It's got my head spinning.......I am self-employed, so my income is variable.

A great resource for LA outsiders to find relevant information about the little neighborhoods inside Los Angeles is: http://maps.latimes.com/neighborhoods/ ...it shows how wildly Income, employment rates, rent-to-own ratios, and crime statistics differ wildly between the little neighborhoods of L.A. 

If you are flipping, isn't there a self employment tax to be paid?

These cycles will wipe out the weak that jumped in when risk was seemingly low (positive employment, RE in the news and uncles buying SFRs) while those that accumulating will be moving sideways growing their balance sheet preparing to buy from those that missed all the signs.

When you are self employed you may not earn any money but you are unlikely to get fired.

Is employment good in that area?

Here's my scenario: Right now, all of our income comes from my employment salary, and from investments (rental income from RE and Stocks).  

Long story short, I could NOT keep my rentals rented not even to Sect 8 because when economy took a dive, people who wanted to stay employed moved OUT of the area and that made room to the "other" people that trashed the asset class from a B- to a blunt D in as little as 2 years. 

I told my current employer on April 1st..

The Eastside is going to be one of the more resistant areas to priced drops mainly because of our huge employment bases.