TSP loan for rental

[Account Closed]

I currently have a rental in nc and owe 98k at 4.5%. rental income is $700. I am breaking even since 2008. I wanted to pay the loan off by using TSP loan and pay tsp loan in 2-3 yrs. I can then refinance and buy another property. Is this a good Idea? I will get about 2% interest payment to self on TSP but may lose whatever income I get in the next 2-3 yrs. Most of my friends think it is a bad idea. Please advise. Thanks

[Paul Santos]

Some things to consider: TSP General Loan has a maximum of $50,000 and max amortization of 5 years. TSP General Loans, as last week, had a rate of approx. %1.750. You can't use a TSP Residential loan because TSP regulations strictly prohibit TSP Residential loans for investments, only owner occupied.

Whether it is a good idea or bad idea depends on the numbers. If you think you save more money by taking out the TSP loan, compared to what that money could earn in the future, then it might make sense. But at only $50,0000 you still have a remaining mortgage balance of $48,000.

My guess is you might not get many responses here on BP to your question, because TSP is specific to military or government employees. Go to the TSP website, they have a lot information related to loans that may help you make a well-informed decision. Good luck!