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How Do You Calculate Prorated Rent? A Guide for Austin, TX Property Managers

How Do You Calculate Prorated Rent? A Guide for Austin, TX Property Managers

Being a Texas landlord certainly presents challenges, especially now that rental vacancy rates are on an upward trend. Despite the many regulations governing rental units in the state, you'll often come across exceptions to the rule.

One of these instances is when a tenant wants to occupy or leave your unit on any other day except the first of the month. During times of fierce competition for tenants, it's never a good idea to turn away rental income, so it makes sense to familiarize yourself with the prorated rent formula for these occasions.

As a property manager, it's your responsibility to guide your landlords through these types of challenges. Read our guide to discover the most efficient rent calculations for these situations.

When Would Prorated Rent Apply?

Landlords who own a single rental property often don't need to concern themselves with prorated rent calculation methods. In these instances, they could simply alter the rent due date to correspond with the day the tenant moved in.

For example, if they took occupation of the unit on the 10th of the month, they could pay their rent on the same day for every month going forward.

For those who own more than one rental property, it can become inconvenient to manage several different rent collection dates. In these cases, you should do a few sums so that the tenant can fall in line with everyone else as soon as possible.

Sometimes, a tenant may have no choice but to move out of your rental unit a few days before or after their lease agreement expires. The landlord isn't compelled to adjust the rent in these instances, but they might agree to do this as an act of good faith.

How to Calculate Accurate Rent Adjustments

Calculating prorated rent starts with determining the value of one day's rent for the rental property in question. These methods differ slightly depending on the type of lease agreement that you have in place.

These are the two most common scenarios:

Annual Leases

Calculating the daily rate for an annual lease agreement is very simple and stress-free. All you need to do is multiply the monthly rent by 12 and then divide this amount by 365, or 366 in a leap year.

Once you have this figure, you can multiply it by the number of days the tenant will occupy the unit for that month.

Month-to-Month Leases

These calculations are slightly more complicated. Count the number of days for each month that the tenant has occupied the unit. Then divide this total by the number of months they've been living there.

Dividing the monthly rent by this average number will give you the daily rate for calculating prorated rent.

More Guidance for Landlords and Property Managers

Property managers and landlords alike need a little guidance from time to time. Monte Davis Property Management Services has the expertise and experience to assist you with all your queries.

Our proprietor has over 40 years of experience in real estate and has gathered a team of dedicated, specialized agents and property managers over the years. We are passionate about maximizing our clients' investments.

Browse our blog for more property management tips, or reach out for prompt, professional service.