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
