Being a landlord isn't always the most predictable undertaking. Although there are many regulations governing rental units, sooner or later, you're bound to come across something a little different from the norm.
Tenants who want to occupy your unit on any other day than the first of the month are one example. Fortunately, it's easy enough to calculate the difference in their rent payment, so you don't need to turn anyone away.
Read on for some advice from our property managers about getting the sums right when calculating prorated rent.
Why Would You Charge Prorated Rent?
Now that residential vacancy rates are starting to climb once again, no landlord can afford to turn away rental income from a potential tenant, so it makes sense to accommodate them where you can.
If you own a single rental unit, you can skip prorated rent calculations.
In this case, it's easy to change the tenant's rent-due date to the same day that they move in. So, they could pay on the 15th of every month, for example.
When you own more than one rental property, it can be difficult to manage different rent collection dates. In these cases, it's worth doing some calculations to adjust the first month's rent accordingly.
After that, you would continue to collect the rent on the first day of the month.
In other instances, you might allow your tenant to move out a few days before their lease expires or a few days afterward. In both these cases, you aren't compelled to adjust their rent but you could do so as an act of good faith.
How to Calculate Prorated Rent
To calculate prorated rent, you must discover the value of one day's rent for your accommodation. The terms of your lease agreement determine how you'll arrive at this figure.
Annual Leases
You can calculate a daily rate for an annual lease by multiplying the monthly rent by 12 and then dividing it by the days in the year. You would divide the total by 366 for a leap year, or 365 in an ordinary year.
Count the days the tenant plans to occupy your rental unit and multiply it by the daily rent to get the amount due to you.
Month-to-Month Leases
Month-to-month lease calculations are a little more complicated.
You should count the number of days in each month of the lease. Then, divide this total by the number of months the tenant's been in residence.
Finally, divide the monthly rent by this average to get a daily rate.
Our Property Managers Assist You With Every Detail
As a landlord, it can be tricky to navigate the intricacies of things like prorated rent and lease negotiations. Hiring a property manager is the best way to avoid these complications.
PAM Performance Asset Management offers a full range of property management services to help you maximize your Milwaukee, WI, property investments. Our property managers are experienced, qualified, and committed to going above and beyond for our clients.
We do all the math for you when it comes to calculating pro-rated rent or making the most of your rental business budget. Discover a hassle-free way to succeed as a landlord in Wisconsin.
