Picture this: You're a landlord and just renovated a rental property, but it's only the 10th of the month. Waiting to rent it until the 1st means:
- The unit is empty for 20 days
- You lose 20 days of rental income
The good news is that most property managers use a system that eliminates these problems: prorated rent. Prorated rent lets you collect more money by filling units on any day of the month.
If you own properties in Dickson, TN, you'll want to learn how this works. Continue reading to find out.
What Is Prorated Rent?
Prorated rent refers to collecting a partial month's rent to allow a tenant to move in on a day other than the first. This method lets tenants move in now instead of waiting until the first.
Prorated rent is only used for the first month. After that, the person pays rent on the first for the entire amount, keeping your rent payments on the same schedule.
Prorated rent is not just a convenience for tenants; it's a smart business move. It allows you to increase your income and decrease your vacancy rate, ultimately boosting your profits.
Calculating Prorated Rent: Step-by-Step Guide
To do this, you must learn the prorated rent formula. Most Dickson, TN, rent management companies calculate it through the following steps:
- Agree on the monthly rental price
- Divide the rent by the number of days in the month
- Determine how many days the tenant will live there the first month
- Multiply the daily rate by the number of days
Following these steps will tell you the prorated rent amount.
Example Calculation for Dickson, TN
Landlords have a lot of duties and responsibilities. However, learning how to calculate prorated rent is simple and beneficial, and viewing an example might help.
Imagine if you have an apartment for rent that costs $1,200 per month. If a tenant wants to move in on the 8th day of a 30-day month, they would live there for 22 days.
The daily rate is $$40, and multiplying this times 22 gives you the prorated rent amount of $880. You'll earn $880 more in rental income by renting it now instead of waiting until the first of the next month.
Tools and Resources for Calculating Prorated Rent
As you navigate the challenges of owning rental properties, you can simplify the workload in several ways:
- Use strong lease agreements
- Communicate the details of prorated rent clearly
- Use online calculators
You can also hire a property management firm to simplify things further.
Hire Property Managers to Calculate Prorated Rent
Property managers are familiar with prorated rent, as most use this as a standard procedure. Prorating rent lets you:
- Collect more income
- Reduce your vacancy rate
- Keep your rental payment schedule on the first
You can use this strategy and calculate it yourself or hire it out. Hiring it out gives you access to expert property management services that can benefit your business.
PMI Greater Dickson is a family-owned and operated property management company. We specialize in all aspects of property management and offer services across numerous counties.
Our aim is to help you reach your market goals. Reach out today to learn more.
