The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

What Is Prorated Rent & How Do You Calculate It?

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When signing a lease, most agreements start on the first of the month for accounting purposes. However, there are situations where you may need to move into an apartment on a different date. In such cases, you will pay a prorated rent for the days you occupy the unit outside the regular monthly term. Let’s look at what prorated rent means and how it works.

What Does Prorated Rent Mean?

It is a portion of the full monthly rent based on the days a tenant occupies a property. It is due when a tenant occupies a residence for a partial term, such as a few days or a week.

You typically pay prorated rent when you need to occupy an apartment for several days in addition to the standard monthly term of your lease. This usually happens at the beginning or end of a lease when a tenant may need to move in or out a few days before or after the first of the month.

For example, if you move into a new apartment on the 20th of the month, you’ll need to pay for the days you occupy the residence before the first entire month of your lease begins. Similarly, prorated rent would be due if your lease ends on the 30th or 31st, and you can only move out later, such as on the 5th of the month.

You would pay for the additional five days you plan to occupy the unit outside the monthly leasing period. In this situation, paying prorated rent means paying for the additional days you spend living in the apartment.

When Do You Pay Prorated Rent

When you move into an apartment for less than a month, you’ll pay prorated rent. This means you’ll only pay for the days you’re using the apartment rather than having to pay for the entire month.

When Do You Pay Prorated Rent?

Prorated rent is usually paid at the beginning or end of a lease to accommodate tenants based on when they need to move in. Landlords typically prefer to start leases on the 1st of the month. If tenants want to move in early, they must pay for the extra days they’ll occupy the apartment. The same applies to tenants who need to move out a few days after their lease ends.

How To Calculate Prorated Rent?

There are two different ways to calculate: monthly and yearly. The monthly method is easier and faster, but the yearly method is more accurate.

1. By Number of Days in a Month

To calculate prorated rent every month, you can follow these steps:

1. divide the total rent by the number of days in the month. This will give you the daily rate.

2. Multiply the daily rate by the days you’ll occupy the unit.

For example, if the rent is $1,500 and you move in on April 15th:

1. Calculate the daily rate by dividing $1,500 by 30 (days in April). $1500 / 30 = $50

2. Multiply the daily rate ($50) by the number of extra days you’ll occupy the unit (15).  $50 x 15 = $750

In this example, you would owe $750 because you occupy the unit for half the month.

2. By Number of Days in a Year

As the number of days in a month varies, the daily rate for rent will also vary. Some landlords may opt to calculate the prorated rent every year. To do this, you would first find the annual rent by multiplying your monthly rent by 12. Then, divide the annual rent by 365 to get the daily rate based on a yearly schedule. Finally, multiply this daily rate by the days you plan to occupy the unit.

For example, if your monthly rent is $1,500:

$1,500 x 12 = $18,000 (annual rent)

$18,000 / 365 = $49.32 (daily rent)

$49.32 x 15 = $739.80 (15 days)

As you can see, the difference between calculating prorated rent monthly and yearly is only about $10. However, calculating prorated rent yearly provides a more accurate estimation because the number of days a year does not fluctuate (except in a leap year).

Prorated Rent Example

Here’s an example of how prorated rent works. Let’s say a tenant rents an apartment for $3,000 a month. Their lease ends on May 31, but they must stay until June 10. The landlord will charge them $1,000 prorated rent between June 1 and June 10.

To calculate the prorated rent, you first need to determine the daily rental rate and then multiply that by the number of days the property is being used.

Tips To Keep In Mind When Prorating Rent

It is quite simple and can be a helpful way to negotiate an early move-in date. However, there are a few important things to keep in mind:

Prorated rent usually applies to the rent paid before your official lease term begins. If you move in after the 1st of the month, you are still responsible for paying the entire month’s rent unless you and the landlord agree to start the term on the 1st of the following month.

Ensure all the rent you owe is clearly outlined in the lease, including any prorated rent.

If you need to extend your lease beyond the original term but don’t want to renew for an entire year, you can ask the landlord for a month-to-month lease. Even if you pay for the additional days you occupy the unit, having a lease is still a good idea to avoid any potential problems.

Prorated Rent Bottom Line

It’s important to prorate rent if you need to move into an apartment a few days early or stay a few days past your lease. Paying prorated rent means you only pay for the days you live in the apartment, ensuring everyone gets a fair deal. Without prorating rent, you’d have to pay for the entire month, including days you aren’t using the property, which would be a waste of money. 

Written By: Georges Benoliel

Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.

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