If you've got a rental property in Houston, TX, there's probably a part of you that feels like you've struck oil! Since the pandemic, Houston has been the second most popular metropolitan city in the country.
You shouldn't have any problems finding tenants for your Houston, TX property. But what happens if your tenants arrive in the middle of the month? What happens if they wish to leave in the middle of the month?
In such a case, you can charge prorated rent. Property managers can help with this. However, you should also know how prorated rent is calculated.
Prorated Rent Per Month
When trying to earn rental income, Texas law permits landlords to charge prorated rent via the monthly or yearly method. You can always charge a full security deposit equivalent to a full months' rent.
Prorated rent per month involves calculating the daily rental fee by the number of days that the tenant will stay in the property.
Let's say your tenant, Sally, wishes to move in on June 3rd, 2024. You'll first have to calculate the days she'll stay within that month. June has 30 days in total. Sally won't stay for the first two days of the month.
30 days - 2 days = 28 days. This is the number of days you'll calculate by the daily rate.
The daily rate is the rental fee per day within a given month. Let's say you wish to charge Sally $1,000 per month.
$1,000 divided by 30 days = $33.33. You'll now multiply the daily rate by how long Sally will stay in that month.
$33.33 multiplied by 28 days = $933.24. This is how much you'll charge Sally for moving into the rental property on June 3rd.
Prorated Rent Per Year
Another approach for calculating prorated rent is to do it using the yearly method. This is appropriate if your tenant is signing up for a one-year lease.
First, you must multiply the monthly rate by 12 months. Following the previous example, Sally will pay $12,000 for rent.
To calculate the daily rate, you'll have to calculate the yearly rental fee by the number of days within that year. Since 2024 is a leap year, you'll use 366 days.
$12,000 divided by 366 days = $32.79 (approximately). This is the daily rate you'll charge Sally. Since she's staying for 28 days in June, you'll use the same formula as in the previous example.
$32.79 multiplied by 28 days = $918.12. This is how much you'd charge Sally for moving in on June 3rd, 2024 if she's signed a one-year lease.
You don't have to stress about charging and collecting prorated rent. You can hire property managers to help you.
Property Managers Can Help
Charging prorated rent is a much fairer way of charging your tenants if they move in or leave without completing a month.
If they don't commit to a year, you can consider using the monthly method to calculate the daily rate. Otherwise, the yearly method is often the best way.
Of course, you can hire property managers to help you. First Class Realty & Management is Houston's best property management company. We have over 20 years of experience and several satisfied clients.