Are you hoping to invest in a rental property in Richmond, VA? It's considered one of the best places to live or retire in. As a result, one can expect sustainable population growth in the coming years.
This brings many opportunities for landlords to earn a high rental income. But don't start seeking tenants just yet!
You'll need to know how to calculate prorated rent. This is crucial as your tenants may not occupy your property at all times.
Afterward, you can hire property managers to collect your rent. Here's how it works:
What Is Prorated Rent?
Prorated rent is the rental fee you'll charge a tenant if they don't occupy your space during a specific period. If your tenant moves in the middle of a month, you won't charge them a full month's rent.
Currently, charging prorated rent isn't required by Virginia law. Nevertheless, your tenant would appreciate not having to pay the full amount in such a situation.
In most cases, prorated rent applies to the first or last month. This is for a scenario where a tenant may move-in or move-out in the middle of a month, for instance.
Methods for Prorated Rent
There are three methods for calculating prorated rent. You can decide which is the ideal option for you.
Monthly Rate
The easiest method for calculating prorated rent is to divide the rental fee by the days in a given month.
Here's a scenario:
Let's presume the rental fee is $2,000 per month. Let's say the month is November, which has 30 days. Your tenant will be moving in on November 20. They'll only occupy the home for ten days in November.
First, you'll calculate the daily rate. This is $2,000 divided by 30 days.
$2,000/30 = $66.67 per day. Now, you'll calculate this amount using the ten days that your landlord is staying in.
$66.67 x 10 = $666.67. This is the prorated rent you'd charge the tenant. You can collect it on your own or hire a property manager to collect it for you.
Banker's Month
If you want to keep it simple, you can always charge a "banker's month." This means that, except for February, you'll always consider a month to be 30 days.
However, this means that if your tenant moves in for a month that has 31 days, they'll pay a higher rate.
Annual Rate
Another option is to calculate the rate based on the year. You'll multiply the monthly rate by 12. Then, you'll divide the result by 365.
$2,000 x 12 = $24,000.
$24,000/365 = $65.75
$65.75 * 10 days = $657.50
This amount brings you the lowest amount of money. However, this is a fair amount which may lead to a better chance of your tenant renewing their lease.
Hire Property Managers
Now you can calculate prorated rent for your rental property in Richmond.
The next step is to reach out to potential property managers. They can help calculate prorated rent. They can also collect your rental income and handle many other landlord duties for you.
Renters Warehouse is the best option for Richmond landlords. We've served many satisfied landlords and are eager to help you as well!
