After several years of unprecedented growth, rent prices in Central Florida decreased in 2024. This is good news for renters, but challenges could be coming for landlords. You want to keep a competitive edge.
Prorated rent can incentivize tenants to choose your Orlando property. They can move in as soon as they're ready without needing to pay for a whole month. Do you know how to calculate prorated rent?
Keep reading for prorated rent calculation tips that will give you more tools to attract quality tenants.
What Is Prorated Rent?
Prorated rent is an adjusted rental amount when a tenant only occupies a unit for a partial term. Landlords may use prorated rent when a tenant moves in or out in the middle of the month.
Prorating rent isn't required in Florida. However, it's a good practice that helps build a positive relationship with the tenant. This can make residents more likely to renew their lease and recommend your property to other potential renters.
How to Calculate Prorated Rent
The most common ways to calculate partial rent charges are based on the number of days in the month or year. You need to determine the percentage of time the tenant will occupy the property compared to the total term.
By the Number of Days in the Month
Most Orlando tenants pay monthly rent, so calculating prorated rent based on the month is easy to understand. First, divide the monthly rent amount by the number of days in the month to get the rent per day.
Next, multiply the daily rate by the number of days the tenant will be in the unit. This gives you the prorated rent amount.
For example, a tenant moves into the unit on March 25 with a monthly rent of $1,500. March has 31 days, so $1,500 divided by 31 is $48.38. The tenant will be in the unit for seven days, so seven multiplied by $48.38 is $338.66 in prorated rent.
By the Number of Days in a Year
Prorating based on the number of days in the year is the most accurate method for tenants with a year-long lease.
First, multiply the monthly rent by 12 to get the yearly rent. Then, divide that amount by 365 to find the daily rent. Divide by 366 for a leap year. Finally, multiply the daily rate by the number of days the tenant will have the unit.
Using the same example as before, you would multiply $1,500 by 12. This gives you a yearly rent of $18,000.
Next, divide $18,000 by 365 for a daily rate of $49.32. Multiplying $49.32 by seven gives you a prorated rent of $345.24.
Document Your Prorate Leasing Strategy
You should document how you calculate prorated rent in your lease agreement. You can also specify under what circumstances you will calculate partial rent charges. This helps you avoid misunderstandings with tenants later.
Make Your Landlord Rent Calculation with Confidence
Knowing how to calculate prorated rent is important for your Orlando properties. Offering prorated rent helps build positive relationships with your tenants. You can avoid vacancies by encouraging tenants to move in as soon as possible.
You won't need to worry about rent collection when you partner with RE/MAX 200 Realty in Orlando. We offer a full range of property management services tailored to your needs. Contact RE/MAX 200 Realty today to learn how we can simplify your property management.
