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What is Prorated Rent?

When a tenant moves in for a shorter period of time than the whole month (or week, or day), the owner may charge them a prorated rent. The only days that count toward the rent total are the days when the unit is actually occupied. Since daily rates are often more expensive, this one is calculated on a monthly basis instead.

Everything that property owners need to know about rent proration is included here.

What’s the point of a prorated payment?

Prorated rent is useful when a tenant moves in or departs in the middle of the month, or when they sublease their unit to someone else. If a tenant moves in on the 15th of the month, as is typical, the landlord may collect a prorated amount from the tenant for the days prior to the first of the month, and then the full amount of rent can be collected on the first of the month.

Although it is not the owner’s legal obligation to prorate rent, doing so is appreciated and may lead to a more positive relationship with the tenant. Having a solid connection is crucial. It encourages tenants to stay there, which cuts down on turnover, as well as encourages them to refer friends and family and be excellent tenants overall.

HOW RENT IS PRORATED!


Prorated rent may be determined in four different ways.
Here’s a brief refresher on the right sequence of operations for mathematical problems, as taught in high school, before we get to the real formulae for calculating rent. Rent calculations often include many steps due to the complex nature of the methods used.

  • Parenthesis
  • Exponents
  • Multiplication
  • Division
  • Addition
  • Subtraction

PEMDAS, which stands for “Please Excuse My Dear Aunt Sally,” is a useful acronym to remember this by.

Method 1: Counting the Year’s Days


This is the most precise method for calculating prorated rent for a 12-month lease. The formula is as follows:

The formula for calculating the prorated rent is as follows: ((Monthly Rent x # of Months in a Year) Number of Days in a Year) x Number of Days the Resident is Paying For. With a move-in date of September 15 and a monthly rent of $1,500, the calculation is as follows.

( $1,500 x 12 ) ÷ 365 ) X 15 = $739.73

This formula has the drawback of sometimes being difficult to follow. A complicated methodology might lead people to feel untrustworthy, offsetting any potential gains an owner could see. Keeping things basic might be the best option.

Second Method: Typical Monthly Day Count


Given that there are 365 days in a year, and 12 months in a year, this calculation is based on the average number of days in a month, which is 30.42. The formula is as follows:

Rent multiplied by (30.42) days times the number of occupied days For a ten-day stay at a monthly rate of $1,200, the following calculation should be used.

($1,200 ÷ 30.42) x 10 = $394.50)

Banker’s month (a flat 30-day period) is the third method.
In this approach, the monthly rent is divided by 30 regardless of the number of days in the month. This is the only technique used to determine prorated rent in certain states, such as California. The equation may be found below.

Rent multiplied by (30) days multiplied by the number of days occupied.

Using a monthly rate of $1,200 and a stay duration of 10 days, the following is the resulting calculation.

($1,200 ÷ 30) x 10 = $400


With this equation, you may calculate your prorated rent for the remainder of the month. The formula is as follows:

Prorated rent is calculated as: (Monthly Rent / Number of Days in the Month) x (Number of Days of Rent Being Paid For)

With a move-in date of September 15 and a monthly rent of $1,500, the calculation is as follows.

( $1,500 ÷ 31 ) X 15 = $725.80

  • How many days do you have to charge for in the first month?
  • What is the total number of days in the second month?
  • When does the lease start and terminate formally?

Rent proration advice

The prorating policy of the owner need to be specified in the lease. If you’re using the annual formula and it’s a leap year, divide the result by 366.

If a tenant signs a lease for the first of the month but moves in on the second, the landlord is under no obligation to prorate rent. Similarly, if a tenant decides to leave before the end of the month, but their contract is still in effect, the landlord is not obligated to prorate the rent. Rent should be prorated using the flat 30 approach unless otherwise required by state law, which owners should check.

The Nutshell on Rent Proration


A simple approach for a landlord to establish or maintain a positive connection with a tenant is to prorate the rent. It gives tenants confidence that their landlord has their best interests at heart.

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