Prepaid rent is not considered earned until that rent is due. Only earned rent can be distributed.
Prepaid rent is rent that has been paid prior to the date that any rent or charge to your Residents is due and is therefore considered unearned.
For example, if a Resident pays rent on April 28th for their rent that is due on May 1st, your April Monthly Statement will show that rent payment as Prepaid Rent because it is not considered earned until May 1st and therefore does not get distributed until the 10th, the first distribution of the month. In fact, any money paid by the Resident that is in excess of the total amount of charges for the month is considered Prepaid rent and will be excluded from your Owner Distribution until those payments become earned. Once earned, you will find these credits in the Income section of your Monthly Statement.
Please note that if a Resident overpays by a few dollars or cents from the prior month, you may see Rental Income on your Owner Portal or your Monthly Statement for an amount of $0.50 or another small amount. This indicates that there was a small credit balance on the Resident’s ledger from the prior month that is being applied to the current month’s charges. You will often see this small amount ‘post’ to your account for the 1st of the month; however when the Resident pays their normal monthly rent amount, it is the difference between that small amount from the month prior and their standard rent payment that will be posted to your account.
For example, if your home’s rent is $1,000, you may see a credit of $0.50 on May 1st from the April’s overpayment. When the Resident pays $1,000 on May 4th, you will see $999.50 in your Income, adding up to the total Monthly Rent payment. In fact, the $0.50 credit may continue to carry over to the month of June and so on if the Resident continues to pay their standard monthly payment without realizing that they had slightly overpaid in a previous month.
Learn more about our twice monthly rental income distributions.