjoy what they are doing, and as a result, have been compensated for being good at what they are doing. Usually, people do what they want to do and get really good at it, and then the compensation comes. With all due respect, it still seems you care about the paycheck way too much and not so much about what you are doing, which may be the reason why you are hitting a glass ceiling.

Submitted by bearishgurl on September 21, 2016 - 3:18pm.

kev, what would be your commute time to work from Santa Ana . . . or even Whittier or El Monte (LA County)? I saw two nice cosmetic fixer SFRs in Whittier similar to the listings I posted here in Buena Park on your thread a few years ago listed this past summer for the low $400's. I haven't checked to see if they sold. I saw a corner lot 1900sf single-story SFR in El Monte which sold short for ~$360K in June of this year, I think. The house appeared to be in pretty good shape inside and the lot was mostly concrete, as I recall.

You're frustrated because you have been looking in the wrong (high-competition) cities which have had too many all-cash investors trolling around them for years who are 20+ years older than you and have 30+ years experience in the construction trades, their own flatbed trucks and a warehouse full of tools. That is your "competition."

Submitted by bearishgurl on September 21, 2016 - 3:34pm.

Also, practically the entire City of Irvine was built around the concept of the Homeowner's Association. Thus, a very high percentage of residences there (85-90%?) lie within HOAs. If you want to buy a residence in Irvine, you will likely have to join one and pay ever-rising HOA dues PLUS any special assessments (with condo complexes) which are voted in by the Association's Board of Directors . . . which could be several thousand per homeowner.

With a 740 FICO score, at today's 30-yr mortgage rates, $350 month HOA dues is equivalent to borrowing another $83K on the mortgage!

Submitted by svelte on September 22, 2016 - 9:14pm.

Very nice posts, bg. To the point and thoughtful.

Since I've been a critic in the past, I feel it is only right to offer praise also. Thank you.

Submitted by sdsurfer on September 23, 2016 - 1:28pm.

FlyerInHi wrote:
I have a friend who bought a 2/1 condo in Huntington Beach for about $350. It's old but with a good remodel it will be very comfortable. She did FHA.

My brother bought something similar in Encinitas earlier this year for 315k. It cash flows in his instance, but in yours it could be a great starter pad that becomes a rental down the road once you have two incomes like you mention. It's barely east of the 5 so you could walk to everything in Encinitas as well as the beach.

Good luck with everything!

Submitted by exsdgal on September 23, 2016 - 2:41pm.

You asked ‘How to make more money?’

When I read your post yesterday, I thought what can I say that has not already been said. Your question by itself was interesting, and am certain many here have asked a variation of it at some point in their life. I know I did.

For some ‘money’ implies dollars, euros, pounds, pesos, bitcoins, etc. I prefer to think of ‘money’ to include monetary currencies along with trust, time, credit worthiness, self ability (skills), self interests (passions), personality and health to list a few. In our every day activities we essentially barter one set of ‘personal currency’ for something equivalent/better.

e.g. with my skills(not necessarily passion) get W2 income; with trust/credit worthiness obtain a loan; with passion/skills/trust convince a VC to invest in the next round; with time/dollars support organizations I am passionate about.

The best person to answer your original question is YOU!

What works for others need not work for me. It is also worth noting what worked in the past may not be applicable today for a simple reason - my interest/passion changed.

Since I can not provide concrete examples to make more money, I will reply with my thoughts to a variation of your question I had when I was in my 30’s (AARP is eager to add another household to their mailing list soon).

Here was my self assessment:
- I am a lazy person (please don’t mistake that - I seek challenges, and will solve them with the most efficient solution as quickly as possible, with minor fine tuning along the way to perfect/automate the problem)
- value time more than monetary currency (will take reduced pay to keep my 15 minute commute)
- can become passionate/knowledgeable about almost anything (within limits)
- my investment inclinations tend to be valuation driven and contrarian by nature
- have a constant paranoia it will only become difficult as I get older to find interesting workplaces

With this newly acquired self awareness I chose to do reverse analysis on the problem at hand - ‘what do I want to do at age X?’ and most importantly ‘what support will I need to maintain my goals at that said age X’

Now that I had a magical $ number to support life at X, I started looking for diversified opportunities across the spectrum to generate my magical $ number. Typically a $1 saved is $1.33 earned, which simply dictates to come out ahead/even in the game one has to find legal options to minimize the ~30% deficit. My end goal is not to amass wealth, but just enough to support my/spouse lifetime along with a 5% surplus to kick-start the next generation.

