Property Management Blog

Calculating Prorated Rent

Math: we love it, or we hate it. But don’t make the landlord mistake of allowing something as simple as prorating rent to cause you to inadvertently lose money, or overcharge the tenant. Calculating prorated rent is a skill that every landlord should possess. Unless every tenant moves in on the first of the month, proration will be necessary. And who are we kidding? That is just not the case all of the time.

In its simplest form, prorated rent is the amount of rent owed for only a partial month’s occupancy. For example: if a tenant moves in on the fourteenth day of any given month, they will not owe full month’s rent, they will only owe rent for the days they occupied the property (depending on how the lease is written, the prorated amount may be used for the first month of occupancy, second month, or potentially a different month). The same rule applies if a tenant moves out before the last day of any given month. 

Heather Peake lays out four different ways to calculate prorated rent in a recent article on Rentec Direct, appropriately entitled, “4 Ways to Calculate Prorated Rent.” 

As Heather explains, there are two steps in calculating prorated rent amounts:

Step 1: Determine the daily rental rate

Step 2: Multiply the daily rate by how many days the tenant will occupy the unit

While the two-step process is pretty straight forward, determining which formula to use takes a little more thought. 

To see the four recommended formulas to find which is best for you, and to view the article in its entirety, click here.