Picture this: You have a vacant apartment and find a tenant with all the right qualities. But it's only the 10th of the month.
A: Make them wait until the first of the month to move in.
B: Let them move in today.
Letting them move in before the first of the month is the better option. But you can't charge a full month's rent if you do this. After all, this will mess up your rent collection schedule.
Many property managers handle this by prorating the rent. Do you want to learn how to do this? Keep reading to learn more.
Why Property Managers Prorate Rent
You'll face many problems when managing properties. One is rent collection. There are numerous challenges of rent collection, and you're probably familiar with these.
One challenge can be having multiple rent due dates. If all your tenants have different due dates, you'll deal with a lot of confusion. Therefore, eliminate this challenge by prorating rent.
When you prorate it, the tenant pays from today until the end of the month. It's rent for a partial month. After that, they'll pay on the first of the month.
Secondly, prorating rent leads to higher rent collection. If you want the same due date for all tenants, you must collect it on the first of the month. Prorating lets you sign leases on other dates.
You won't have to wait until the first to sign a lease. You can let tenants move in early by collecting a partial month's rent.
How to Calculate It
Calculating prorated rent is simple. Start by using a calculator to determine how many days the tenant must pay. You can also figure this out in your head.
For example, if a tenant moves in on the 10th day of a 30-day month, they'll live there for 20 days that month. Therefore, they should pay for 20 days of rent.
Next, divide the monthly rent by 30 days. This tells you the daily rate.
Finally, multiply the daily rate by 20 days. The answer is the prorated rent amount the tenant must pay to move into the unit.
Benefits to Tenants
Offering prorated rent is also beneficial to tenants. The primary benefit is they'll need less money upfront.
A tenant must pay a security deposit when moving into a unit. On top of that, they must pay a full month's rent. By prorating, you reduce the amount they need for move-in costs.
The rental agreement will state that rent is due on the first. However, the tenant pays less the first month due to moving in on a different date.
Seek Help From a Property Management Company
Property managers prorate rent to simplify things. It's also helpful for tenants, letting them move in with less money. Are you considering it?
Talk to a property manager in Fairfield, CA, about prorating rent. PMI Northbay is a reputable property management company. Our firm is locally owned and operated, allowing us to know this area well.
We specialize in excellent customer service and can help you with all your rental property duties. Reach out today to learn more.