Assisted Living: The Hidden Profits & Horrors
Sep 08, 2025
Thinking about investing in assisted living? You’ve probably heard stories about making $10,000+ a month in cash flow. Sounds amazing, right? But what’s really going on behind the scenes? This blog breaks down the real profits—and the hidden challenges—so you can see what’s really possible.
Let’s dive in! π
Check out this video, too:
Why Understanding ROI and Cash Flow Matters
Before you jump in, it’s key to know how to measure success.
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ROI (Return on Investment) tells you how much profit you’re making compared to your total investment.
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Net Operating Income (NOI) is your income after expenses but before loan payments.
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Cash flow is what you actually have left after paying everything—including your mortgage.
Cash flow is what most assisted living investors care about most, because it’s the money that goes into your pocket each month.
Big Expenses That Can Make or Break Your Business
To know what’s realistic, you have to understand where your money’s going. Here are the five biggest expenses you’ll face:
1. Payroll and Wages
Staff costs are the largest expense. Expect to pay about $19/hour+ for staff. Usually, you’ll have 1.5 full-time staff per shift plus an administrator making around $50,000-$80,000/year. All told, payroll could cost you $18,000-$30,000 per month — plus an additional amount (about 10-15%) more for payroll taxes.
2. Debt Service
If you bought a property for $650,000 with a 25-year loan at 10% interest, your monthly mortgage will be around $5,900.
3. Food Costs
Feeding residents typically costs about $10 per resident per day. That might seem low, but seniors usually eat less, and buying in bulk can help keep costs down. Here’s a quick look at some potential food costs by facility size:
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6-bed: $1,800/month
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10-bed: $3,000/month
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16-bed: $4,800/month
4. Insurance
You’ll need property, liability, and workers’ comp insurance, costing about $2,000/month+ on average.
5. Utilities
Internet, power, gas, waste, and other utilities add up to roughly $1,000/month+.
Miscellaneous
Other things like activities, decorations, supplies, laundry, and office items will cost around 20% of your main expenses — about $5,700/month+.
What Does Profit Look Like for Different Facility Sizes?
Here’s a snapshot of what your monthly income and expenses might look like:
Six-Bed Facility
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Income (at $4,500 per resident): $27,000
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Expenses: $42,472
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Result: Losing about $15,472/month
Margins are tight for small facilities. It can work, but you need to know your numbers really well.
Ten-Bed Facility
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Income (at $4,500 per resident): $45,000
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Expenses: $43,912
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Result: Profit of about $1,100/month
Not huge profits here, but you’re in the black.
If you raise your monthly rate to $6,000 per resident, income jumps to $60,000, and your profit can grow to $16,000/month. Big difference! So knowing your market and pricing right matters a lot.
Sixteen-Bed Facility
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Income (at $4,500 per resident): $72,000
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Expenses: $46,072
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Result: Profit of about $25,928/month
This is where those stories of $10,000+ monthly cash flow become real. But remember, it depends on occupancy, expenses, and your rates.
The Reality Check You Need
Small facilities have very tight margins, and big facilities have bigger margins—but also more complexity.
You can’t just assume you’ll hit these numbers. Every deal is unique based on location, financing, staffing, and your management skills.
Understanding your expenses and income before jumping in is key to avoiding costly mistakes.
How to Start Right
Want to know if assisted living is a good investment for you? Here’s what to do:
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Download the free underwriting calculator to plug in your own numbers.
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Aim for realistic occupancy — 80-90%, not 100%.
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Figure out who you want to serve and what your market can pay.
Next Steps: Take Action Today!
π Ready to start your assisted living business?
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Step 1: Download the free Business Plan Checklist at AssistedLivingInvesting.net to build your solid foundation.
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Step 2: Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
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Step 3: Use your numbers, take action, and build your business step by step.
