How Do You Calculate Prorated Rent?

How Do You Calculate Prorated Rent?

Did you know that the rental vacancy rate in the United States has been slowly declining since 2009? There are a lot more renters these days, but you still might find yourself struggling to avoid unit vacancies in your area.

As a landlord, finding good tenants should be a top priority. One way to attract tenants while avoiding long periods of vacancy is by offering prorated rent.

What is prorated rent exactly and how is it calculated? Keep reading to find out.

What Is Prorated Rent?

Prorated rent allows a renter to pay for a partial month of rent based on how many days in the month they occupy the property.

Landlords and property managers will offer prorated rent to tenants that want to move in before the first of the month or leave before the last day of the month.

The benefit for landlords is that they can maximize occupancy and cash flow for rental spaces. This attracts renters because it saves them money for the time they don't occupy the property.

When Should You Apply Prorated Rent?

In the event that a tenant can't move in on the first day of the month, prorate the rent. As the landlord, you won't have to wait until the next month to bring in money for the rental unit.

Prorating rent won't affect a renter's security deposit payment or the other months of rent that aren't prorated.

How to Calculate Prorated Rent

If the rental start date is not the first of the month, you'll need to calculate prorated rent. You can either do this by using the number of days in the given month or by using the number of days in a year.

To use the former, divide the total monthly rent by the number of days in that month. This will give you the daily rent amount. Multiply the number you get by the number of days the tenant is staying that month.

To use the number of days in a year multiply an entire month of rent by 12 (the number of months in a year) to get the yearly rent. Divide the yearly rent by 365 (the days in a year) to get the daily rent.

Lastly, multiply the daily rent by the number of days the tenant stays in the unit to get the prorated rental amount.

If you want to save yourself the trouble, use this prorated rent calculator.

Should You Offer Prorated Rent to Tenants? 

It's easy to see why prorated rent is an attractive option to tenants, but it has benefits for landlords as well. When you prorate rent, you avoid long periods of rental vacancy and better your cash flow.

Apply prorated rent when tenants move in after the first of the month or move out before the last day of the month.

Don't have time to do the math and handle tenants yourself? Hire property management services to help! Contact us today to see what we can do for you.

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