Monthly rent of $1,750 was collected in advance by the seller for a 30-day month. Closing occurs on the 11th day of the month, and the seller owns the day of closing. What is the seller's share of the month's rent?
Correct Answer
C) $641.67
Divide the month's rent by the days in the month to get the per diem: $1,750 ÷ 30 = $58.33. The seller owns the day of closing, so the seller's share covers 11 days: 11 × $58.33 = $641.67. Because the seller already collected the whole month in advance, the buyer's 19 days ($1,108.33) are debited to the seller and credited to the buyer on the settlement statement. The two shares always add back to the full month's rent, which is the fastest check on the day count.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Daily rate calculation involves determining the cost or income per day by dividing the total amount by the number of days in the period (usually a year or a month). This is a fundamental step in proration.
The capitalization rate (cap rate) is the ratio of a property's net operating income to its sale price, expressed as a percentage. It is used to estimate value and compare profitability of investment properties. Cap Rate = NOI / Value.
The capitalization rate (Cap Rate) is the rate of return on a real estate investment based on its expected income.
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