As a Hampton Roads, Virginia, landlord, you want to make as much rental income as you can. You can do this by allowing new residents to move in early or move out late, for a charge.
This is defined as prorated rent. Landlords can generate additional income by allowing these exceptions. But, how is prorated rent calculated?
Keep reading to learn the equation and how property managers can help.
Defining Prorated Rent
Prorated rent is an amount charged to a tenant for the number of days they live in their unit. Based on the monthly rent amount, rent is prorated by the day.
You can charge a prorated rent when a tenant moves out before the end of the month or moves in before a new month. The percentage of the month the tenant occupies the unit is the percentage of the rent they will pay.
It's not legally required to charge tenants their monthly payment on the first of the month, but it can help keep things organized. You can make rent payable the day a tenant moves in if it's not on the first.
Most landlords charge on the first of the month and charge a prorated rent, if necessary, to keep all units on the same schedule. You will receive rental income on the same day of every month unless you let renters prepay.
Calculating Prorated Rent
Using the number of days in a month is the easiest way for property managers to calculate prorated rent.
Divide the monthly rent by the number of days in a month. Multiply this number by how many days the tenant occupies the unit in that month.
Here's a look at the equation:
- (Monthly rent/number of days in that month) X number of days renter is paying for = prorated rent
To provide an example, let's say that the monthly rent amount is $1,000. Let's say there are 30 days in this month, but the tenant is only occupying the unit for seven days in that month.
With these numbers, your equation would look like this:
- ($1,000/30) X 7 = $233.31
$233.31 is the prorated rent amount for this scenario. The number of days in a month and your rent amount can fluctuate, so you'll have a different equation every time.
Prorated Rent Tips
Hampton Roads, Virginia, landlords can avoid disputes about prorating rent using these tips.
First, make sure your prorating policy is in writing. You can incorporate it into your lease agreement to avoid conflicts down the line.
Your policy should include your responsibilities as a landlord.
For example, you don't have to prorate rent if the lease agreement begins on the first day of the month but the tenant decides to move in later. The same theory applies if the tenant's lease ends when the month ends, but they choose to move out before.
How Can Property Managers Help?
Dealing with tenants, especially when it regards rent, can be complicated. Hand over these responsibilities to property managers in Hampton Roads who know the ins and outs of the local laws.
Since 2007, Renters Warehouse has been helping landlords like you with tenant relations, rental agreements, and many other services.
Our unique property management strategy positions us to be the best in the business. Contact us today for help with building your wealth!