Few other random thoughts:
- consider a 9-5 job as a spring board to reach ones goal. This helps to build ones personal currency of trust, credit worthiness, skills. Most importantly helps to sort out what one’s likes and dislikes are.
- it takes money to make money. I know it sounds a cliche. So will amend it as ‘it takes personal currency to make money’.
- The best currency to have anytime is Other Peoples Money in the form of loans, goodwill etc
- look at your 1040 to understand above line deductions and below line deductions.

I can’t speak for you, but if I were in your position my action plan (UNLESS my current rent was ridiculously below market) will be to
- buy the largest house I can afford in the best neighborhood I desire. Note, this can be the smallest house in the neighborhood. Ideally prefer not sharing the land rights with anyone. By choosing the best neighborhood I also insulate from possible market slowdowns
(or)
buy a place with best attributes in an up and coming area. This follows the concept money is made where no one is looking.
- maintain the place as primary residence for at least 2 years, depending on market conditions sell and pocket up to $250K tax exempt profit and move to another primary residence (rinse and repeat). Now how to maximize the tax exempt profit is an exercise on its own.
- if selling is not an option, rent the place and move to a newer/upscale property after 2 years, collecting rent against the mostly low fixed rate costs.
- Personally will not consider drastic career changes. For example Mortgage broker business might look lucrative (I don’t know if it really is). But switching from SE to an unrelated business often times we forget to account for the ‘opportunity cost’. The time preparing to enter a new profession, cost involved to become proficient in the new business (note even if one went to the best of school for the new profession one will still be the ‘new’ guy in the business); and in the mean time the SE skills become outdated in case I chose to return to the programming world.

Now if real estate is your interest and you are not willing to commit, one idea (which I can not vouch for) is to try the AirBnB route. Assuming you can lease a nice desirable property, which allows subletting/etc and have funds to make upscale furnishing selections, and a support team to complete move-in/move-outs there might be some money to be made. Obviously consideration needs to be made for taxes from the money made, business licenses etc.

If software development is your dream there are plenty of options to explore. With the latest technologies it is quite easy to experiment rapid developments and test market. There are several interesting nascent domains that are worth exploring - internet of things, machine learning, robotics. Look for old forgotten problems that can use some disruptive technology.

Well I hope there was some useful information in here for you to brain storm your money generating ideas following the ‘no pain no gain’ principle. Good luck!

Submitted by no_such_reality on September 23, 2016 - 4:00pm.

flu wrote:
Also, you don't need to change your career to make $200k in CA, BTW kev. You just need to be at the top of your game.

IMHO, there's a little more to it than that.

First, let's be realistic on how many are actually making over $200K.

Second, let's be realistic why some of them that are making over $200K are making it.

Third, let's be realistic on the form of that compensation.

Finally, let's realistic on what it's really going to take to make it.

1st, a small percentage of the people are making over $200K, even in tech. For every $200K person, there is an army of junior people, off-shore people, help desk people and others.

2nd, of those making over $200K, many are because of in demand skills, new skills or exploitative niche of old skills and personal connections. I know more than a few making that, that are stuck where they're at.

3rd, many making over $200K are doing so because of equity participation in one form or another and combination of good company performance AND, job tenure (there long enough to cash in on that equity).

Finally, you got to work it. You have to actively work the compensation component of it, jumping ship when the comp isn't there. You also have to work it and deliver. Don't underestimate this one, deliver, deliver, deliver. Deliver when you said you would deliver. Deliver when no one thinks you can deliver.

