prorated rent..am I being jipped? (apartment, lease, how much)

[lilxcutie53]

I am about to move into a new apartment. My lease starts May 10 so I will be paying prorated rent for the rest of May. My monthly rent is $2320 + $85 for flat util. Therefore, 2320 divided by 31(# of days in May) X 22(# of days i will be living there) should be 1646.45 for our pro rated rent.

Then $85 divided by 31 X 22 should be 60.32. So that comes to a total of 1706.77.

My welcome letter by the management company is saying that my total prorated rent should be 1763.66. I e-mailed the management company and asked how they got that number and the lady replied saying $2320 divided by 30 X 22...

I am wondering if I am being lied to by the management company to see how much money they can get out of me or do some companies use a standard 30 days no matter what month you move in?

The lady already called me earlier this morning saying that she received our application but our lease would start May 1. I was told by her May 10th the other day when went to tour the place. Once I told her, she said that we could start it May 10 since that is what she told us. It just seems a bit sketchy to me.

[robbobobbo]

I'd never thought about this - my first inclination would be to use the number of actual days in the month. But look at it this way - does your rent go up for longer months, and do you get a discount for February? I assume not, rather, it's the same amount per month regardless of number of days in the month. So they've figured out what the daily rate is for any month, basing it on 30 days.

I don't know if this is a typical practice, but apparently it isn't unique because a Google search shows many people have similar questions.

The pro-rated first month's rent really should have been in the lease for you to review prior to accepting the apartment!

[HokieFan]

Typically, prorated rent is calculated this way:

$2320 + $85 x 12 (months) = $28860 per year

$28860 / 366 (number of days in 2012) = $78.85

$78.52 per day x 21 days = $1655.85

[Alltheusernamesaretaken]

*waiting for someone to point out that "jipped" refers to gypsies and is not PC*

[vermonter16]

$1660.43 if you use 365 days in a year (just in case the management company did not include the Leap Day)

Wow - I'm confused.

[NC211]

Almost all use the 30 / 360 accounting method to track and quote rents. Same with your "flat" utilities as well. You won't pay less in February, and you won't pay more in December.

$2,320 x 12 = $27,840 / 360 = $77.33
$85 x 12 = $1,020 / 360 = $2.83

$80.16 a day x 22 days = $1,763.59

You're dividing by 365, whereas you should divide by 360. Granted, you're multiplying that on an "actual" day count, it is what it is, and typically how they do it.

[vermonter16]

Wow, you're good. So, he's getting a deal, not getting....ummmm....don't eve want to say it now.

[NC211]

Yes, he is, at the tune of about $400 a year. It's a card trick really when it comes time to account for the property's income levels. That $400, on the surface, may appear to be lost revenue on that unit, but in reality, the tenant is paying for it. What you don't know in this equation to determine if he/she is getting a good deal, is what the unit should lease for to meet the performance numbers designed into the project itself. Also, don't forget the fees (application, amenities, parking, likely overage on that utility fee, etc). I heat/cool/water/trash over 4,200 square feet in Loudoun for $230/month. You think 750 square feet with only one exposed wall to the elements really needs $85 of energy? Chances are, the unit probably uses $50 a month in utilities. There is no such thing as "free rent". Well, not for the next 18 months or so. Then, the market will be saturated with new apartment units and we'll be back to the 10% concession level (2 months free rent). But even that is suspect considering they're usually on a 13 month lease contract.