The average home in the US costs just over $507,000, and this is an excellent opportunity for investment property owners. Many people who own rental properties outsource to property managers to handle their obligations. However, working as a property manager isn't as simple as finding a tenant and collecting rent.
There are many situations where you'll need to calculate prorated rent, but not everyone understands how to go about it. Let's explore the key property management strategies you should keep in mind when handling properties in Saratoga Springs, NY.
Understanding Prorated Rent
Prorated rent is a way to calculate rent based on the actual number of days someone will be living in the property for a given month. Property managers use this method to ensure tenants aren't overcharged. If you move in or out mid-month, prorated rent ensures you pay only for the days you are in the property and not the entire month.
Basic Calculation Method for Property Managers
The most common way to calculate prorated rent is to determine the daily rent amount. To do this, take your monthly rent and divide it by the number of days in the month. For example, if your monthly rent is $1,200 and the month has 30 days, your daily rent would be $40.
Let's assume you'd be living there for 21 days. Multiply the daily rent by the number of days you'll be staying. In this case, $40 x 21 days = $840.
Different Calculation Methods
There are also other methods property managers might use to calculate prorated rent. One alternative is the 30-day method, where they always assume a 30-day month regardless of the actual number of days.
To get started, divide the monthly rent by 30. Using the previous example, your daily rent would still be $40. The prorated amount would be calculated the same way.
Some property managers might use the exact day method, which considers the exact number of days in each month. This method is typically used to ensure precise rental calculations and is often preferred in real estate accounting.
Lease Agreements and Prorated Rent
Always check your lease agreement for details on how prorated rent is calculated. Some lease agreements include specific clauses that outline the calculation method, ensuring transparency. If your property manager drafted the lease agreement, ask them to clarify this information before proceeding.
Common Scenarios for Prorated Rent
Prorated rent calculations are commonly used in several scenarios. As previously mentioned, you'll use prorated rent when a tenant moves in or out during the middle of the month.
It's also used when renewing leases that don't start on the first of the month or when adjusting rent for lease breaks. Understanding these will help you avoid conflicts in the future.
Don't Overlook Prorated Rent
Understanding how to calculate prorated rent is crucial for both tenants and property managers. The information in this guide will help you make the best decision for your property in Saratoga Springs, NY.
Veno Properties offers expert insights into real estate investment, property management, and market trends. Our experienced team will guide you through every step of property ownership and management. You'll learn more about how we can help when you get in touch with us today.
