Do you own a rental property on the Emerald Coast of Florida? The state has seen a growth trajectory of 1.62% since the last census, and we expect this to continue in the foreseeable future.
As a result, landlords can expect many tenants to show up in the middle of the month, wanting to move in. This is welcoming news, but it brings a unique problem.
How much do you charge for rent in such a scenario? You can charge prorated rent. Property managers can help you, but you should know how prorated rent works.
Here's what you should know:
Charging the Monthly Rate
The monthly rate requires you to calculate the daily rental fee based on the number of days in that month. Keep track of all rental income payments for accounting purposes.
Suppose your tenant, Bob, is moving in on August 15th. Let's suppose you charge $2,000 per month for rent. You must first charge the rental fee based on the number of days in August.
$2,000 divided by 31 days = $64.52 (rounded up).
$64.52 is your daily rate. The next step is to calculate this amount by the number of days Bob will stay in August. Since he's moving in on the 15th, he'll stay a total of 16 days that month.
$64.52 multiplied by 16 days = $1,032.32. This is the prorated rent that you'll charge Bob for August.
When you set your rental fee, you'll want to set a price that can help you cover the cost of your investment. Keep this in mind when charging prorated rent. You may want to choose the option that will pay you more.
Charging the Yearly Rate
With this method, you'll calculate the daily rate based on a one-year rental agreement. Your first step is to multiply the rental fee by 12 months. Let's continue with the previous example.
$2,000 multiplied by 12 months = $24,000. This is how much you'll charge your tenant for the entire year. The next step is to divide this amount by the number of days in that year - 365 for a regular year or 366 for a leap year.
$24,000 divided by 365 days = $65.75. This is the daily rate that you'll charge your tenant.
Next, you'll multiply the daily rate by the number of days the tenant will stay in the particular month. If we continue with the previous example, Bob will stay 16 days in August.
$65.75 multiplied by 16 days = $1,052. This is how much you'd charge Bob for August according to the yearly rate. In this case, you'll earn more from this rate.
You can hire property managers to help you calculate and collect prorated rent.
Property Managers Can Help
You can now hire property managers to help you calculate prorated rent. They can also collect rental payments for you as well as help with other tasks.
Prorated rent is great for charging your tenants a discounted rate if they arrive after the first day of the month or if they leave early.
Coastal Realty Services is here to help Emerald Coast landlords like you. We've been in business for over 50 years and look forward to having a chat with you!
Contact us to learn more!
