How to Prorate Rent

Many newcomers to property management as well as many tenants do not understand how to prorate a rent payment.

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.

On move in, most income property owners 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 upon moving in? It is quite easy to figure out as long as you stick to the formula and thought process.

Figure it this way: 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 prior to moving in thereafter the tenant would pay the original amount of 1,200 on the first of every month
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