Three of the top goals of most landlords are to:
- Improve their rent collection process
- Collect more money
- Reduce stress
Sound familiar? The good news is you can accomplish all three by taking a few helpful steps. These include creating a tenant portal and choosing high-quality tenants. Making all your rent due on the first of the month will also help.
So, what do property managers do when a tenant moves in on a different day other than the first? They either have the tenant pay on that day every month or prorate the rent. Prorating the rent is the better choice. Continue reading to learn why this matters and how to calculate it.
Proration Simplifies Your Rent Collection
Prorated rent serves one primary purpose: To have all your rent due from the tenants on the first of every month. The result is simplified rent collection.
Collecting rent for every rental property is essential for your finances, but it's more complicated. First, you need to perform tenant screenings to find great tenants. Screenings help you weed out the bad tenants to find good ones.
You can handle this task yourself. However, hiring a property manager for tenant placement services is more accessible. Good tenants tend to pay their rent.
Making the rent due on the first is a simple rule to follow. It's easier for someone to know their rent is due on the first rather than on a different day of the month.
Additionally, you can track rent collection more easily. You can look at your records on the third or fourth day of the month to see if you collected all the money.
How Property Managers Calculate It
Hiring a property manager transfers the duty of calculating prorated rent to them. You can earn passive income while the property managers handle all the work. But if you'd like to know how to calculate it, here is the method:
- Determine the daily rate for the rental property by dividing the monthly rent by the days in that particular month
- Calculate how many days the tenant will live there in the first month
- Multiply the number of days by the daily rate
The answer reveals the amount of rent the person must pay for their first (and partial) month in the rental property.
Other Perks of Prorating Rent
Prorating rent offers two additional perks. First, you can experience increased rental income by letting someone move in before the first. After all, you lose rental income every day an apartment is vacant.
Secondly, you'll receive rental income on the spot when they move into the unit. The result is an improvement in your cash flow.
Increase Your Revenue and Decrease Your Stress
Many landlords live stressful lives due to the nature of the job. However, you can decrease your stress while increasing your revenue. Ready to learn how?
Key PA Property Management can help. We are a leading property management company in Chester County, PA. We're dedicated to excellent customer service that's both friendly and reliable.
We're part of a larger franchise with over 20 years of experience helping property owners like you. Reach out today to learn more.
