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Home · Property Management · Latest News : Prorate Rent the Right Way

by Robert Machado, CPM, MPM
how to prorate rent Abacus
How to prorate rent payments is something many newcomers to property management as well as many tenants do not understand how to do.

This comes up when a new tenant moves in mid month. Most property managers want all rents due on the first of each month, so the question becomes, how do we figure out what amount of rent is due to accomplish that.  In other words, what is the right way to prorate rent?

On move in, most companies, HomePointe included, have each new tenant pay a full months rent and the entire security deposit. If the rent is $1200.00 and the deposit is $1200.00 then the tenant must pay $2400.00 to get the keys. If the tenant moves in on the first day of the month, there is no figuring to do. Each month thereafter the tenant will pay $1200.00.

But if the tenant moves in on the 20th of the month, the question is, what does the tenant owe on the first of the next month? It is quite easy to figure out as long as you stick to the formula and thought process.

 

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Here’s how to prorate rate: Every month is considered a 30 Day month, which is what we call a bankers month. If the tenant moves in on the 20th, they were not in the property for 19 days. 30-19 = 11 Days they were in the property. Now take the rent rate $1200 and divide it by 30 days (one month) = $40.00 per day. $40 x 11 days the tenant had possession = $440.00. That is what they owe for the second month.

Our rental agreement states that all rent for the month is due in full in advance on the first day of the month. So the entire $440.00 is due on the first of the tenant’s second month of occupancy.

Now you can sleep well tonight dreaming of collecting the correct prorated rent from your tenant AND be able to explain it to them.

Robert Machado, CPM, MPM has twenty-seven years experience in managing residential and commercial properties and is with HomePointe Property Management, which serves the greater Sacramento area.

Let us know what you think by commenting below.

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  • CALROB Realty Co.

    Under this partial-month move-in scenario and for those propeties that we manage, we would require the $440 for the partial (first) month, the $1200 for the first full month (2nd month) and the $1200 SD up front from the Tenant for move in.

  • CALROB Realty Co.

    I think it was okay for a novice, however, anyone who is renting/managing properties who can not do this kind of basic, everyday math (division and multiplication)to determine how to determine a partial month’s rent should probably be in another line of business.

  • On my rentals I require the partial for the first month plus the security deposit for them to get the keys. Second months rent is full month.

    Moving is an expensive event. Therefore, I show my prospective tenant that I am a resonable “landlord”.

    “Different strokes for different Landlords.” Also called “service”.

  • CALROB Realty Co.

    As I said, in the example that was presented, where it’s already the 20th day of the month. Depending upon when the partial month falls, that would be our way as well. But with 10-11 days left, a serious and qualified tenant is understandable that those days need to be paid as well, especially if they’re also getting a first month’s rent special, where the first month’s rent is drastically reduced. The burden would be nominal and still the tenant walks with a good feeling. That’s called service, as well, as moving is an expensive event. We are also reasonable and also realistic. If a prospective tenant may pose a credit risk and the last month’s rent would also be required, we would offer to break that down over 4-6 months, with the tenant paying a little extra for the those first rental months, because we know moving is an expensive event. That is also called service. No need to slam. I was offering another viewpoint. By your response I can see why you’d place the word landlord in quotes.

  • MARYJANE

    Thanks for this info, I am a landlord I rent out a home. I was trying to figure out exactly how this prorate would be done. I wanted them to pay the whole 1st month plus security deposit when they moved in but did know how to work the prorate part into the contract. How do you word this into your contract? Do you indicate the the 1st month will be the partial prorated amount and then the rest of the monthly rents will be the total rent amount?

  • moonemotime

    I just moved into my apartment and during my first month I received a notice on from front office that my next month rent is prorated at $185.00 due on the first of next month and the following month resume as lease agreement. I paid the $185.00 thinking hey more bills to pay with extra cash. Than the 9th of the prorated month and i receive a call from leasing office of why i paid $185.00 not the full rent. What rights to I have here?

  • Dennis

    If you have a prorated rent for a month that has 31 day .and your prorate is base on a 30 day bankers month . Move in is on the 15 how many days is rent owed

  • Mary Trudell

    I moved into my apartment on January 10th, I am vacating CV the premises on July 18th.
    The manager said she will not prorate my rent. I live in Michigan, is this legal? Can I just prorate it myself?
    I gave 60 days notice to vacate.
    Mary

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