How to Prorate Rent

By
Real Estate Services with HomePointe Property Management, CRMC
http://actvra.in/48lq

Many newcomers to property management as well as many tenants do not understand how to prorate a rent payment.  This comes up when a new tenant moves in mid month.  Most property managers want all rents due on the first of each month, so the question becomes, how do we figure out what amount of rent is due to accomplish that.

On move in, most companies, HomePointe included, have each new tenant pay a full months rent and the entire security deposit.  If the rent is $1200.00 and the deposit is $1200.00 then the tenant must pay $2400.00 to get the keys.  If the tenant moves in on the first day of the month, there is no figuring to do.  Each month thereafter the tenant will pay $1200.00.

But if the tenant moves in on the 20th of the month, the question is, what does the tenant owe on the first of the next month?  It is quite easy to figure out as long as you stick to the formula and thought process.

Figure it this way:  Every month is considered a 30 Day month, which is what we call a bankers month.  If the tenant moves in on the 20th, they were not in the property for 19 days.  30-19 =  11 Days they were in the property.  Now take the rent rate $1200 and divide it by 30 days (one month) = $40.00 per day.  $40 x 11 days the tenant had possession = $440.00.  That is what they owe for the second month.

Our rental agreement states that all rent for the month is due in full in advance on the first day of the month. So the entire $440.00 is due on the first of the tenant's second month of occupancy.

Now you can sleep well tonight dreaming of collecting the correct prorated rent from your tenant AND be able to explain it to them. 

Posted by

Robert A. Machado, CPM, MPM

HomePointe Property Management

Sacramento, Yolo, El Dorado, and Placer Counties

We manage residential and commercial property.

916-429-1205 x 105

rmachado@HomePointe.com

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Rainmaker
251,176
Robert Machado
CPM MPM - Property Manager and Property Management - Sacramento Area
HomePointe Property Management, CRMC

Sometime simplicity and mistake free rules.  I realize we lose up to 5 days of rent per year, but it is a convention that make things simple.  In your example, we do charge the same rent no matter what the length of each month is during the course of the lease (except the first one).  So, once moved in everything is the same. 

August 07, 2010 01:23 AM
Anonymous #11
Anonymous
yolana

I rented a room and my room mates, that person  gave me $385 and she left on the 11th so she was there for 11 days. i prorated  so its $35 dollars a day right???????????

November 10, 2011 12:27 PM
Rainmaker
251,176
Robert Machado
CPM MPM - Property Manager and Property Management - Sacramento Area
HomePointe Property Management, CRMC

$385 divided by 11 is $35.

December 08, 2011 11:53 AM
Anonymous #13
Anonymous
Gayle

I live in the state of New Jersey and my rent is due on the 10th of the month.  My landlord sold the house and the new owners will be moving in.  If I move out on the 15th of the month, how much do I owe the landlord?

August 20, 2012 09:55 AM
Rainmaker
251,176
Robert Machado
CPM MPM - Property Manager and Property Management - Sacramento Area
HomePointe Property Management, CRMC

Your rent is due on the 10th, but what period does it cover?  If you are paid through the 9th, you would owe the 10th through the 15th, which is 6 days.  I cannot tell you more without more information.

August 20, 2012 10:05 AM
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Rainmaker
251,176

Robert Machado

CPM MPM - Property Manager and Property Management - Sacramento Area
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