Solo 401(k) Real Estate Strategy

[Matt Franklin]

Greetings,

I'm in the process of buying my first investment property using my solo 401(k). Using a non-recourse loan with 50% down seemed like the way to go, but I'm starting to re-think my strategy.

Basically, I've allocated about $300,000 in the account for purchasing single family homes in the midwest. If the houses average around $130K and I'm into them for around $70K I can buy 4 and still have reserves on hand for vacancy/repairs/etc.

OR...

If I use traditional financing outside of my solo 401(k) and borrow money from the solo 401(k) for the down payments, I could buy twice as many properties. 

I don't need any of the cash flow for at least 10 years, so the strategy would be to pay back the 401(k) loans in ten years, then start collecting the cash flow.

This is all predicated on the understanding that I can borrow from my own solo 401(k) account. Can anyone tell me if this is a sound strategy, or if it's a totally dumbass idea?