Why do I need to Prorate Rent?
Rent proration is used to calculate the rent amount due for any month that a tenant does not stay for the entire month.
So, you found a new tenant to live in your Las Vegas rental property but they are going to be moving in in the middle of the month, instead of the first of the month. The big question is how do you charge them prorated rent?
There are two common ways to calculate prorated rent:
Charge for the number of days the tenant spends on the property based on the monthly rate or the yearly rate. You can do the math easily on your own, or use an online prorated rent calculator.
MONTHLY RATE
This is a two step process:
- Figure out how much daily rent would cost based on dividing the monthly rate by days in the month.
- Multiply the cost of daily rent by days the tenant will spend in the unit for the month.
Here's an example where a tenant spends 15 days of July in a unit that costs $950/month.
- $950 / 31 = $30.65
- $30.65 x 15 = $459.75
YEARLY RATE
If your tenant is signing a year-long lease or longer, this is a preferred way to calculate prorated rent. This is a three step process:
- Figure out how much rent costs for the entire year by multiplying the number of months by the cost of rent.
- Determine daily rent by dividing the yearly cost by days in the year.
- Multiply the cost of daily rent by days the tenant will spend in the unit for the month.
Here's the same example as above, but calculated for the yearly rate:
- $950 x 12 = $11,140
- $11,140 / 365 = $31.23
- $31.23 x 15 = $468.45
As a note, this extra step adds a layer of complexity that can confuse the tenant, but provides the most accurate amount for year-long leases. Either way you calculate it, make sure to be clear and transparent with your tenant to build that relationship of trust.
THINGS TO KEEP IN MIND WHEN PRORATING RENT
- Leap year
- Day on month billed (Rent due date)
- If the rent spans months.
- Number of days in the first month
- Number of days in the second month
- Amount per day in the first month
- Amount per day in the second month
- Number of billable days in first month
- Number of billable days in second month
- Different amount per day depending on month
Contact Blackbird Realty And Management to learn more about Las Vegas Property Management
To learn more about how to charge a tenant prorated rent, or to speak with us about our property management services, contact us today by clicking here.