Got questions? Drop them in the comments below! β¬οΈ
Show full transcript π
Transcript
00:00:00 - 00:00:52
Hey friend, I'm Brandon Gustafson with Assisted Living Investing. I help beginners like you launch their assisted living business in the next 12 months. In today's video, we're going to be getting into the topic of what is a realistic ROI when it comes to investing in assisted living. So, if you've been trying to figure that out and you want like the truth on it, make sure you stick around for today's [Music] video. Hey Fred, welcome back to Assisted Living Investing. excited to
00:00:28 - 00:01:21
have you here with me on the channel. Before we get into our topic, I want to remind you to go and grab your free underwriting calculator at assistedlivinginvesting.net. It's the big blue box in the top right corner. Go grab that free underwriting calculator because it's going to help you out actually as we talk about our topic for today, which is what is a realistic ROI when it comes to investing in assisted living. I see this question a lot. People want to know like the truth. What what's it going to look like? And we had
00:00:54 - 00:01:35
a video on the channel a few weeks ago that was, you know, should you do a six bed facility? So, I'm going to link that up above so you can go and watch that uh when you're done with this video because it's going to be really, really helpful for you as you're trying to figure out, you know, can I do this? What's it going to look like? So, as I go through this, just a disclaimer, I'm going to be talking about a bunch of numbers. We're going to try to throw those up on the
00:01:15 - 00:02:04
screen for you just so that you can actually see them rather than me talking about it cuz I know listening to people talk about numbers, it can be confusing and and overwhelming. So, I'm going to try to throw those up on the screen so that it makes sense. So, if you don't see a lot of me in this video, then make sure you like the video cuz maybe you like that. Um, but I'm hoping this really gets to be helpful for you as you're trying to get along your path to seeing if this is going to work for you.
00:01:39 - 00:02:30
Okay, so with that said, with that little bit of a disclaimer, let's talk about some numbers here. But before I do that, I do want to get into a couple just like three definitions really quick. So, let's talk about ROI. ROI is return on investment. So, I want to give you the quick calculation for what that looks like. You're going to be doing your net profit, which is, hey, this is how much money I I am getting. Uh, this is a profit that's coming to me after everything is said and done. This is my
00:02:04 - 00:02:58
profit. Divide that by my investment. So, I'm going to say this is how much money I put into it. Not what my debt service is, not how much I bought it for, but the actual amount of money that I put into it. Okay? So, my investment, I'm going to take that number, net profit, divide it by total investment, and then I'm going to multiply that by 100. And that's going to give me my ROI. So, this really helps you measure how much profit that you're going to make relative to your investment. It's what a
00:02:31 - 00:03:25
lot of people like to look at. Uh, it's a very simple, very common metric for you to be looking at. Another one that I want you to be aware of is your net operating income, your NOI. This is your total revenue, all of the revenue that you made, and you're going to minus that from your operating expenses, but this is also before your debt service. Okay? So, you're going to take that service out of it. You're going to get your NOI, your net operating income is going to be those numbers. So, you can see exactly,
00:02:58 - 00:03:42
you know, how much are we making on this thing? It's actually a really good metric. and banks are going to want to see that when they're going through the underwriting process. So, if you've looked at my underwriting calculator at all, then you're going to notice in there, there's a section that is for the debt services below that. So, you can figure out what your NOI is going to be, and then you can actually figure out what your total profit's going to be, your net profit's going to be after you
00:03:20 - 00:04:14
take out the the debt service payment. Then, the other one that I want you to be aware of is cash flow. So, this is the actual profit after all of the expenses are paid, including your mortgage. So, this is the money that's coming to you. And when it comes to assisted living, ROI is great. All of those metrics, all those investment metrics, they are good and things that I would encourage you to have an understanding of, know what your threshold is, uh, know what you're getting into, but a lot of people are
00:03:47 - 00:04:33
are looking at these from a cash flow perspective as well. And so, cash flow can be really important and something that I want you to be looking at. That's actually what we're going to be focusing on quite a bit here in this video is what that cash flow is going to look like rather than specifically the ROI. I'm going to give you the numbers and then you can back your way into an ROI based off of what your investment is going to be. Um so you can see what that's going to look like. But cash flow
00:04:10 - 00:05:04
is what I want to show you. So that's what we're going to be getting into here as as we dive deeper into this video. Now with that all said, the other disclaimer I'm going to give you is your investment amount. what you're putting into this is going to be very specific to you, specific to your loan product, um how much your down payment is going to be. There's a lot of variables that go into this. And so I'm trying to give you an idea of what expenses might look like, what your income might look like,
00:04:37 - 00:05:36
