Planning to move in or move out of the place you’re living in now, but your date does not fall on the first or last day of the month?
You might want to read more about prorated rents and why it’s important to know more about it.
Prorated rent applies to rent of your house, condo, apartment, or any other property where you live and pay monthly rent. Prorated rent is subtracted from the number of days you were not using the facility or the property.
Regardless if you stayed there for only a week or even a day, you will pay rent for the number of days you were occupying the property.
You will not be paying the whole monthly rent in this situation. You will only be paying the prorated rent.
When you are moving in, you inform the landlord. Some landlords automatically calculate and hand out the prorated rent, and other landlords wait for you to inform them about prorated rents. So, it would be best to know how to calculate this in order to save some fees on your rent.
Calculating your prorated rent can easily be done manually, especially when the billing date is on the first day or last day of the month.
If you don’t want to confuse yourself with calculations, you can also a use prorate rent calculator to help you easily get the calculations done.
What does it mean to have rent prorated?
Prorated rent can be applied in two situations: one is when you are moving in, and the other is when you are moving out.
When you move into a new home on the 12th instead of the 1st day of the month, you will need to calculate the prorated rent you have to pay for that month and only pay the days of rent from the 12th to the 30th.
When you’re moving out on the 19th instead of the 30th, you will have to pay for the prorated rent of the 1st day to the 19th day that you were occupying the property and not pay the 20th to the 30th day since you already ended the contract and have moved out.
Prorated rent means that you are paying the justified amount of days you are staying in the property.
You aren’t cheating the landlord because you are paying what is due, and the landlord is not cheating you by asking for the whole monthly rent regardless if you are already staying there or not.
Having a prorated rent is having an honest calculation of the rent, making it a win-win for both situations.
If you want to make passive income every month, you can Learn how to invest in real estate with this article.
How do you prorate your rent?
Since there are no laws in regards to prorated rents, the landlords are the only ones who decide if they offer prorated rents.
There are a few things you can do to check if the landlord offers this privilege or not.
However, please keep in mind that there is no law regarding the mandatory execution of prorated rent, so we can’t force this on the landlord unless the lease/contract mentions it.
Call in advance
When you’re in the process of choosing where to live, you can call the landlord of the property in advance to ask for information. You can then casually give a random move-in date and ask if they offer prorated rents.
It would be nice to call and talk about the place instead of immediately talking about the rent.
Check the lease or contract
If you are planning to move out on the 10th of the month, it would be pointless to pay another month of rent. This means a prorated rent is a good way to save some cash.
You can read the lease or contract you signed when you first rented the property. In the agreement, look for any mentioned prorated rent available.
If there isn’t any stated, you can ask your landlord about this.
If not available, try asking if you can
Sometimes, it isn’t stated in the lease. Other times, the landlord does not know anything about it and sticks to the traditional counting that as long as you stay there in that month, regardless of the number of days, you are paying that month’s rent.
You can try asking for a prorated rate. You might need a prorate calculator to help you out or manually do a calculation to help you save some money.
What is the calculation for prorated rents?
When you calculate the number of days you are staying and the equivalent amount of rent you will be paying for those days, that is the calculation for the prorated rents.
In order to do this, you have to follow these steps:
Step 1: Identify the daily rent.
The daily rent is not the same each month because it is dependent on the number of days in the month, which could be between 28 and 31.
So, you will need to divide your monthly rent by the number of days in that month.
- Monthly rent is $800 / 30 = $26.67
- $26.67 is your daily rental rate for that month.
Step 2: Multiply!
Using the daily rate you calculated in Step 1, multiply it with the number of days you are occupying the property.
So, if you are moving in on the 19th of the month, you subtract 19 from the 30 days of the month. The answer is 11. Therefore, you will occupy the property for 11 days in that month.
- $26.67 x 11 = $293.37
- $293.37 is now your prorated rent.
Look at how much you could save. From a monthly rent of $800, you were only able to pay the prorate rent of $293.37, saving $506.63.
