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Being the owner of a rental property has tremendous benefits — monthly cash flow, diversification, growing equity, and more.
But it also comes with tremendous responsibility, and part of that responsibility is managing tenants.
It can be hard to find reliable tenants, and once you do find them, they may not be able to move in on your target date, instead of needing to move in at a random date midway through the month.
As a result, tenants can ask for something called prorated rent, which means that they are only responsible for a portion of the total monthly rent.
In this article, we’ll explore what prorated rent is and how it works to help you manage your tenants — and your rental property — the right way.
Example of Prorated Rent
To start, let’s look at an example of how prorated rent works.
After landing a prestigious internship, Jennifer has to relocate to Los Angeles in the middle of September. She’s thankful to find an affordable apartment near her internship, but since she’s moving in on September 15, she’s not sure it makes sense to pay the full monthly rent.
Because of this, she submits a formal, written request to her landlord, asking for prorated rent for the first month since she won’t be occupying the building for the full month of September.
The landlord agrees, and Jennifer makes a prorated rent payment that’s roughly half of what she would otherwise pay.
This is an example of how a prorated rent situation works well between the tenant and landlord.
What is Prorated Rent and Why is It Used?
By definition, prorated rent is the amount a landlord charges when a tenant occupies a living space for a partial term.
This time span can be for:
- even a day or two
On one hand, prorated rent provides a fair price for renters seeking to move in at a time outside of the first of the month.
On the other hand, this means that landlords may lose money because their rental unit(s0 will be vacant.
How to Calculate Prorated Rent
Prorated rent is easy to calculate:
- Divide your monthly rental fee by the number of days in a month — this is your daily rental fee
- Multiply this daily rental fee by the number of days the property is occupied
For example, if the usual rent is $1,200 a month, the daily rent will be $40.
A tenant that resides at the property for 15 days will then pay a prorated rent of $600.
Keep in mind that while not every month has 30 days, some companies suggest that landlords should treat each month as having 30 days for the sake of simplicity and consistency.
Prorated Rent Lease Agreement
Landlords should take care to use a prorated rent lease agreement.
To save time, you may consider using one of the following templates available online:
If you want to draft your own lease agreement, you may also consider utilizing some of these sample clauses.
Prorated Rent FAQs
Next, we’ll look at the most frequently asked questions associated with prorated rent.
Q. When Can You Request Prorated Rent?
Some landlords may advertise prorated rent, but they don’t always do so.
If a tenant is moving into an apartment or house prior to a day other than the first of the month, he or she can request prorated rent, since they won’t be occupying the unit for the full month.
Keep in mind that tenants aren’t entitled to prorated rent.
It all boils down to the terms in the lease agreement.
Q. How Should Tenants Ask for Prorated Rent?
Tenants should always request prorated rent in writing. Remember, prorated rent may be offered as a courtesy, not as a guarantee.
It’s important for tenants to be specific about dates so that a reasonable agreement can be made.
Q. How Much Prorated Rent Should A Tenant Pay?
Prorated rent is simple to calculate. If a landlord allows prorated rent, the tenant should expect to pay only for the days in which the residence is occupied.
For instance, if a tenant moves in on the 15th of the month, he or she should expect to pay roughly half of the monthly rent.
The Bottom Line on Prorated Rent
Ultimately, prorated rent is about doing what’s reasonable and fair for renters.
Landlords and rental property owners will admittedly take a hit from this, but offering prorated rent may create goodwill from tenants, making the tenant-landlord relationship run smoothly (and profitably) over the long term.