Another way to describe prorated rent is rent based on a division of the monthly rate. Sometimes it's useful or necessary to charge your tenant this way.
However, many property managers don't know how to calculate this type of rent. Thus, when the situation calls for it, they'll struggle to get it right. They may even end up charging the wrong amount.
You shouldn't want to become this type of property manager. Read on to learn how to calculate the prorated rate for a few different situations.
Two Methods to Calculate Prorated Rent
Property management companies typically use prorated rents to deal with the situation where a tenant occupies a unit for only a part of a month. When a tenant moved in or out, say, halfway through the month, it's only fair to still charge them for the time that they occupied the unit. However, to do this, you will have to divide up the monthly charge.
Below you'll find two methods you can use to calculate the prorated rent.
By the Number of Days in a Month
Take the monthly rate and divide it by the number of days in the month that's in question. For a month like April, this would be 30 days; for July, it would be 31. February, of course, would be 28 or 29 days.
This will give you the amount of rent that you would normally charge the tenant for each day. You can then multiply this number by the number of days that your tenant will occupy the unit for that month.
For example, dividing a rent of $1,500 by 30 days gets you $50 a day. If your tenant stays for 15 days, you multiply $50 by 15. In the end, your tenant would owe you $750 in prorated rent.
By the Number of Days in a Year
Take the monthly rate, multiply it by 12, and then divide it by the number of days in the year. For a regular year, this would be 365; for a leap year, it would be 366. You can then multiply that daily amount by the number of extra days a tenant will stay in the unit.
For example, multiplying a rent of $1,500 by 12 gets you $18,000. If you divide $18,000 by 365, you get $49.30. You can then multiply that by 15 to get $739.7.
As you can see, the numbers are slightly different. You may want to do some rounding or do both calculations and reach a happy medium.
When You Need Help Property Managing, We'll Be Your Property Managers
As you can see, the calculation is fairly simple. With enough practice, you should be able to completely memorize it. Then you can bring it up anytime it is necessary.
However, if you're having trouble managing your property management company, let us step in. With marketing, resident screening, leasing, and more services, we can be your property managers. Call us today to get your free rental analysis.