Your investment has to outpace inflation AND the associated cash flow & compound effect thereof.

And to compound that issue, there is also the question of whether or not the State of California will allow me to defer their portion.

paying off a house is simply trading liquidity for non-liquidity. you'll save yourself the compounding interest but that's at a very low rate.

Mutual funds and compound interest is safe and works well.

Considering returns are often non-linear and affect of compounding money, I think this approach would be more widely used.I have been exploring writing a program to do a program to do such an analysis.

What I had not realized is that it was purchased by the person who owned the lot next to it and that they were to combine the lots into a large multiplex compound (8 units total). 

You need joint compound. 

As Joe mentioned above your age is going to be a huge factor to creating generational wealth as your investments will have more time to compound. 

Of course, we can also assume that over 30 years, we will face 0 inflation or even deflation, but then REI as a whole would become very challenging.Final point, I do not include "appreciation over inflation" in my calculation: the only reason why the sale of the property in the second example is higher than the purchase price is due to compounding inflation.

But I'm patient I know it will happen and when it does that money will further compound what I already have going.