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Rent revenue is the money you collect from tenants for rental properties. As a landlord, you'll always look for ways to boost your income. Using prorated rent is one way to increase it.
Property managers use prorated rent when renting a property to someone part-way through the month. You can also learn how to calculate prorated rent if you manage rental properties.
Continue reading to learn how to calculate it and the benefits of prorating rent for your Fort Walton Beach, FL, properties.
What is Prorated Rent?
Prorated rent is a tool property managers use to calculate rent when someone moves into a unit on any day other than the first of the month. When someone moves in on the first of the month, they pay the full rent.
The problem arises when someone moves in on a different day. Do you charge them a full month and have the rent due that day of each month? You could do this, but it would complicate your financial records.
In this situation, landlords often look for rental income strategies, and prorating the rent is the ideal solution. This lets you calculate the amount of rent they owe for the partial month.
After the first month, they pay the rent on the first of each subsequent month. This process simplifies your accounting records and offers a way to let people move in during the month.
You will still charge the regular security deposit when the person moves into the unit.
Methods to Calculate Prorated Rent
Property managers use various methods for calculating prorated rent, including the banker's month method and days in a year method. The most common option is the days-in-a-month method.
A rental calculation guide explains how to calculate prorated rent with each method, but learning just one method is satisfactory. With the days-in-a-month method, you'll need to know a few details:
- Days in the month
- Monthly rental amount
- Date the tenant moves in
You'll calculate the prorated rent by dividing the monthly rental amount by the days in the corresponding month. The answer tells you the daily rental rate for the unit.
Next, calculate how many days the tenant will occupy the unit for this month and multiply the number times the daily rate. The answer yields the amount the tenant must pay for rent the first month.
This is an accurate rent collection method for Fort Walton Beach rentals and other properties. Property managers often use this method, but you can use any of the methods you choose.
Hire Property Managers to Assist
You can learn how to calculate prorated rent if you manage your properties. However, you can also hire property managers to do it for you. They already understand how prorated rent works and can handle this task.
Property managers in Fort Walton Beach, FL, can also handle all the other property management tasks your properties need. Are you ready to get help?
All American Realty is a veteran-owned and operated property management firm. We aim to provide the highest level of service possible and have a team of trusted professionals.
You can trust us with your real estate needs, so reach out today to learn more.