Keep in mind that this can change when the billing date is not on the 1st day of the month. The formula will have to remain, but you will be computing for both months.
This means that you will have to calculate the daily rental fee of the original month and the succeeding month up to the last day before the next billing date.
When the billing date is changed, the process of calculating the prorated rent is longer because you will have to get two daily rental fees, multiply it with their number of days occupancy, and then add the sum for each month. The total will be the prorated rent with the billing date applied.
Where can you find a prorated rent calculator?
To find a prorate rent calculator, you can search on Google. There are a lot of websites that offer free services and automatically calculate your prorated rent for you.
When using these prorate rent calculators available on the internet, you will be asked to provide the following information:
- Monthly rent
- Move-in or move-out date
- Billing date (This is the date when the landlord collects the rent of the property.)
- Currency of your rent
Why would rent ever be prorated?
Rents are prorated because the renters can save a lot from it. This is a life hack when you’re moving in or out because rents can be expensive.
When its prorated, it justifies the amount of rent you are paying since these are the only days you are occupying the property.
Prorated rents justify the price or rental fee you are paying for that month and help you save some cash.
Landlords who offer this are considerate because they know that rental fees can be expensive, and everyone could use some savings from it.
When should you get prorated rent?
You should always get prorated rent because money does not grow on trees. Like in my example above, saving $506.63 with a prorated rate is a lot.
That can be used to pay your rent on the next property or add to the payment of the house you’re buying.
If you’re moving in with someone, that extra money you were able to save from the prorated rent can be used for furniture, appliances, or any other expenditures you have.
You should get prorated rent because the amount of money you can save from it can help you get started on your new journey.
If you have enough money lying around, you could also have your prorate rent’s savings donated to charity or as a tip to the landlord.
Examples of prorated rent when you move in on the 15th of the month
Here are some examples when you’re moving in on the 15th of the month:
- Monthly Rate = $1,000
- Move-in Date = February 15
- Billing Date = 1st day of the month
- $1,000 / 29 days = $34.48
- 29 days of the month – 14 days inactivity = 15 days of occupancy
- $34.48 x 15 days of occupancy = $517.2 prorated rent
In another example, we can try having the billing rate changed.
The usual formula is applied here. However, due to the change of the billing date, we will be getting the daily rates of different months since the two months have 30 and 31 days.
The daily rental fee is different for each month, and the number of days that the property is occupied is different in those two months. So, we will have to calculate both April and May for this situation.
- Monthly Rate = $1,000
- Move-in Date = April 15
- Billing Date = 5th of the month
- $1,000 / 30 days for April = $33.33
- $1,000 / 31 days for May = $32.26
Billable days in April is 16, and May is 4 days.
- 16 days of April x $33.33 = $533.28
- 4 days of May x $32.26 = $129.04
$533.28 + $129.04 = $662.32 as the prorated rental fee.
How to make sure you get the right prorated rent
To make sure you get the correct prorated rent, you can have it checked using the calculator when you are doing it manually. You can then let your landlord triple check everything.
However, if the situation was reversed and your landlord provided the prorated rent, you can have it double-checked using a prorate rent calculator or manually check it using the formula stated in the earlier part of this article.
It is recommended to double-check before paying regardless if it was you or the landlord who gave the prorated rent because paying something honestly is a fulfilling and proud feeling.
- How to Quit Your Job and Retire Early with Financial Independence
- How To Find Private Money Lenders
- How to Find a Profitable Income Property Investing In Real Estate
- Invest Now Before the Real Estate Market Crash
- How to Get Business Credit with BAD Personal Credit
Premium online courses for any level of investor: beginner-advanced. Completely go at your own pace and can be taken through "Self-Study" or through "Membership".
Inside the membership, attend live 90-minute Group Coaching sessions with Coach Dustin Heiner as he and the MPI Coaches teach you how to build a successful real estate investing business.
Connect with the MPI Coaches and the other like-minded investors inside the MPI Mastermind Community. Ask questions about investing and get feedback how to be successful in your business.