Self Storage- Cargo Containers, 2025 tax prep, Cost Segregation

We do Self Storage traditional units and Cargo Containers or Conex's.  Several things came to a head this year, so we took action.  Cargo containers are the lowest they have been in 5 to 10 years.  We have another REI investment we just went to market.  Country Subdivision lots, which we sold 3 lots since June so will have more income for taxes.  

Investment-  Decided to buy 50 One Trip or New containers.  Normally we buy 14 at a time.  In 6 months, we have rented 10 of them which is actually on track.

Cost Segregation- On average we paid $2,900 per unit wholesale, Retail they sale for $4,500 in our area.  Another $200 for delivery, site prep and to set them in place.  Basically $3,100 each for 50 units.  Doing a Cost Segregation on these is easy since we have the invoices.  Both the units and the site prep are eligible for the 1-year write-off.  The 100% write-off came back into effect this year.

Income offset- we sold 3 lots on our Country Subdivision which we would have had to pay taxes.  These Container write-offs will cover most of that profit.  

Cons- to me 1-year write-offs are really a loan from the government.  You will have to pay the taxes on income at some point.  But with inflation and devaluation of the dollar, the future tax payments will be cheaper than today.

Upsides- Really 3 pros

1.  Containers- 5-year payback.

2.  Fed loan with the One-year write-off.  No interest payments.  No loan documentation.

3.  We have taken that Cash and invested into a Non-REI Asset class, which we will get a 50% return in 6 months, and a 100% to 300% return in 12 months. 

Downsides- With a potential downside of 10% loss from base on the non-REI asset.  

We will not want to sell this property for at least 5 years or more, otherwise we will pay for depreciation recapture.

I always say use your unfair advantages, but you have to be able to see them.  If we weren't in Self Storage, we wouldn't have done the Cargo Containers.  We had the jump in Income from the sale of lots; thus, we can take advantage of the 1-year write-offs.  With the "Federal Loan" we then invested in a momentary investment strategy and take a large position.

Start small and Make Your Big Mistakes Early.