How to calculate rent?

[akyboy]

G'day,

This being my first rental property, I'm not sure how to calculate the amount of rent required to be paid by my tenant.

The lease agreement states payments will be made monthly. Works out better for me as there is less administration.

Weekly lease is $310 per week.

Do I:

a) 310 * 4.333 = $1343.23
b) 310/7 * (days in month, eg.30) = $1328.571

Total payments for a year are:

a) 310 * 4.33 * 12 = $16107.6
b) 310/7 * 365 = $16164.29

To me, option (b) sounds the fairest. But I don't know how the market does it.

Does anyone have a nice excel spreadsheet that does these calculations, etc.?

Thanks,

akyboy

 

[Merovingian]

I'm not sure if this is the correct way to calculate monthly rent, but this is how I'd do it:

rent_per_week = $310.00
=> rent_per_year = $310.00 * 52 weeks
=> rent_per_month = rent_per_year / 12 months
=> rent_per_month = $1343.33

Dunno...

 

[Kristine..]

Hi akyboy

Generally speaking the weekly rent is multiplied by 52 weeks and divided by twelve.

However, I am trying to educate my property managers to multiply by 52.3 weeks, and divide by twelve.

A previous manager always used the 52.3 weeks factor, but the next time that particular house was let the next manager used 52 weeks, and I got less rent even though the property was let for the same weekly figure.

It may not sound like much, but whose money is it?

Cheers

Kristine

 

[akyboy]

Is 52.3 weeks per year the accepted accounting normal over 52 weeks?

The additional complication is that my lease began on 21/03 and the rent is paid on the 1st of each month, so the first month's rent will include all of April and 11 days of march.

akyboy

 

[simonjulie]

Hi Akiboy
Here is an excel rent calculator for you to play with.
Simon

 

[simonjulie]

I don't know about other states but down here in the ACT we calculate rent as following.
daily rent *365 / 12
gives twelve even months due on the same day each month
See my calculator above.
We have been using this method for years. It's easy and if the lease is for twelve months it all works out over that period nicely.
Simon

 

[akyboy]

G'day Simon,

Thanks for the excel file. That's exactly what I was looking for. I was dreading having to do my own.

Akyboy

 

[geoffw]

I don't know about other states but down here in the ACT we calculate rent as following.
daily rent *365 / 12
gives twelve even months due on the same day each month
See my calculator above.
We have been using this method for years. It's easy and if the lease is for twelve months it all works out over that period nicely.
Simon

That's the way I do it, and the way it was always done for me when I was renting.

It's perhaps an anomaly that rents are usually quoted as weekly but paid monthly.

I do however vary rent periods to suit the tenant. A tenant who gets paid fortnightly had trouble paying monthly- but he's been a good payer since I changed to fortnightly rent.

 

[the.j]

GeoffW, very good point with varying the frequency to your tennant's pay frequency.

Is it common that people get paid weekly?

I have lost touch - and have had a monthly pay day for about 15 years and before then, it was a fortnightly yellow envelope with a couple of red lobsters in it

Cheers
J

 

[geoffw]

Is it common that people get paid weekly?

I don't think it's that uncommon.

My Subway employees get paid weekly- that may well be a norm for casual employees. (Some of them get paid weakly- at 16YO working 4 hours pw). Fortnightly is the norm for public servants and welfare recipients.

My tenant was on welfare when he asked to be switched to fortnightly. When he got a job paying weekly, he asked to pay rent on that cycle.

In Mexico, the norm is bi monthly.

 

[simonjulie]

I have allowed for Daily, weekly ,fortnightly and monthly rent payments in the calculator that I posted above
It also has a section for working out the outstanding days leading up to the first months payments and there is also a rent increase calculator as well.
Simon