Americans are suffering from an issue related to poor math skills.
If you own one or more rental properties, you'll need to know how to calculate prorated rent. This is a crucial concept for landlords and tenants alike. This ensures that both parties pay or receive the correct amount of rent when moving in the middle of the month.
You might be asking yourself, "What is prorated rent exactly?" It's a reliable way to calculate a portion of the monthly rent. This is based on the days the tenant will live in the property during that month.
Calculating Prorated Rent
To calculate prorated rent, you first need to know the monthly rent amount. Let's say the monthly rent for a property in San Jose is $2,000. Next, determine the number of days in the month.
Most months have 30 or 31 days, but some have 28 or 29 in the case of February. For simplicity, we'll use 30 days for this example.
Simple Calculation Based on the Number of Days Per Month
Now, it's time for a simple calculation. Divide the month-to-month rent by the number of days in the month to find the daily rent amount.
In this case, $2,000 divided by 30 equals $66.67 per day. This is the amount you'll use to prorate the rent.
Prorating for Partial Months
Let's say a tenant moves in on the 15th of the month. They'll only be occupying the property for half of the month.
To calculate their prorated rent, multiply the daily rent amount by the number of days they'll be there. In this case, 15 days multiplied by $66.67 equals $1,000.05.
Moving Out Early or Late
Similarly, if a tenant moves out before the end of the month, you'll prorate their rent based on the number of days they've occupied the property.
If they move out on the 20th, for example, they've been there for 20 days out of 30. So, their prorated rent would be 20 days multiplied by $66.67, which equals $1,333.40.
Accounting for Different Months
Remember, the number of days in a month can vary, so you'll need to adjust your calculation accordingly.
February, for instance, has fewer days than other months, so the prorated amount will be slightly higher per day. Make sure to use the correct number of days for each month to avoid errors.
Communicating With Tenants
Clear communication is key when it comes to prorated rent. Make sure your tenants understand how the calculation works and why it's necessary.
Provide them with a breakdown of the prorated amount so there are no misunderstandings or disputes later on.
Now You Know How to Calculate Prorated Rent
Now that you know how to calculate prorated rent, you can ensure you get every dollar you deserve. By keeping your financial matters organized, you'll prepare yourself for success in the long term.
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Are you ready to enjoy less stress and more profit? If so, don't wait to touch base with the Provident Property Management team today.
