Managing Your Rentals – Charging Prorated Rent
In the course of occupying your rental properties, you will undoubtedly have many tenants that will move in sometime during the month and not on the 1st of the month. This, of course is a good thing because you want to get your units occupied as soon as possible. Much better to have a qualified tenant move in on the 20th of the month than have them wait until the 1st of the next month. But how do you deal with the prorated rent for this initial, partial month?
The formula for calculating prorated rent is quite simple.
Total Rent / 31 days = Daily Rent
Daily Rent * Number of Days = Prorated Rent
For example, if your tenant moves in on the 20th of July, they need to pay for 11 days of rent. You are charging $1099 for monthly rent.
$1099 / 31 days = $35.45/day
$35.45/day * 11 days= $389.95
Now, here’s the important part. When your tenant moves in on the 20th, you don’t merely collect their security deposit and the prorated rent of $389.95. You should collect a full first month’s rent of $1099 along with their security deposit. When the 1st of the next month (August in our example) roles around, then you collect the prorated rent of $389.95.
The reason you should do this is to protect yourself. While you are undoubtedly placing highly qualified tenants in your houses, you don’t want to take the chance that a tenant will move in at the end of the month and then fail to pay rent when the 1st roles around. No matter what day of the month your tenant moves in on, you should always collect a full month’s rent and then charge them the prorated fee for the following month.
Until my next post,
James
P.S. Want to learn some awesome strategies for making property management a breeze? Check out the Secret Property Management Tips and Tricks course which you can download free this week.
Related posts:
- Automatic Rent Collection: Have Tenant Rent Zipped To Your Bank Account Each Month Automatically Have you ever had a tenant not pay you on the first of the month...
- Stop Getting Rent Late By Using Collection Attorneys I hope this does not sound familiar to you, but it does sound too familiar...
- Late Rent Payment Checklist For Landlords I am working on putting together the resources for dealing with all varieties of tenant...
- Marketing To Buy, Sell, Rent, Rent To Own and Private Money Tonight’s webinar at 7 PM MST called Marketing To Buy, Sell, Rent, Rent To Own...
- Getting Your Houses Rented – Effective Marketing for Your Rentals If it’s time to fill a vacancy for one of your rentals, you will want...
- “Rent To Own” As A Common Exit To Buying “Subject To” Once you buy a house “subject to” the existing financing, you’d like to be able...
- It’s a Rent-To-Own, Not a Lease-Option I am currently advertising one of my properties as a rent-to-own. I am trying to...
- When Good Tenants Go Bad: Things You Can’t Do To Force Your Tenants To Vacate If you are in the rental business, sooner or later, you are going to have...
- How to Raise Rents: The Nuisance Rental Increase Every landlord is faced with the question: should I raise rent? And if so, by...
- Property Management Basics: Improving Your Bottom Line through Tenant Retention – Why It Matters Every investor wants to maximize cash flow. However, achieving this goal can sometimes be counterintuitive....
