Using TSP Funds for Land Purchases.. any downside?

**Asylum** · 03-03-2008, 07:55 PM

Thinking about taking some money out of my TSP and buying land... about $100k worth.

Hard to beat the 3.5% interest that TSP charges (and pays you).. for the use of your money.

I build homes and I can basically double my inverstment on every two lots I buy and our local market is still growing with sales forecast to bump up by the end of the year.

I figure my land/building rate of return is better than nada.

Thoughts?

**Silverbird** · 03-03-2008, 08:12 PM

Are you over 59 1/2? Otherwise most likely you can't withdraw any money from your TSP (more or less it has to be a major disaster or life change).

Are you CSRS or FERS? If you are on FERS, it's hard to beat the matching you get for the first 5%.

Loans are limited in amount and you have to immediately start paying them back. I think it's must pay back in 5 years for personal loan, 15 for residential.

**Asylum** · 03-03-2008, 08:19 PM

Originally Posted by Silverbird

Are you over 59 1/2? Otherwise most likely you can't withdraw any money from your TSP (more or less it has to be a major disaster or life change).

Are you CSRS or FERS? If you are on FERS, it's hard to beat the matching you get for the first 5%.

Loans are limited in amount and you have to immediately start paying them back. I think it's must pay back in 5 years for personal loan, 15 for residential.

No. I am 43 and under FERS.

Loans are limited to 50% max of your tsp's current market value. You can take out a 'loan' in which you pay yourself back 3.5% interest for the balance. I currently put 15% of my pay into tsp.

I will have the tsp loan paid back within the year so the 5 year limit wont effect me.

**DCguy** · 03-03-2008, 08:22 PM

I thought loans are easy to get. 3.5% interest is pretty cheap too. Also, you actually pay interest to yourself and so you get to keep interest too. And we all know the stock market wont do well this year. If your money's in G already, I guess it's not bad to get a loan.

**Asylum** · 03-03-2008, 08:25 PM

Originally Posted by DCguy

I thought loans are easy to get. 3.5% interest is pretty cheap too. Also, you actually pay interest to yourself and so you get to keep interest too. And we all know the stock market wont do well this year. If your money's in G already, I guess it's not bad to get a loan.

they are easy-breezy to get...

and meh money is 100% in F now days

**Asylum** · 03-03-2008, 08:30 PM

i should post up some building pix..

**Scout333** · 03-04-2008, 03:22 PM

Originally Posted by Asylum

they are easy-breezy to get...

and meh money is 100% in F now days

Loan amounts are capped at the lesser of 50% of your TSP account or $ 50,000. Makes a good bridge loan for short-term but not so great for long-term. i.e. Required to repay if you leave civil service or retire, if you don't it is treated as a taxable distribution (unpaid balance). Possible withdrawal penalties if you don't meet the age requirements, etc. I recently used one to facilitate a new house purchase while waiting to sell the old house. That worked out pretty well. Good luck.

**Asylum** · 03-04-2008, 03:23 PM

Originally Posted by Scout333

Loan amounts are capped at the lesser of 50% of your TSP account or $ 50,000. Makes a good bridge loan for short-term but not so great for long-term. i.e. Required to repay if you leave civil service or retire, if you don't it is treated as a taxable distribution (unpaid balance). Possible withdrawal penalties if you don't meet the age requirements, etc. I recently used one to facilitate a new house purchase while waiting to sell the old house. That worked out pretty well. Good luck.

capped at $50k? I didnt realize that.

Thanks!