Submitted by harvey on September 23, 2016 - 4:07pm.

exsdgal wrote:
For some ‘money’ implies dollars, euros, pounds, pesos, bitcoins, etc. I prefer to think of ‘money’ to include monetary currencies along with trust, time, credit worthiness, self ability (skills), self interests (passions), personality and health to list a few. In our every day activities we essentially barter one set of ‘personal currency’ for something equivalent/better.

It must be very confusing to do business with you.

Submitted by exsdgal on September 23, 2016 - 6:27pm.

harvey wrote:
exsdgal wrote:
For some ‘money’ implies dollars, euros, pounds, pesos, bitcoins, etc. I prefer to think of ‘money’ to include monetary currencies along with trust, time, credit worthiness, self ability (skills), self interests (passions), personality and health to list a few. In our every day activities we essentially barter one set of ‘personal currency’ for something equivalent/better.

It must be very confusing to do business with you.

perhaps! At least the people I deal with know exactly what to expect from me, and that they won't get screwed. That got to count for something right? :-)

Submitted by exsdgal on September 23, 2016 - 6:55pm.

no_such_reality wrote:

Finally, you got to work it. You have to actively work the compensation component of it, jumping ship when the comp isn't there. You also have to work it and deliver. Don't underestimate this one, deliver, deliver, deliver. Deliver when you said you would deliver. Deliver when no one thinks you can deliver.

I agree with your assessment, with the exception about jumping ship. I am not certain jumping ship helps in the long run, unless the work experience/circle is large enough so as to never have any overlaps. Definitely in the case of bad/mis management it makes sense. Switching jobs just for the sake of dollars imo may not work out too well.

Now I would consider 'deliver when no one thinks you can deliver' to be the perfect blissful state!

Submitted by njtosd on September 23, 2016 - 9:18pm.

I have scanned the comments and don't believe that what I'm about to say has been addressed - if I"m wrong, feel free to ignore.

You are a software guy. If you are good, there must be something that you could produce, independently, that someone would be interested in. Not sure about the terms of your employment agreement, but if you have legal room to generate and sell your own software I would think you should be putting your free time toward that. I don't know anything about you, but my feeling is that if one were to put good engineers and good real estate agents/brokers on a Venn diagram, there would be little to no intersection of those two circles. Why try to retrain yourself when the skills you already have are valuable? I have six (at least) ideas of web based services that I think would be marketable - maybe I'm right, maybe I'm wrong, but if I have that many I'm sure you have more (and if you don't, that's something to think about).

Most people want others to give them a job. When they do that, they sell their time and there is only a finite amount of time. On the other hand, if you start your own business and you come up with Flappy Bird, or similar, you can sell millions of downloads in a day. And I'm being a little facetious, you don't have to have a blockbuster - a little extra income goes a long way depending on how you invest it.

Best wishes to you.

Submitted by FlyerInHi on September 24, 2016 - 10:04am.

exsdgal wrote:
harvey wrote:
exsdgal wrote:
For some ‘money’ implies dollars, euros, pounds, pesos, bitcoins, etc. I prefer to think of ‘money’ to include monetary currencies along with trust, time, credit worthiness, self ability (skills), self interests (passions), personality and health to list a few. In our every day activities we essentially barter one set of ‘personal currency’ for something equivalent/better.

It must be very confusing to do business with you.

perhaps! At least the people I deal with know exactly what to expect from me, and that they won't get screwed. That got to count for something right? :-)

Why not just think of money as money, and time as time. Sure, there's a trade off in life. But time, health, passions, etc... are not money.

Submitted by exsdgal on September 26, 2016 - 2:21pm.

FlyerInHi wrote:

Why not just think of money as money, and time as time. Sure, there's a trade off in life. But time, health, passions, etc... are not money.

That does keep things simpler. I agree my definition is unconventional. In the context of OP's question I do believe when 'money' is considered in a non-generic fashion there are opportunities to make more conventional money. Although time/health are not money, I would say time is more valuable, and without health it might be impossible to make money. In my personal experience separating the money aspect from the equation has created rewards far greater than I could have anticipated at that time. OMMV.

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