Anyone ever use a TSP loan to purchase a rental?

[Drew Vukov]

TSP is the Feds 401K. I have been considering taking a loan out to purchase a rental property free and clear. The problem is loan repayment term is 5 years, which pretty much kills any cash flow. The interest rate is only 2.25% and I would be paying my self back.

I had upped my TSP contribution to the legal limits the last few years in anticipation using the funds to buy a rental at some point, but now I realize I should have kept the contributions at an amount that match employer contributions and saved the rest.

Has anyone used this strategy (TSP or 401K loan) to buy an investment home? Were you still able to cash flow? What was the outcome?

[Drew Vukov]

@Brie Schmidt there are two types of TSP loans. One for purchase of a primary residence this requires documentation and proof, with loan terms up to 30 years. The other type is a general purpose loan, it requires no docs, and can be used for any purpose including purchasing non occupied property

Just wondering if anyone has used a loan like that ( low interest, 5 year term, paying yourself back) to buy a rental property? How did it work out for you, were you able  to get it to cash flow immediately ?