The first property I ever bought was a vacant, renovated triplex on Vendome in what is now Historic Filipinotown.

 

The year was 2001, the price was $380,000, and it cashflowed beautifully from day one. I liked buying units with four bedrooms because roommates are musical chairs—people move in and out, but someone's always paying rent.

 

Twenty-two years later, I sold it for $1,169,000.

 

Not bad, right? Nearly tripled my money. But here's what haunts me: four blocks north, across the 101 freeway, properties appreciated far more dramatically.

 

Which brings me to the same conclusion I reach every time I look back on 25 years of real estate investing:

 

 

 

Let me offer a better case study.

 

A friend's father bought a beachfront property in 1998 for $3 million. Nice house, prime location, but let's run the numbers the finance influencer way: if he'd taken that 20% down payment ($600,000) and thrown it into the S&P 500, he'd have about $3.2 million today.

 

Solid return, no complaints.

 

But what's that house worth now? $40 million.

 

Suddenly the math looks different. Yes, a middle-class home will always be a middle-class home. But an A+ home? That becomes an A+++ home. Premium real estate doesn't just appreciate—it compounds social and economic advantages in ways that index funds simply can't.

 

 

This is why every real estate veteran preaches the same gospel, the same message sold slightly differently:

These aren't just catchy sayings. They're recognition that real estate operates in tiers, and the top tier plays by different rules entirely.

 

 

The finance influencer makes one valid point: your house wealth is "locked up." You can't access it without "getting rid of it" or taking on debt.

 

Money in stocks? That's liquid. Available. Flexible.

 

But here's the thing—that homes are hard to sell is a feature not a bug. Buying young and selling your house in retirement should be part of your plan. Previous generations downsized to condos as a matter of course.

 

Baby Boomers seem allergic to the concept, but I suspect Millennials will rediscover this wisdom in a few decades. By then, that "locked up" wealth will have had decades to compound at rates that make index funds look quaint.

 

 

The stocks-versus-real-estate debate misses the fundamental point. It's not about choosing between asset classes—it's misses the fundamental point that different properties exist in entirely different universes of return potential.

 

Buy a house in Whittier? You're probably better off with index funds.

 

Buy a house on the beach? You just bought yourself a money printer.

 

The hard part isn't picking between stocks and real estate. Frankly, you should do both. The hard part is having the capital, conviction, and stomach to max out your 401k and buy the best house you can. The house that your future self will thank you for—even when it feels impossibly expensive today.