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How to properly collect the first month’s rent from tenants

House key on money
by Jeff Rohde, posted in Investment Strategy

One best practice for a landlord to follow is collecting the first month’s rent from tenants. While it may sound easy, it can be pretty tricky, especially if you’re unfamiliar with the process.

In this post, we’ll explain how to collect the first month’s rent from your tenants and provide tips on making the process as smooth as possible. Read on and learn everything you need to know about collecting rent from your tenants.

Key takeaways

  • Collect the first month’s rent in advance, preferably through a certified check, money order, or Stessa online rent collection.
  • Landlords may also include a security deposit, prorated rent, and the last month’s rent in the money received from renters before they move in.
  • Keep records of all rent payments made by your tenants, including the date and amount of each, to help you track when rent is due and help you identify any potential late-payers.
  • Be clear about what expenses are included in the rent price, such as utilities and pet rent.


What is the first month’s rent?

The first month’s rent is the amount of rent that a tenant pays for the first month of their lease. Landlords typically require tenants to pay the first month’s rent up front before moving into a rental property.

Landlords usually prorate the rent if a tenant moves in before the first of the month. Prorating rent is when a landlord calculates the rent for the partial month a tenant occupies the rental unit.

To do this, landlords take the total amount of rent due for the month and divide it by the number of days in the month. They then multiply this daily rate by the number of days the tenant occupied the unit during that partial month.

For example, if a tenant is moving into a rental unit on October 15 and their monthly rent is $1,000, the landlord would first divide $1,000 by 31 days in October to get a daily rental rate of $32.26. The landlord would then multiply $32.26 by the 17 days that the tenant occupied the unit in October (including the day the tenant moved in) to get a prorated rent amount of $548.42.

In most cases, landlords require that tenants pay the first month’s rent and the prorated rent for the partial month. This is because it helps ensure that the tenant can pay their rent on time and prevents them from falling behind on payments. Additionally, it gives the landlord peace of mind knowing that they will receive the full amount of rent that is due.


When should the first month’s rent be collected? 

Landlords usually collect the first month’s rent before the tenant moves in. This way, you can be sure that you will actually receive the rent and that the tenant is not using it to cover moving costs or other expenses. Additionally, by collecting the first month’s rent before the tenant moves in, you can avoid any potential problems that may arise if the tenant decides not to pay rent once they are already living in the unit.

There are a few benefits to collecting the first month’s rent before the tenant moves in. First, it allows you to screen tenants more effectively. Additionally, collecting the first month’s rent before the tenant moves in allows you to use the money in case any damages to the unit need to be repaired before they move in.

Finally, collecting rent before the tenant moves in helps to set the tone for the rest of the tenancy. If you wait until the tenant moves in to collect rent, the tenant may get comfortable and start to think that they don’t have to pay rent on time. Collecting rent before the move-in date helps to deter this problem.


man paying rent

How can landlords collect first month’s rent from tenants?

You always want to ensure you’re getting paid on time and in full. One way to help ensure this is by asking for the first month’s rent in guaranteed funds.

Guaranteed funds are funds that cannot be reversed or taken back by the tenant. This means that you can be confident you’ll receive the rent money. Cash is one example of guaranteed funds, as are money orders and certified checks. The tenant gets a money order or certified check from their bank, made out to the landlord for the first month’s rent.

Using Stessa’s online rent collection tool is another good way to collect a tenant’s first month’s rent. It’s a simple and easy way to collect rent electronically, and Stessa is free for both landlords and tenants making an ACH transfer. It also helps to keep track of all payments made by the tenant, so you can be sure that you are getting paid on time and in full each month.

Overall, collecting the first month’s rent from a tenant in guaranteed funds is a good practice for landlords to follow. Using Stessa to collect rent makes it easy for tenants to pay on time and for landlords to automate key tasks like deposits, receipts, and accounting. Stessa’s online rent collection is a win-win and free for landlords and tenants.


Can landlords require tenants to pay last month’s rent as well?

Collecting the last month of rent is essentially a way for landlords to protect themselves in case a tenant skips out on the lease. The last month’s rent serves as a security deposit of sorts – it ensures that the landlord will receive rent for the final month even if the tenant decides to move out early.

There are some pros and cons to this strategy. On the plus side, it gives you peace of mind knowing that you have some extra money if something goes wrong. On the downside, collecting the last month’s rent up front can be difficult, particularly if the tenant is tight on cash. You also risk alienating good tenants who may feel they’re being taken advantage of.

Ultimately, it’s up to you as the landlord to decide whether collecting the last month’s rent is right for your situation. If you choose this route, just be sure to communicate with your tenants clearly, so they know what to expect.


What else needs to be included in the first month’s rent?

Most landlords require tenants to pay the first month’s rent, along with a security deposit and sometimes the last month’s rent, before moving in.

A security deposit is a sum of money paid by a tenant to a landlord at the beginning of a lease. The deposit is intended to cover any damages or unpaid rent at the end of the tenancy. Landlord-tenant laws vary from state to state, but most states have laws limiting how much of a security deposit a landlord can collect. In general, landlords can only collect an amount equal to one or 2 months’ rent.

Other charges that might be included in total rent collected before a tenant moves in include utilities paid for by a landlord and charged to a tenant (sometimes found with multifamily property), parking fees, and a pet deposit and pet rent.


Final thoughts

As a rule of thumb, landlords collect the first month’s rent before a tenant moves in, along with a security deposit and prorated rent. Once you’ve collected the up-front money from a tenant, it is important to keep accurate records. 

Be sure to document when the rent was paid and how much was paid. Doing so will help you if there is ever any disagreement about the payment. Following these simple tips will help set the right expectations with the tenant and deter any problems with collecting the rent each month.


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