North Carolina's hot housing market means that fewer people can afford to buy homes, increasing the demand for rental accommodation. While this is great news for property investors, it does mean that property managers might need to get creative when filling vacancies.
High demand in the Raleigh rental market can lead to unusual requests, such as tenants wanting to move into a rental unit early, i.e., before the first of the month.
Allowing tenants to occupy your rental units on flexible dates is one way to take advantage of North Carolina's flourishing rental market. Keep reading to discover more about prorated rent and how to calculate it.
Why Would a Property Owner Prorate Rent?
Every day that a rental unit stands empty costs the owner money. So, it's sensible to allow tenants to occupy a vacant unit from any day they please.
If a tenant wants to leave their accommodation before the end of the month, the landlord isn't legally obligated to prorate the last month's rent unless they find a new tenant to take up the vacant days. So, when a tenant wants to occupy the unit early, it's sometimes a win-win situation for everyone concerned.
Prorated Rent Calculation Methods
If a landlord owns one or two rental units, they can simply adjust the tenant's rent due date. So, if they arrived on the 15th of the month, the tenant could continue to pay rent on the 15th of every month.
For landlords who own many rental properties, this can become confusing and wreak havoc with their accounting records. In these cases, the tenant should pay rent only for the days they occupy in the first month.
You can use this simple prorated rent formula to calculate the value of a single day's rent and determine what the tenant owes:
- Calculate the value of a year's rent
- Divide this amount by 365 to get a daily rate
- Multiply the daily rate by the number of days the tenant will occupy
So, if your tenant wants to stay in the rental unit from the 14th of January and the monthly rent is $2000, you should prorate the rent payment as follows:
- $2,000 x 12 = $24,000
- $24,000 / 365 = $65,75 (daily rate)
- 31 days in January minus 14 days = 17 days (number of extra days occupied)
- $65,75 x 17 = $117.75 (prorated rent due)
After that, the tenant would pay the usual $2,000 on the first of every month from February onward. The tenant should still pay the security deposit as usual before occupying the unit.
Property Managers Help You Maximize Your Rentals
Calculating prorated rent can help you minimize rental vacancies by facilitating back-to-back leases regardless of tenants breaking their leases or requesting unusual occupation start dates.
PMI Triangle can assist you with everything related to real estate management in Raleigh. Our team comprises licensed and experienced property managers who are well-equipped to maximize your profits as a Raleigh landlord.
We offer the full range of property management services and embrace the latest technologies to ensure seamless customer service and prompt communications. Browse our blog for more property management tips or reach out for answers to more of your questions.
