Living in a rich neighborhood while still needing to work
Consider this a somewhat low-effort family planning thread from a financial angle.
So I'm sure other people here have dreams of living good and I'm strictly talking about living in some of the more known wealthy communities. I've looked around at prices on Zillow and I'm more-so referring to something that is on-par with areas like Newport Beach (not on the ocean) and The Woodlands (TX) as Beverly Hills and Florida Keys seem a bit too extreme (albeit I'm certain somebody reading this will think that's exactly where they want to be, I was the same way until I spent time modelling my income). Say we're in the price range of $2 to $3 million with an estimated payment on a house worth $2.0mil being 11.1k/mo and for $3.0mil being 16.2k/mo.
Now I'm not American, but I'm certain some limitations exist on how much of your wages you are allowed to allocate into a monthly payment for a mortgage. Where I'm from it's 50% I believe. Since the monthlies make up a total annual outflow of 133.2k or 194.4k, this suggests you might need to be making ~270 to ~390 a year which isn't all that much (especially if you look at some of those charts we have on the right side of the web page when scrolling).
But while the amount isn't much, it only isn't much in a ceteris paribus type condition (sorry, my economics vocabulary is leaking). We would be making that money strictly because of where we are at that moment (NYC, Boston, wherever else). With confidence we can say that most of these rich neighborhoods have little-to-no work opportunities and a lot of them are nowhere near these opportunities either (you should have some luck out in Cali tho, maybe NB wasn't the best example).
Regardless, my question is how do you envision getting into one of these neighborhoods? I do know that discussion about "downgrading" is pretty common on the forum, i.e. making time to make sure you can have a family, albeit there's a lot more of this discussion in female threads, through reducing your hours (and therefore reducing your pay). Should we (the people looking to get into such neighborhoods) hope for full-time WFH opportunities? Or what other alternatives exist for getting into a similar situation while being able to sustain the costs?
First of all, I like this idea of a thread. It is a bit unusual and not something we read every day.
Second, I used to live in Newport Beach before but moved away for a new job. Not every home/place is in the millions, even in wealthy neighborhoods. there are "affordable" places almost everywhere (maybe, with exceptions like Bel Air or something). My apartment was luxurious but not ridiculously expensive.
Third, you also have to account for all of the CoL, not just the house. Wealthier estates are typically in areas where schools, products, services and everything else also cost more. I.e. if you have kids in a wealthy area, chances are high that the schools in that area are also way more expensive.
Also, many people who move into certain areas of the nation have a plan how to maintain or create wealth. while they are still "working", it is a different form of work. Either through their own company, consulting work, through their network, or other means. While WFH is great for now and a portion of it will remain, I don't believe we are all going to be 100% WFH for the next 10 years.
Moving to a quieter, more residential region would be an amazing opportunity to potentially change jobs/industries or create a business.
A really good experience about living in richer neighborhoods would be the people you will meet. It is a great opportunity for networking and dating in the right social classes. great experience.
good areas i.e. could be Scottsdale AZ Brentwood CA areas between Vickery/Moss in Dallas, TX, etc
I suspect the reason why we fetishize these homes that are into the millions isn't because of the price tag, but because of the look. We might see some really nice modern homes for cheap in Dallas, but when I look at a million dollar home in Newport Beach, I just instantly know that it's not something that would have me at peace in the long-term. Side-note: Ben Wegmann posts Dallas real estate on Twitter, that's why I know nice stuff isn't that expensive there.
I want to bring attention to your 4th paragraph though. Obviously I'm not expecting to have much of an idea on how to create wealth outside of investing and a normal job (not quite a 9-to-2, shout out to the people grinding IB). I am generally aware of BaaS/SaaS (for readers unaware, that's business/software as a service) but if coming up with unique ideas was that easy, we probably wouldn't be spending much time on WSO.
I do kind of think that towards the end you were talking something different because by the time I'd have the down payment for a house into the millions the chances of me being single are extremely slim. It sounded like you were promoting the idea of living somewhere expensive as a method of building contacts and finding a partner on equal footing in the socioeconomic status department. I suspect you have some experience with something like this based on what you said about living in NB and later moving away. Is this worthy of consideration? Limiting personal potential (I'm sure opportunities in NB aren't the same as in NYC) by taking a gamble on finding a partner with higher potential?
The only reason I lived there was because I owned a business in California. And I didn't have a girlfriend back then (I do now), but dating was so much better in "richer" neighborhoods. It wasn't even the money though. If you are in a more affluent area (affluent can mean anything from middle class to upper crust, whatever people think in various regions) you will meet people who are very different from the usual tinder or online dating crowd. I thought they had their life more together, were more accomplished, organized, structured. They had more goals and a way to get there. Some had a "fortunate" background through their family, some worked hard to get there. What they had in common was they were pushing harder than others I have met elsewhere.
You will also meet more entrepreneurs, people who jumped off the corporate bandwagon, people who are star retail investors, or simply prefer to work on their own terms rather than in a large corporate gig. Very refreshing.The quality of life is higher there compared to living in a shoe box in Tribeca. Someone who works in a medium size PE group could be happy in such an area.
I don't think a small business owner would have to be an expert in everything, you just have to do it. Switching your brain from "secure corporate income" to "I will trust my guts and make it on my own" is the key aspect.
Whether your are single or not depends on when you marry. I know guys who married late (in their 30s) and were single when they had higher income. Either way, I thought the quality of people in more affluent areas was higher. You cut out the bridge and tunnel crowd. Speaking absolute numbers, you will have more high profile people in London or NYC. But you have to sift through all the incompatible ones to find them. In a more remote, more quiet, and luxurious area you have fewer people, but more of them are quality folks. Socio-economic footing, as you have said.
If you decide to run your PE firm or consulting group or whatever, the local country club would be an ideal place to promote it as well. A good salesperson could even restore young/oldtimers for a living and find the right customers there. I once met a guy who has many remote offices that inject fillers into lips and under the skin, he seemed happy.
And if you really need a larger city - even the remote areas have one of them within 50-75 mls.
You don't really need $2M - $3M in a place like The Woodlands (have no desire for CA so never looked into it). Even at a $500k home you're still living like a king there, you can get at least 4k sq feet and 4+ bedrooms for that. That's a little less than $3k/month mortgage which is pretty affordable even on a $175k - $200k base salary.
I'd take that extra $300k you're saving (20% down on a $2M home) and invest it, put more money down, and go on some sweet vacations.
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