As a Covina landlord, you'll find much guidance about managing your leases in prevailing California rental laws. Yet, the issue of prorated rent remains a gray area for many landlords.
Allowing tenants to prorate rent is one way to maximize your rental occupancy rates, so you might need to do these calculations to accommodate your tenants in some cases.
Read on to discover how and why property managers calculate rent in Covina, CA.
Why Calculate Prorated Rent?
Landlords aren't obligated to prorate rent, but the benefits of allowing tenants into your investment properties sooner outweigh the effort involved in a prorated rent calculation.
In most cases, landlords will need to calculate prorate rent when a tenant wants to occupy a rental property on a day other than the first of the month. Sometimes it's easy to change their rent due date to correspond with this calendar date.
This method works best for landlords who own few properties. It can get confusing juggling multiple rent-due dates if you own many properties.
Prorated Rent Examples
All prorated rent calculations are based on the value of renting the accommodation for one day. The methods used vary slightly depending on the type of lease in place.
California allows two main types of leases; this is how to calculate prorated rent for each one.
Annual Leases
It's easy to calculate prorated rent for these types of leases. You simply divide twelve months' worth of rent by 365 or 366, depending on the number of days in February.
This will give you a daily rate for your rental unit.
Month-to-Month Leases
Tenants should give the landlord at least 30 days notice of their intention to vacate the unit, but these conditions may vary based on the contents of the lease agreement.
If tenants want to remain in the rental unit for a few extra days after they're due to move out, you can calculate their prorated rent as follows:
- Add up the number of days already occupied by the tenant
- Divide this amount by the number of months they've been in residence
- Divide the monthly rent by this average
This figure equals the daily value of their rent. Simply multiply this number by the extra days they will stay after the end of their notice period ends. So, if a tenant has occupied for January (31 days), February (28 days), and March (31 days), the calculation will be as follows:
- 31 + 28 + 31 = 90 days
- Divided by 3 months = 30
- Monthly rent divided by 30 = daily rate
Tenants may not use their security deposit as the last month's rent.
Get More Help From Property Managers
Calculating prorated rent can help limit rental vacancies and foster good relationships with tenants. The type of lease dictates how to calculate these part payments.
If you're uncertain how to figure it all out, a real estate professional can help you do the math.
PMI San Bernardino is the expert in real estate management in Covina. Our team of property managers has many years of experience in the local market and a strong commitment to outstanding customer service.
We offer a full suite of rental management services and can offer guidance on a wide range of landlord issues. Browse our blog for more property management tips and explore more answers to your questions.
