converting weekly rent to monthly

my tenant is paying $420 pw. When I renew the lease I want to change to monthly payments

option 1. 420x52/12 = $1820 pm
option 2. 420/7x365/12 = $1825 pm

are there any rules to follow or any issues with the 2nd calculation?

cheers

 

The 2nd one Alex

 

Generally method 2 but this year has 366 days in it Will missing out on $60 over the course of the year send you broke? Of course it all depends upon when the change is effective and whether, like in NSW, the change to monthly has to be initiated by the tenant.

 

Nah, it was 2016 that was the leap year. Next one will be 2020.

I've seen number 2 used, and they dropped one day during the 2016 leap year (i.e. instead of the monthly rent being due on the 22nd, it changed to being due on the 21st. I presume that this was due to the leap day)

 

My bad we only get an extra day for the Summer Olympics (not the real ones in winter).

 

They will suspect and want option 1 but you would prefer option 2.

Let the negations begin .

 

I wanted the same. Ended up getting 28 days (7x4) rent every month.
Then they just pay me an extra week's worth every now and then.

 

Rent generally accrues per day, so just make sure you aren't being short changed a few days each monthly payment.

 

Most PMs don't even know how to work this one out properly. Everyone assumes there are exactly 52 weeks in a year and there aren't. All rent is calculated daily so method 2 is the correct method unless it's a leap year but any adjustments will be made.

 

Do you private manage? Keep a ledger? This arrangement seems like an odd way to keep formal track of rent payments.

That's right.

There aren't two ways to calculate it- method one is wrong.

 

@Tom Rivera - there are two ways, the right way & the other one.

 

My ones that I privately manage, I don't do monthly payments because it is annoying to keep track. But I'm saying that monthly normally means calendar month, so if you just get a 4 week payment on the same date of each month, you're going to be missing days each time.