and what that cash flow could potentially be with the understanding that your situation could be different. So the numbers that I use, expenses or income may be different. So I want you to take that into consideration as well. These are examples. This is a way for you to understand, hey, this is how I could figure this out. So, please do not take this as exact gospel truth with what we're talking about. This is to help you and illustrate how you're going to figure out these numbers so you can
00:05:07 - 00:05:56
see if it works for you. They're somewhat realistic, but they're pretty close to real numbers, but they are not exact for your specific situation. That's what I'm going to tell you. Okay? So, make sure you um keep that in mind as as we go through this. All right. First up, we're going to be talking about expenses. You got to understand what they are. There's going to be five big ones that we're going to go through and then there's miscellaneous. Let's talk about payroll. Okay, so payroll is
00:05:31 - 00:06:27
let's say staff are going to be on average they're earning about $19 an hour. Okay, so you have a staff member, they get paid $19 an hour for each shift that you have. You're going to have one and a half staff there for every shift. So maybe you have a busier time of day. You've got two people there, but they're only there for 4 hours and then they leave and for the rest of that that shift, you just have one person. Okay, so that's the example here. You have about one and a half FTE, full-time
00:05:59 - 00:07:00
equivalent employees, one and a half people. Seems very reasonable, especially for smaller assisted living facilities. So, that's an assumption we're making. Let's say the administrator is going to make $50,000 per per year. So, administrator is $50,000 per year. Could be higher, could be lower. Depends on where you're at. 50. Pretty average right there. Um, so if I'm going to take all of that, the $19 an hour for one and a half staff members per shift and I have my administrator making $50,000 a year, my
00:06:28 - 00:07:30
payroll for that group of people is $17,847 per month. That's just payroll. So you can see already like this is huge expense. That doesn't include payroll taxes. So, that's going to be like an additional 10% on top of it. So, let's say add an extra $1,700 on top of that to give you an idea. You're getting really close to about $20,000 per month. And I've got to say, in some scenarios, that's even low. So, you got to keep that in mind. We're going to keep math simple. We're going to give you the real
00:07:02 - 00:08:13
numbers uh overlaying things. $18,000 per month in payroll. Okay. Debt service. This is the amount of money that you're paying for a house. Let's say you purchased the house $650,000. I don't It could be an existing facility, could be a house that you're renovating. $650,000. That's what your mortgage amount is for. You are doing a 25-year loan on it. 10% is the rate. You're looking at a monthly payment here of $5,98. Okay. So, we're about $5,900 there in just our debt service. Now,
00:07:38 - 00:08:32
let's talk about food costs. Our food costs, we're going to say $10 per resident per day. And I've got to be honest with you, this is a little bit high. I typically use eight $8 per resident per day as my number. And I know some of you think $8 per resident per day. There is no way in this economy that that is true. I have done this analysis several times. Uh it it actually plays out. It is absolutely true. So it's very possible. You have to remember generally you're working with
00:08:05 - 00:08:54
elderly individuals who don't eat a ton of food. And while you are providing snacks and and things like that in in your grocery budget, they're not eating that much and you're buying it in bulk. And so you get some discounts there as well. And and there's ways to really help you meal plan and take advantage of some of the other things that are out there. Okay. So we're going to be conservative. We're going to say $10 per resident per day. Here we have we're going to look at this kind of in the way
00:08:30 - 00:09:30
of we got three different facility sizes. One's a six bed facility, one's a 10 bed facility, and one's a 16 bed facility. So, in in that facility, six beds, we're going to be spending about $1,800 per month. In a 10 bed facility, it's about $3,000 per month. You know, you would say $10 per resident. $10 10 residents times 30, that's 3,000. That's how we get to that number. Now, 16 residents, we're at $4,800 per month in food. So, there's our food costs. Now, let's talk a little bit about insurance.
00:09:00 - 00:09:50
So, insurance, you're going to need property insurance, you're going to need liability insurance, you're going to need your workers comp insurance. Those are the three big ones that you need. Your area, you might need other special types of insurance. You work with an insurance broker. It's going to tell you your insurance, $2,000 a month. Probably going to be a little bit less, but going to depend on a lot of factors. Now, let's talk here a little bit about your utilities. So, utilities is your
00:09:25 - 00:10:18
internet, your waste, your gas, your power, TV bills, you know, whatever you want to throw in there. On average, I've seen our facilities kind of average out at about $1,000 a month. Sometimes you're going to have big months. You know, summer power bills are going to be high. Winter your gas bill is going to be high. Overall average is out about $1,000 a month. That's for my house. Yours may be different. If you own the house, you're going to know pretty clearly what those numbers are. Next is
00:09:51 - 00:10:50
miscellaneous expenses. So, what I'm going to assume those five big ones. So, we have wages, we've got food for the residents, we have insurance, we have our debt service, and we have our utilities. Those five typically going to take about 80% maybe as much as 90% of your total operating budget. Takes up a huge chunk. So if you can really hone in on those five big expenses, you're going to be, you know, 90% of the way to figuring out what the expenses are going to look like for you with your facility.
