You have a rental property ready to rent, but you haven't filled it by the first of the month. Should you wait until the first of the month to have the new tenant move into the unit?
You can decide, but you should realize you don't have to wait. Instead, property managers suggest prorating the rent.
Prorated rent helps you increase your rental revenue by charging a partial month's rent.
Would you like to learn how to calculate it and the benefits it offers? Continue reading to learn more about prorated rent.
Definition of Prorated Rent
You earn more when offering a rental property to a tenant. They sign a lease agreement and agree to pay monthly rent while living there. To increase your income, you must keep every unit occupied as much as possible.
Of course, you will have times when you have vacant units. For example, someone moves out one day. Then, you spend the next few days or weeks preparing the unit for the next person.
Increasing turnover time is an effective way to increase your rental income. You can also increase your rental income by enforcing effective rent collection strategies.
Prorated rent is one of the best ways to increase your rental income. Prorated rent simply means you let people move in during the month. You then charge them only for the time they live there that month.
For example, you charge the tenant for ten days if they move in on the 21st of a 31-day month.
Purpose of Offering Prorated Rent
The primary purpose of prorating rent is to increase your occupancy rate. Letting people move in throughout the month reduces vacancy rates for the month.
Secondly, it helps you increase your rental income. You receive a partial month's rent today instead of waiting until the first of the next month.
Calculating Prorated Rent
The good news about prorating rent is that calculating it is simple. You can even use online calculators to simplify it further.
To do it by hand, you'll need a few details:
- Monthly rental rate
- Number of days in the month
- The date in which the tenant moves in
First, divide the monthly rate by the corresponding days in that month. The answer reveals the apartment's daily rental rate. Next, multiply this number by the number of days the tenant will live in the apartment.
After charging prorated rent, the tenant will pay the normal monthly rate on the first of every month.
You can also hire this out. A property management firm can prorate rent for you. They can also handle other management duties or tenant placement services.
Hire Property Managers to Handle It
Property managers offer rental property management services. They can help you find tenants, calculate prorated rent, and enforce the lease. They'll also handle other duties.
As a landlord, this offers stress relief and frees up your time.
PMI Mile High is a full-service property management firm. We are locally owned and operated with a team of experts ready to help. We strive for great customer service and keep owners informed with every detail.
Reach out today to learn how we can help.
