Pro-rating rent for your tenants can seem like a hassle, but it doesn’t have to be! Both new and seasoned landlords can benefit from adopting this practice, which can help you find the balance between positive relations with your tenants and maintaining your rental profit margins. While there are calculating tools available online, it’s just as easy to do yourself, if you know the formulas. Keep reading for the best tips on making pro-rating rent fast and easy!
What is Pro-rated Rent and How Do You Calculate it?
When a tenant moves into or out of a property part of the way through the month, a landlord and tenant may agree to a calculated, or pro-rated, portion of rent to be paid based on the actual number of days the unit will be occupied. Some property owners choose not to pro-rate rent, either opting to collect rent monthly based on the move-in date, or to charge for the full month if the unit is available on the first of the month, regardless of a late move-in or early move-out date.
In most states, it’s up to the landlord to determine whether or not to pro-rate the cost for a partial month’s rent. However, pro-rating is considered the standard practice, and failure to do so may mean negative feedback from your tenants. There are a few ways to go about calculating pro-rated rent; we’ve outlined two of the most common below.
The most common and easiest way to find your pro-rated rental rate is to divide the monthly rental amount by the exact number of days in the month. Different months will yield different daily rates with this method, which is frequently used when signing short-term or month-to-month agreements.
You can also divide your monthly rental amount by 30, regardless of how many days are in the month in question. This method is recommended for landlords who frequently have tenants moving in or out on days other than the first of the month; this way you’ll always know the daily rental rate regardless of the month in question.
It’s always advised to check your city and state regulations to be sure you’re in compliance– for example, California requires landlords to use the flat 30-day method, whereas in Texas pro-rated rent must be calculated by the exact number of days in the month.
All County Denver South Property Management Can Help with Calculating Pro-rated Rent
All County Denver South Property Management is here to help property owners get the best return on their investment through knowledgeable and trustworthy property management services. From managing tenant relationships to lease enforcement, we look forward to working with you to see how your investment can be a long-term, stress-free asset. For a complimentary quote, call us today at (720) 664-4550.