00:10:21 - 00:11:21
Now, your miscellaneous expenses, these are just the other things that happen. activities. You've got to decorations, just whatever else that that comes up, buying supplies, whatever. Office supplies, supplies for the residents, toilet paper, laundry, detergent, you know, all of those types of things, they're going to fall into this miscellaneous chunk. We're going to say about 20% of those main expenses. So, in our scenario here, we're going to say it's about 5700. 5,711 to be exact because I did math on
00:10:50 - 00:11:43
this. Okay. So, about $5,700 is is what we're looking at. Okay. Now, let's look at our expenses here. And what we're going to say here, again, we're going back to this six bed, this 10 bed, and this 16 bed facility to kind of give you an idea of what this might look like from an ROI perspective. Um, what your net profit's going to look like, you know, that cash flow coming in to you on a monthly basis. What's that going to look like? So, six bed facility. So, we're going to make an assumption that
00:11:17 - 00:12:14
$4,500 per month is what our residents are paying. We're also going to assume, and this is not a good assumption, we're going to assume 100% occupancy. And I I highly suggest that you be at 80 to 90% occupancy when you do your underwriting, but for this example, we're going to make an assumption here. And then we've got our six or 10 and our 16 bed facility. So, you can kind of see the differences here. Six bed facility, we have $4,500 per month, six residents, we have $27,000 in income coming in. Seems like
00:11:46 - 00:12:49
a good number, right? But if you remember back to our example of the staffing, that almost sucks all of it up. And then when we throw in our debt service, we don't have enough money to feed our residents at that point. So that's something you got to be aware of. So our total expenses in this example, we're at about $42,472, right? So we are losing $15,472 per month. Our ROI is not great. So, we are operating at a loss. Um, we're not in a good spot there. Things are not looking good. Now, I do want to
00:12:25 - 00:13:24
caution you and I mentioned this. We have our six bed facility video. I want want you to go watch that. This does not mean that a six bed facility cannot work for you. It absolutely can. But you have to get really familiar with the numbers. You have to know what you're looking at. You have to not just do all these blanket numbers that I'm doing to illustrate my purposes for you. You need to look at your specific situation because it might be okay. It might not, but it might be fine. So, you want to be
00:12:54 - 00:13:43
looking at that and and get really familiar with what you're looking at there. Okay. Now, let's move on to the 10 bed facility. We have a 10 bed facility, $4,500 per month. Again, we're assuming 100% occupancy, 10 residents. So, we got $45,000 in income coming in in a month. Our total expenses, they're a little bit higher than the six bed facility cuz we have more residents. We're paying a little bit more for food and things like that. Our total expenses in this scenario, we're going to say
00:13:19 - 00:14:23
it's $43,912 per month. So, we're getting a net profit here of about $1,000, close to $1,100 per month. But, we're making a lot of assumptions here. So, even this 10 bed facility in this scenario, oh man, I was feeling like I don't know if I want to do this. I I I'm breaking even for sure, but am I making millions of dollars? No. Am I making tens of thousands of dollars in a year? Yeah. Um, so you got to you have to look at this. Again, don't make the assumption that what I'm telling you is
00:13:50 - 00:14:56
is exact. I mean, if we changed our number from $4,500 a month up to $6,000, now we have $60,000 in income coming in at that $43 uh,000 in expenses, now we're cash flowing $16,000 a month. Huge difference, right? And so maybe the question is, is 4500 my base or do I need to cater to a group that does 6,000? Who do I want to be serving there? If I want to be doing something that's low cost, are there expenses that I can cut that don't ruin the experience for the resident but are still having
00:14:23 - 00:15:13
allowing us to be profitable? These are questions you got to ask yourself because uh if you don't understand the expenses or the income or how all of these things work, it man it can really ruin you as you get along. But if you understand them, you understand your market and you can make a four bed facility work if you have the right things in place. You just need to understand what that's going to look like for you. If you need help with it, make sure you go and grab the launchpad. We're going to have that linked down
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below. It helps you build out the foundation and really focus on this underwriting piece to see if it's going to be profitable. Now, let's move over to our 16 bed facility. So, 16 bed facility, $4,500 per month. We're getting $72,000 in income, which is great. That's 100% occupied, obviously. But now, let's look at our expenses. Expenses, again, a little bit higher. We have more residents. we're going to be at $25,928 per month here. So, our our net profit on a monthly basis is
