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Proprietors collect money in advance before an occupant relocates. Oftentimes, the funds gotten from the occupant include a down payment, prorated lease, and the very first month of rent. In this post, we'll take a thorough appearance at how the very first month's lease works, along with other tips for increasing cash flow and keeping your rental residential or commercial property profitable.

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The very first month's lease is a form of pre-paid or advance lease and, relying on relevant laws in the jurisdiction where the rental is located, can consist of additional months such as the first 2 months of rent, or the first and last month of lease. Charging the first month's lease is an easy process, but can often be puzzling for new landlords and for occupants who have never rented a house before.

Accounting for the First Month of Rent Let's presume a home leas for $1,500 each month.  A Good Read  is signed on June 15th with a lease start date of July 1st. You would gather $1,500 from the occupant on June 15th for the very first month of rent for July and record that quantity as advance rent for July.

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Here's how accounting for the very first month of rent would appear on a cash circulation statement: June 15th July very first month's lease $1,500  July 1st July rent due $1,500 $0 August 1st August rent due $1,500 $1,500 August 1st August rent paid by tenant $1,500 $0 At the beginning of the capital statement, the occupant has a credit balance due to the fact that they spent for the July rent beforehand on June 15th.

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Moving forward the occupant will have no exceptional balance or credit, supplied the lease is paid completely and on time. When to Prorate Lease Prorating rent and enabling the occupant to relocate before the very first of the month can be a great way to create extra rental earnings and increase possible ROI.