# Prorate Rent the Right Way

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.