Prorated rent calculator

Most landlords want to ensure their properties remain occupied at all times. Any vacancy, for however long it may be, is a missed opportunity for rental income. And while it'd be nice if every tenant could start their lease on the first of the month, sometimes it can be more practical not to delay the process if they are ready to move in sooner. 

In these instances, prorating rent can be advantageous for both you and your tenant. Tenants will appreciate your flexibility and you’ll benefit from fewer vacancies and more rental income. With prorated rent, you calculate how much to charge tenants based on how many days they occupy the unit, rather than a full month’s rent. Not sure where to begin? We’ll guide you on everything you need to know about prorated rent—from how to calculate it to why it makes sense, and when to apply it so you can keep your rental business running smoothly. 

What is prorated rent?

Assume you have a tenant that wants to move in—or out—on the 15th of the month. It’s only fair to charge them for the days they’ve lived in the apartment, otherwise known as “partial rent”. For example, if rent is $2,500 a month but they are moving in or leaving half way through, you would charge them $1,250 instead. Essentially, prorated rent is the rent your tenant pays for the days they actually spend living there. 

When to prorate rent

As a landlord, you’re not bound by any legalities regarding when you require a tenant to pay rent. Usually, most landlords want to be paid in advance or on the first of the month. You’re also allowed to request rent payments bi-monthly or even weekly. There’s no hard rule. But if a tenant moves in on a random day like the 9th or the 17th, you may want them to pay that day. Here’s a few different scenarios when it makes sense to prorate rent:

Mid-month move-ins and move-outs

If a tenant moves in after the first day of the month, you can prorate the rent to cover only the days they’ll occupy the unit for that initial month. Similarly, if a tenant moves out before the last day of the month, they should only pay for the days they’ve lived in the property.

Lease renewals

Sometimes, lease renewals don’t align perfectly with the beginning or end of the month. Prorating rent helps adjust for these discrepancies.

Lease breaks

When a tenant breaks the lease early, you might need to prorate rent based on the notice period given and the actual move-out date.

Landlord discretion

Although it's a frequent practice, you have no obligation to prorate rent and it's up to your discretion. However, prorating rent can help you fill vacancies and show tenants that you're willing to work with them. 

How to calculate prorated rent

Calculating prorated rent involves determining the daily rental rate and multiplying it by the number of days the tenant will occupy the unit. There are three common methods for this calculation:

1. Monthly rate method

This method assumes each month has a fixed number of days. Here’s a step-by-step guide on how you would calculate it:

Step 1: Determine the monthly rent.

Step 2: Calculate the daily rent by dividing the monthly rent by the number of days in the month.

Example: If the monthly rent is $1,200 and the month has 30 days, the daily rent is $1,200 / 30 = $40.

Step 3: Multiply the daily rent by the number of days the tenant will occupy the unit.

Example: If the tenant moves in on the 10th, they’ll occupy the unit for 21 days. The prorated rent is $40 x 21 = $840.

2. Annual rate method

In contrast to the monthly rate method, this method averages the number of days across the year.

Step 1: Determine the annual rent by multiplying the monthly rent by 12.

Example: $1,200 x 12 = $14,400.

Step 2: Calculate the daily rent by dividing the annual rent by 365 days.

Example: $14,400 / 365 = $39.45.

Step 3: Multiply the daily rent by the number of days the tenant will occupy the unit.

Example: If the tenant moves in on the 10th, they’ll occupy the unit for 21 days. The prorated rent is $39.45 x 21 = $828.45.

While the monthly rate method is simpler, the annual rate method is more precise, especially for longer lease periods.

3. Banker’s month or 30-day standard

When you use the banker’s month to prorate rent, calculations are completed based on a standard 30-day month, regardless of the actual number of days in the month being calculated. 

Step 1: Determine the monthly rent.

Step 2: Since the banker's month method assumes a standard 30-day month, divide the monthly rent by 30 to find the daily rent amount.

Example: If the monthly rent is $1,500, use this formula: $1,500 / 30 = $50 per day.

Step 3: Multiply the daily rent amount by the number of days the tenant will occupy the property. Example: If the tenant moves in on the 15th of the month and the month has 31 days, the prorated rent calculation would be $50 per day × 16 days (from the 15th to the end of the month) = $800.

Communicating prorated rent to tenants

Effective communication is key to managing prorated rent. Here are some best practices to consider when communicating with your tenants:

Include prorated rent terms in lease agreements

Clearly outline the conditions under which prorated rent will be applied in the lease agreement to make sure both parties understand their obligations.

Provide detailed calculations

When presenting the prorated rent amount, include a detailed breakdown of the calculation. Exercising transparency builds trust and reduces the likelihood of disputes.

Use written notices

For mid-month move-ins or move-outs, provide tenants with a written notice explaining the prorated rent calculation. Doing so formalizes the process and serves as a reference in case any disputes or questions come up. 

Prorated rent and legal compliance

While prorated rent is generally accepted as a fair practice, regulations can vary by jurisdiction. Here are a few points to consider:

State and local laws

Familiarize yourself with any specific laws or regulations regarding prorated rent in your state or locality. Some areas may have guidelines on how prorated rent should be calculated or limitations on charges. For example, certain states require you to calculate prorated rent based on a standard 30-day month, whereas others require you to use the actual number of days in that specific month for the calculation.

Fair housing laws

Your prorated rent practices must comply with fair housing laws, meaning you must treat all tenants equally and without discrimination. Every tenant, regardless of race, color, national origin, religion, sex, familial status, or disability should be afforded the same opportunities and terms.

Documentation

Keeping thorough records of all prorated rent calculations and communications with tenants is crucial for maintaining transparency and accountability. Accurate records are essential for compliance with legal and financial requirements and can protect you in case of audits or legal challenges.

Tools and resources for calculating prorated rent

With the right tools and resources, managing prorated rent can be straightforward. 

Online calculators

Online calculators, like RentSpree’s prorated rent calculator, can help you quickly determine prorated rent. Simply input the necessary information and the calculator does the rest.

Property management software

Many property management software solutions include features for calculating and managing prorated rent, along with other rental tasks. These softwares can often help streamline your operations and reduce errors.

Excel spreadsheets

For a more customized approach, create an Excel spreadsheet to calculate prorated rent. This allows you to input specific details and track calculations over time.

Crunching the numbers with RentSpree

Prorating rate is not only fair, but will help keep your tenants satisfied and minimize any vacancies on your property. 

RentSpree's free prorated rent calculator is an invaluable tool for landlords looking for a little extra help crunching the numbers. All you need to do is input the basic information such as the monthly rent, move-in or move-out date, and the total days in the month to quickly obtain the prorated amount due.