Payment Processing Options for Cohosts

[Ana Carini]

For the experienced cohosts in the group, I’d love to get your thoughts on payment processing options for cohosting companies (LLCs) that position themselves as property management companies but operate without a broker’s license.

As an investor and soon-to-be STR entrepreneur, my business will initially focus on managing a small portfolio of vacation rentals with plans to scale. While cohosting is my initial step, my goal is to transition into a full-service hospitality management company as the business grows. I'm currently looking into the best ways to structure guest payment flows to ensure legal compliance (that may restrict non-licensed property managers from collecting rent directly) and seamless operations. I'm also interested in identifying the most scalable approach to support future growth. With that in mind, which approach do you think works best:

1. Use property management software (PMS) as an intermediary to automate payments and fee splits while reducing legal risk and simplifying operations?

2. Create a direct booking website and set up an escrow account where guest payments are held and disbursed to the property owner and cohost according to agreed terms?

3. Draft a written agreement where the property owner retains full ownership of all guest funds (nightly rates, cleaning fees, and taxes), while the cohost invoices for management fees and reimbursable expenses? Would this, however, place an administrative burden on the property owner, who would need to handle taxes, deductions, and payments to the cohost? Just a thought.

If PMS or escrow accounts seem like the best path, could you recommend specific tools or platforms to streamline these processes? Additionally, are there any other methods, approaches or strategies you’d suggest for someone just starting out in this space?

I’d really value your insights and whether one has worked particularly well for your business.

Thank you in advance!

-Ana

[Andrew Steffens]

Hey Ana - I am a PM with 65 units +/- and 8 years as such.  I do not think options 1 and 2 are mutually exclusive, in fact I think you should do both.  This is what I do.  We have a PMS which also doubles as channel manager and is also integrated into our site.  All funds process through various channels but the PMS (with trust accounting which is very important) keep track of all the funds and then we disburse monthly to the owner.  It is a lot easier IMO this way than chasing people for your fee.  That said I am unsure of the laws in your state.  I am licensed in FL by division of hotels & restaurants and also a licensed RE broker so me holding funds in escrow is not an issue.  Best of luck with everything!

[Ana Carini]

Hello Andrew and thanks for the reply! Great info and will take notes on that, appreciate it.

[Alex Withorn]

A legal expert might correct me here. But as soon as you make a direct booking site and start an escrow account (among other things) you then cross that legal boundary between a co-host and a property manager needing a broker license (depending on your state).

We CO-HOST for others and remain separated from those legal parameters that would consider us a property manager. We don't hande things like, finances and payouts, marketing on a direct booking site, leasing, etc. Everything stays on Airbnb and we essentially just handle tasks for the owners, which happen to be most of the tasks for managing a property. 

Besides that, simplicity is generally easier to scale. We use a PMS and API connect into the owner's listing. Then manage everything from there. Payouts are sent automatically to me and the owner according to our split. This also automates accounting, which is nice.

[Ana Carini]

Very valuable information, thanks for sharing it. May I ask which PMS do you use for your listings?