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Across the United States, clear rules dictate the relationship between landlords and tenants. Yet, there are still some instances that demand a level of flexibility, despite this legal guidance.
One of these is when tenants want to occupy or vacate a property on a date that doesn't coincide with the month's end. In these cases, it's often worth calculating prorated rent for these tenants.
This can get a little tricky, depending on the circumstances. Read on to discover how property managers deal with these unusual circumstances.
Why Calculate Prorated Rent?
It's always to the landlord's benefit if a tenant wants to pay prorated rent to occupy a vacant unit earlier than expected. If you own a single rental unit, it's easy enough to accommodate them.
You can simply adjust the monthly rent due date to coincide with that day of the month. For landlords who own multiple rental units, this can become stressful and inconvenient.
In these cases, it's better to calculate a part payment amount for the extra days and continue to collect your rent on the first of the month going forward.
When a tenant wants to vacate a unit earlier than the agreed date, the landlord is under no obligation to prorate their rent. In some cases, you might do this if you've found a tenant to take up the extra days or as a 'thank you' to good tenants.
How to Calculate Prorated Rent
There are two different types of tenant rent calculation methods. These depend on the type of lease agreement you have in place, as follows:
Annual Lease Prorated Rent Calculation
Calculating the value of a single day's rent is central to prorated rent calculations. For an annual lease, this is easy to figure out by multiplying the tenant's monthly rent cost by 12 and then dividing the total by 365.
Remember to add an extra day if it's a leap year. You can multiply the number of extra days the tenant will occupy the unit by this figure to get the prorated rent amount.
Month-to-Month Leases Prorated Rent Calculation
You'll need to carry out just one extra step when calculating the daily rate for a month-to-month lease. You start by calculating the number of days in each month of the lease.
Next, divide this number by the number of months that the tenant occupied the property, then divide the monthly rent amount by this figure.
This number equals the daily rate for your month-to-month lease, and you can multiply this amount by the extra days of occupation.
Work With Columbia's Top Property Managers
We hope you find our rent calculation guide helpful should you ever need to figure out prorated rent, but we can also assist you with the more complicated aspects of property management.
PMI Real Asset Management is a veteran-owned and operated property management company active in Howard and Anne Arundel Counties. Our team of property managers can assist you with every aspect of the Columbia, MD, rental process.
Read our property management guide for more rent management tips and landlord advice, or find out how we can help you thrive as a Columbia landlord.