00:15:20 - 00:16:25
$25,928 per month in this scenario. Like all of a sudden, that number that you have heard from all kinds of people on YouTube, you know, $10,000 per month, I'm cash flowing this XYZ. Um, now it becomes true. you you you you can see that here in the numbers at this price point at all of the the the examples that I've given you. It can make it can start to make sense. You can start to cash flow. But again, I got to caution you like 100% is that realistic. You you have to be so comfortable with these
00:15:53 - 00:16:40
numbers. You have to know what you're getting into. You cannot just make assumptions that everything's going to be fine. You cannot do that. That's what I'm here to do to help coach you. And if you join my mastermind program, which I'd love to have you do. Go to ali masterastermind.com and apply for that. I'm going to give you the feedback that you need to see if this is realistic, you know, are you missing numbers? Are are you doing the things that you need to be doing? I will guide you. I will
00:16:17 - 00:17:11
help you out through the process and make sure you don't miss steps and make a bad investment. But I want you to go into this with the understanding that small facilities have very tight margins. You can still be profitable. big facilities are going to have higher margins, but there's a lot that goes into caring for 16 versus six residents. And so, what are you going to be comfortable with? You have to understand those things. You have to you cannot go into this blindly. You need to go in
00:16:44 - 00:17:46
with your eyes wide open and you need to not make assumptions. You need to look at the numbers for real to make sure that it's going to work. So, what does this mean? Again, disclaimer, every single deal is unique. location, financing, operations, all of those things can drastically change for each situation and they will change the deal drastically as well. So, you cannot use this example as the thing that says, "Hey, yep, Brandon said 16 beds, I could cash flow $25,000 a month." Yeah, it's
00:17:15 - 00:18:06
potential. Yeah, for sure. You can also do it with a four bed facility if you were charging people $15, $20,000 a month. Like, I don't know. That could be something that you want to do. every deal needs to be taken into consideration on a case-by- case basis. So, that's the disclaimer. So, if you are going to be looking at assisted living as an investment and you want to know the ROI and the cash flow and all of those things, use the example that I just gave you. Plug in your numbers there. Use the calculator. Go to
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assisted livinginvesting.net. Grab the the calculator, big blue box in the top right corner. You're gonna see that thing. You're gonna get it and you're going to plug those numbers that we talked about here for your situation. and you're going to plug those numbers in here and you're going to see if this is going to work for you. And if it doesn't, don't get discouraged. Find another opportunity. There there is a deal out there. I promise you there's a way to make things work. You just have
00:18:04 - 00:18:56
to figure out what they are. I'd love to help you do that. You can do that through applying to the mastermind program, ali.com. We covered a ton of information here in this video. If you enjoyed it, if you found it helpful, make sure you like the video, subscribe, and ring the bell as well. I just want you to know going into this like what is real and what's not. and and how can you do this? And you you just have to understand what you're getting into and not just follow somebody blindly because you heard them
00:18:30 - 00:19:25
on YouTube on a short that said that, oh, I'm making $10,000 per month and my work life is great. Don't just assume that that's happening. You got to put in the work and make sure that it really is working that it's going to cash flow that that much. It's possible. It is 100% possible for you to do that, but it depends on the situation. So, you have to understand that as you get into it. Again, like the video, subscribe, ring the bell. Make sure you are doing those things so you get notified every time we
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put out content on Tuesdays, on Thursdays, um, so I can help you out. Does residential assisted living sound interesting to you, but you don't know how to get started? At assisted living investing, I'm here to help beginners like you launch their assisted living business in the next 12 months. I love helping and coaching people. It is one of my favorite things to do. I'd love to do that for you. And I want you to remember that it doesn't take a lot, just a little bit. Just keep going step
00:19:19 - 00:19:40
by step by step and I promise you if you do and you are consistent and persistent you are going to be successful. Thanks for watching and have a great day. [Music]
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