Renters aren't coming in droves, at least not at the beginning of 2024. Prices are 29.4% higher than before the pandemic, and rental growth has slowed since spiking in 2021.
All this means is that some Chevy Chase property managers face the issue of low vacancies and lower income. Sometimes you've got to take what you can get. That's where prorated rent comes in.
You may not get a whole month's rent. But that reduced income is better than an empty apartment. But what is prorated rent, and how do you calculate it?
Keep reading to learn about proration and how to figure out how much a prorated rent collection should be.
What Is Prorated Rent?
Let's start with an example: You have someone who wants to move in, but it's halfway through the month. They've chosen February 17th to move in.
You don't want to charge for the entire month, so what do you do? You ask for a partial or prorated rental payment.
You don't have to allow the tenant to move in mid-month. There's also no law that rental collection be the first of each month.
The "February 17th" renter could be the one person who pays rent on the 17th of each month. Collecting separate payments each month can create extra work for you.
Proration can make rental income calculations tricky, but it's often more manageable for the initial move-in. Afterward, you can charge the renter on the first of the month.
Here are some other instances when proration might be practical:
- When a tenant moves out before the end of the month
- When a lease expires on the first of the month
- When a tenant needs one or two extra days of residency
How To Calculate Prorated Rent
You can use a prorated rent calculator if you don't want to do the math yourself. If you'd like to know the equation for prorated rent calculation, here it is:
(Monthly rent ÷ # of days in a month) x # days the renter is paying for
Here is a more concrete example: We know the renter is moving in on February 17th, and we'll say the full rent is $1,100. Calculating the prorated rental income would look like this:
1,100 ÷ 29 x 13 = $493 (for transparency's sake, this is a rounded number)
Of course, this is how prorating monthly rent looks. You can calculate yearly rent by multiplying the monthly rent by 12 and dividing the sum by 365.
This sum will be the daily rent. Once you find it, multiply it by the number of days the tenant will occupy the space.
Property Managers Shouldn't Fear Proration
Proration can be a hassle for property managers, but there's no need to fear the process. You can use a prorated rental calculator or the equation we gave you.
Or you can rely on PMI Chevy Chase to do the work for you. We're a full-service property management service with services including rent collection and prorated rental calculations.
Collecting passive income shouldn't be difficult. Contact PMI Chevy Chase to make your property management work easier.
