Picture this: A tenant moves out on the last day of the month, leaving the unit in pristine condition. Within a few days, the apartment is ready for the next tenant.
Should you:
- Wait until the first of the next month to rent it out?
- Rent it out today?
The downside to renting it today is the person pays rent on a date other than the first. This could potentially mess up your rent collection schedule.
Many property managers solve this problem by prorating the rent. Prorating offers several benefits. Continue reading to learn these.
Top Benefits of Prorating Rent
Wise property management firms use the best techniques for managing rental properties. One of these is prorating rent. Prorating rent provides numerous benefits, but there are two primary ones:
Increased Rental Income
Prorating reduces your vacancy rates. As a result, it helps you increase your rental income. Increasing your rental income helps your business make more money.
This works because you allow a person to move in during the month instead of waiting until the first. Naturally, this increases the amount of rent you collect.
Sticks With Your Regular Rent Collection Schedule
Each time you rent a Fredericksburg, VA property, you require rent payments on the first of the month. Prorating lets someone move in on a different date while requiring them to pay rent on the first.
If you did not prorate, someone moving in on the 10th of the month would owe rent each month on the 10th. Prorating means the tenant pays on the 10th of the first month and the 1st of every month after.
How to Perform the Calculations
Calculating prorated income is simple. When someone moves into a rental property during the month, you need a few details to calculate it:
- Monthly rental rate
- Number of days in the month
- Number of days the tenant will live there
Start by calculating the daily rent for the apartment by dividing the monthly rent by the days in that month. Next, calculate how many days the person will live there. Finally, multiply the days by the daily rate.
For example, suppose the monthly rent is $900 for a 30-day month. Dividing the rent by the days tells you the daily rate is $30. If the person moves in on the 20th, they'll live there for ten days, owing you $300.
Other Ways Property Managers Can Help
Hiring a property management company reduces your workload. They can handle the prorated rent and other tasks while you earn a passive income.
Property management firms perform repairs and maintenance. They handle tenant calls. They can also handle tenant screenings and many other services.
Learn More About Property Management Services
Property managers provide services for landlords. That's their specialty, and they're good at these duties. Do you need help with proration or other tasks? Consider hiring a reputable property management firm.
Gem Realty Group operates in Fredericksburg, VA. We are a full-service property management firm offering services you can trust. Our team operates with integrity and the highest standards of professionalism.
Reach out today to learn more.
