With almost 60% of people renting in Los Angeles, it's crucial to follow best practices for managing your property. That way, your tenants know what's expected from them and you can set yourself up successfully to collect your payments and keep your finances in check.
Want to know how property managers calculate prorated rent in LA? We're here to tell you. So, read on for your guide and how a property management company can be helpful for you.
What Is Prorated Rent?
If your tenant starts living in your property at the very start of the month, they'll have to pay full rent for that month. But if they move in sometime during the month, then full rent isn't due. Instead, your tenant must pay the amount that's entitled to the remainder of the days, and this is what's known as prorated rent.
It's your job to work out how much rent is needed. To do this, you must know the right way to calculate prorated rent.
How Do You Calculate Prorated Rent?
While there are two main methods for calculating prorated rent, the one you need to use is based on the state that you live in. For property management in LA, here's how to do it:
- First, divide the monthly rental cost by the number of days for that month
- Then, multiply this by the number of days that are remaining
For example, let's say you charge rent at $1,500 per month and your tenant moves in during September, which has 30 days. Your tenant has 15 full days left of the month once they move in to pay for, as per prorated rent.
To calculate the partial rent that's due you divide $1,500 by 30 which gives you $50 per day. Multiplying $50 by 15 means that they'll have to pay you $750 for their length of stay for the first month.
Why Is Calculating Prorated Rent Important?
There are several benefits of prorated rental payments for a property manager. It allows you to:
- Charge your tenants fairly
- Take the payment accurately
- Calculate the partial first-month rent with ease
Calculating prorated rent is simple. Therefore, it means that you're unlikely to charge more than you should or make mistakes. This is especially true when taking prorated rental calculations based on the month.
LA Prorated Rent Method Compared to Others
When using other methods, the tenant could be charged more. For example, when determining prorated rent based on year, estimated monthly payments are calculated and distributed equally. That means for every month, the total cost is set the same.
The main downfall with this method is that tenants who move in on a month with fewer days, for example in February, will end up paying more for prorated rent. But when using the method in LA, they're charged based on months individually which is more beneficial, especially when faced with this scenario.
The LA Property Managers For You
Ensuring you manage your property correctly is important so that both you and your tenants can make the most of the experience. Here, we've shown you how to calculate prorated rent so that you can take payments fairly.
We welcome you to join other property managers who are benefiting from our help. Call us today! We'll give you the management service that's fit for you!
