As a rental property owner, you set goals to make more money. If you're looking for effective ways to meet this goal, consider prorated rent.
Prorated rent is helpful for optimizing your rental revenue. It's also something property managers suggest.
First, you'll need to understand how it works. Then, you can learn how to calculate it.
Once you learn these things, you can benefit by using it. Continue reading to learn more about prorated rent.
What Is Prorated Rent?
Each time a tenant moves out, you'll have an unoccupied unit to fill. You can take applications for the apartment and choose the best one. Then, you can ask the tenant to sign the apartment lease.
One key detail on the lease is the monthly rent. The tenant must prepay the first month's rent when moving in. However, the rent is for the entire month.
What happens if the person moves in on a different day? If you charge a full month's rent, their rent will be due on the same day the following month.
This results in tenants paying rent on different days, which creates more work. Instead, you could use prorated rent.
Prorating means charging only for the days the new tenant lives in the unit for the first month. For example, a tenant pays for 20 days if they move in on the 11th of the month (for a 31-day month).
Why Do Property Managers Use It?
Improving your rental income is an essential goal when you own rental property. Using prorated rent helps you achieve this goal.
As a result, prorating rent decreases vacancy rates. You lose money every day you have a vacancy on an investment property.
If you let people move in during the month, you receive more rent than waiting for them to move in on the first.
Therefore, proration optimizes efficiency with your rental property business.
How Do You Calculate It?
Calculating prorated rent is simple. You begin by dividing the monthly rental amount by the number of days in the corresponding month. This calculation reveals the daily rental rate.
Next, multiply the daily rental rate by the number of days the new tenant will live in the rental property. This tells you how much money the new tenant must pay for their first (partial) month of rent.
Of course, hiring a property manager simplifies this process. They'll find tenants for you and calculate the prorated rent. They'll also find other ways to improve your business's success.
Seek Help From a Property Management Firm
Learning to calculate and use prorated rent can help you improve your occupancy rates. It may also increase your rent income. Property managers can help you with this task and others if you need assistance.
PMI Virginia offers property management services for rental property owners. We are locally owned and operated and have over 20 years of experience in real estate and property management.
We specialize in prompt and friendly services and have a reputation you can trust. Get in touch with us today to learn more about our services!
