How to take money out of a TSP?

[Casey Walker]

In addition to owning a construction business my Wife and I have a couple of rentals and we are very happy being landlords. My 61 year old Father has money in his TSP that he would like to take out and he would like to invest in our next investment.

My Question is how should he go about taking the money out of his TSP, he is concerned that a withdrawal would add to the taxes he has to pay now, he could wait to withdraw till he retires in 5 years and is in a lesser tax bracket, because he will be earning about half of his current income once he is retired.

What would you suggest the arrangement should be with someone bringing money to the deal?  

My thoughts are I would buy the property in my name using a bank loan for 80% and we would use his TSP money as the down payment. To keep it all simple and clean I just want to pay him a set interest amount on the money he puts in the deal.

Thanks for you help!