→ Relocation

Home → Markets → Relocation → Dual-City Carrying Costs Guide — What the Overlap Period Actually Costs

Dual-City Carrying Costs Guide — What the Overlap Period Actually Costs

Most relocating buyers underestimate the dual-city carrying cost period — the window between purchasing the destination property and closing the sale or rental of the origin property. A buyer who purchases a $2M Florida home in January and sells their $2M California home in April...

The Overlap Cost Calculation

Monthly carrying cost for a $2M property: mortgage ($8,000–$12,000/month at current rates on a $1.5M mortgage), property tax ($1,500–$5,000/month depending on state), homeowner’s insurance ($500–$3,000/month), HOA ($0–$1,500/month). Total monthly carrying cost: $10,000–$21,500/month per $2M property. Two properties simultaneously: $20,000–$43,000/month. Over a 3-month overlap: $60,000–$129,000. Over a 6-month overlap: $120,000–$258,000. This cost is in addition to transaction costs on both the origin sale and destination purchase. For buyers who are also renting temporarily between the two properties: add the rental cost on top. Budget explicitly for the overlap period before committing to the relocation timeline.

Minimising the Overlap Period

Four strategies for minimising the overlap cost period: (1) Sell before buying: close the origin property before purchasing in the destination market. This eliminates dual mortgage payments but creates a housing gap. Solve the gap with the employer’s temporary housing benefit, a short-term rental, or a stay with family. (2) Simultaneous closing coordination: coordinate the origin property closing and the destination property closing for the same week. This requires precise timeline management across two real estate transactions in different markets — achievable with experienced specialists on both sides but logistically complex. (3) Employer bridge loan: if the employer’s relo package includes a bridge loan, it covers the overlap period financing without requiring the buyer to carry two mortgages simultaneously. (4) Origin property rental: rather than selling immediately, rent the origin property to cover its carrying costs during the overlap while the buyer settles in the destination and optimises the sale timing.

The Bridge Loan Option

A bridge loan is a short-term (6–12 month) loan secured by the equity in the origin property, providing cash for the destination purchase down payment before the origin property sale closes. Bridge loan costs: origination fee of 1–2% of the loan amount plus an interest rate of 1–2% above a standard mortgage. On a $500,000 bridge loan, the origination cost is $5,000–$10,000 and the monthly interest cost is approximately $2,500–$5,000. The bridge loan eliminates the risk of missing the destination property opportunity while waiting for the origin property to sell — particularly valuable in markets where the right destination property may not be available if the buyer waits to close the origin sale first.

Cash-Out Refinance on the Origin Property

An alternative to a bridge loan for buyers with equity in the origin property: a cash-out refinance on the origin property, extracting equity before sale. Pros: lower rate than a bridge loan (it’s a first mortgage, not a bridge), flexible timeline, and no requirement to sell the origin property by a specific date. Cons: refinancing a property the buyer intends to sell adds transaction cost (origination fees on the refinance) and requires the lender’s approval. Some lenders will not cash-out refinance a property that is listed for sale or where the buyer has expressed intent to sell. This option works best when the origin property is not yet listed.

tax-deductibility

Some costs during the dual-city overlap period may be tax-deductible, partially offsetting the carrying cost burden: (1) Mortgage interest: federal mortgage interest deduction applies to the primary residence and one second home (up to $750,000 in combined mortgage debt post-TCJA). If both properties qualify, both mortgage interest amounts are deductible within the combined limit. (2) Property taxes: the SALT deduction cap ($10,000 combined state and local tax) limits the property tax deductibility benefit for high-income buyers in high-tax states. For buyers relocating from a high-tax state, this deduction is already fully utilised and the second property’s property taxes provide no additional benefit. (3) Moving expenses: post-TCJA, moving expense deductions are available only for active-duty military. Employer-reimbursed moving expenses may be excludable from income under IRC §132. (4) Bridge loan interest: bridge loan interest is typically deductible as mortgage interest if the loan is secured by the property. Consult your CPA on the specific deductibility of each cost component during the overlap period.

relo-company-bridge

When both employer and private bridge loan options are available, the comparison determines which is the better tool: Employer bridge loan (through relo package): typically offered at below-market rates (sometimes interest-free for 60–90 days), with a term that aligns with the expected origin property sale. No personal credit qualification required — the employer assumes the bridge risk. Maximum loan amount typically capped at the lesser of the origin property equity or a package-specific maximum. The primary constraint: the employer bridge loan requires using the relo company’s agent for the origin sale (and often the destination purchase), which may conflict with the buyer’s interest in an independently verified specialist. Private bridge loan: available from private and portfolio lenders at market rates (1–2% above standard mortgage rates). No restriction on agent selection. Requires standard qualification (credit, income, LTV). Maximum loan amounts based on the property equity and the lender’s LTV limits — typically up to 70–80% of the origin property value. Private bridge loans are the right tool when the employer package bridge comes with an agent assignment restriction that conflicts with independent specialist selection. The rate differential (potentially $2,000–$3,000/month in additional interest on a $500,000 bridge) should be weighed against the value of specialist independence.

Own Luxury Homes® Resources: Tax-Bridge™ Calculator — Institutional Relocation Protocol — First-Time Luxury Buyer Hub

faq

How long does a relocation typically take from start to close?

3–6 months from the decision to relocate to closing on the destination property: 2–4 weeks for specialist selection and pre-qualification, 4–12 weeks for the property search, and 45–60 days from accepted offer to close. The origin property sale adds 30–90 days to the timeline from listing to close.

What is a bridge loan?

A bridge loan is a short-term loan (typically 6–12 months) secured by the equity in your current home, providing funds for the destination property down payment before your current home sells. Interest rates are typically 1–2% above a standard mortgage rate.

How do I avoid carrying two mortgages?

Four approaches: sell before buying (creates a housing gap), simultaneous closing coordination, employer bridge loan through the relo package, or renting the origin property to cover its costs while you buy in the destination. The right approach depends on your financial situation, market conditions, and the employer package terms.

Can I deduct the costs of a work-related relocation?

Under current tax law (post-TCJA 2018), most work-related moving expense deductions were eliminated for civilian employees. Active duty military members can still deduct qualifying moving expenses. Some employer-reimbursed moving costs may be excludable from income under IRC §132. Consult your CPA on the specific tax treatment of your relocation package.