Self storage using Solo 401k funds

[Jeffrey Radcliffe]

Has anyone successfully purchased self-storage units using their Solo 401K? I am looking for more information. Any help would be greatly appreciated.

Thank you

[Jeremy H.]

@Henry Clark @Rebecca Graziano

There's a lot of different ways to source self storage - I think first you have to decide development vs buying an existing facility (an existing facility doesn't necessarily need to be a storage facility). I'm currently doing both. I'm analyzing existing properties while I research the development side - I would really like to develop, but it just depends where the best location and returns are going to be (but I love a clean slate). You can also contact mom & pop places. I would suggest going local for the first one - I think it's much easier to manage.  

Next you need to calculate your size deal - generally speaking we're talking 10-25% down. So if you have 100k downpayment then you can do a 1mm SBA loan or a 250k 25% down commercial loan. Make sure you keep plenty in reserves. I don't think starting a small place, say an acre with 50-75 units would be a bad place to start (can buy smaller tract of land, closer to town for cheaper) also less risk due to the overall cost...

I created a spreadsheet that I use to analyze existing storage units. You would use a similar one to analyze SFH/MFH deals - except your self storage one will be a lot more in-depth - how many units, size per unit, rate per unit, unit mix etc. Then you need to vary the rate and occupancy to find where your success/failure points are. Then calculate your cashflow/payback period/roi from the expenses and income.

Once you can analyze then you can source. I'm using loopnet, crexi, google maps, various websites that sell commercially zoned land - I generally leave the filters open for property type - I don't care what is existing as long as the zoning is right. There are some self storage brokers as well (bellomy, argus etc) - google search for self storage brokers, sign up for their listings and flyers then start to analyze the properties. You'll see if deals pencil out or not based on your spreadsheet. 

For me - I must have value add - whether that means expansion, increasing rates, occupancy %, moving to automation and managing remotely etc - there needs to be a for sure way I can add value and streamline operations. Also the location has to be great - that's the one thing you can't change about a property. 

Also - don't rush the process. There is a ton more involved than BRRRRing a SFH - you have buying/developing, managing, operations, various softwares (RM, CRM), security (cameras, gates, lighting, signs, locks), lockouts...the list goes on. I made an account over on self storage talk .com - lots of stuff that you may not have thought about over there.

And remember there is always another one - if you fail to prepare then you prepare to fail...and as Henry says - start small and make your big mistake early. This cannot be emphasized enough - if you STAY in the game you will win - the key is staying in the game...