Can a Care Home with 5 Beds Actually Be Profitable?
Oct 22, 2026
If you want to start an assisted living business, a five-bed home might seem like a great place to begin. But I’ve seen how easy it is to start a small care home and find out later that the numbers do not work. Let’s look at the math so you can make a smart choice before you invest your time and money.
Want the full breakdown? Watch the video below👇
You Need to Know Your Numbers Before You Open a Care Home
I’ve talked to hundreds of people who want to start their own assisted living business. One of the biggest questions I hear is, “Can I make money with just five beds?”
The answer depends on your numbers. You need to know how much money you can bring in and how much it costs to run your home.
I once spoke with a student who started a six-bed facility. After running the business for a while, they found out they were not making money. They were even losing money each month and decided to sell the facility.
I want you to avoid that mistake. Before you open your doors, take time to understand the math.
đź’ˇ Remember this simple rule: Revenue minus expenses equals profit. The money you bring in is not the same as the money you keep.
You Can Increase Revenue by Adding Beds or Charging More
There are two main ways to increase revenue in your assisted living home.
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Add more residents. More residents can mean more money coming in each month.
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Charge the right monthly rate. Your price should match the care, service, and experience you provide.
Let’s say you have five residents and charge each one $5,000 per month.
Five residents multiplied by $5,000 equals $25,000 in monthly revenue.
That sounds good, but you still have to pay your bills. You also need to make sure your home has enough space for the number of residents you plan to serve.
In many states, room size rules affect how many people can share a room. The video uses 100 square feet per resident for a single room and about 80 square feet per resident in a shared room as examples. Always check your local rules, zoning requirements, and fire safety rules before making a plan.
Shared rooms may also help you make better use of your space. But you need to think about each resident's comfort, privacy, and needs.
You Must Plan for the Five Main Costs of Running a Care Home
I call the main costs the “WIFE expenses.” These are the costs you need to plan for before you open your doors.
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âś… Wages: You need staff to care for your residents. This is often your biggest expense.
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âś… Insurance: Your business needs the right insurance coverage.
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âś… Food: You need to feed your residents every day.
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âś… Energy: You must pay for power, water, and other utilities.
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âś… Debt service: You need to make payments on any business loans.
Let’s use the example from the video. If your five-bed home brings in $25,000 per month, your estimated costs might look like this:
| Expense | Monthly cost |
|---|---|
| Wages | $12,000 |
| Insurance | $1,000 |
| Food | $1,500 |
| Energy and utilities | $1,000 |
| Debt service | $5,000 |
| Total | $20,500 |
These are example numbers, not a full budget. They leave out other costs, such as supplies, repairs, and unexpected bills.
With $25,000 in revenue and $20,500 in these expenses, you would have $4,500 left before paying those other costs. That means your actual profit could be much lower.
You Can Lose Your Profit When Even One Resident Leaves
Small care homes can face a big problem when a resident moves out or passes away.
Using the example of five residents paying $5,000 per month, here is what happens when your occupancy drops:
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Five residents bring in $25,000 per month.
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Four residents bring in $20,000 per month.
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Three residents bring in $15,000 per month.
Your bills do not always drop when a resident leaves. You may still need the same staff, insurance, and building payments.
This is why I encourage you to plan for more than just a full house. Ask yourself what would happen if one or two beds stayed empty for a while.
You should also check whether your monthly rate covers your real costs. A home that looks profitable on paper may struggle once you include every expense.
You Should Look at the Bigger Picture Before Choosing a Five-Bed Home
A five-bed home can be hard to make profitable, especially if you charge $5,000 per resident and have high operating costs. You may have more room to work with if you can safely serve more residents or offer services that support a higher monthly rate.
For example, the video compares five residents paying $10,000 per month with ten residents paying $5,000 per month. Both options bring in $50,000 in monthly revenue, but the costs will differ based on staffing, care needs, room setup, and services.
Do not assume that a higher price or more beds will automatically make your business profitable. You need to check local demand, your costs, room sizes, licensing rules, and what families are willing to pay.
I also recommend learning the licensing rules before you decide how to operate. Even if you are considering an unlicensed home, insurance, funding, and other requirements may be harder to manage. Check your state's rules and prepare your policies, procedures, and staffing plan before opening.
Wrap Up
A five-bed assisted living home may bring in money, but that does not mean it will make a profit. Before you start, work out your revenue, list every expense, and test what happens if one or two residents leave. A strong plan can help you build a business that supports both your residents and your team.
If you need help creating a business plan for your assisted living business, check out the Business Plan Checklist.
And if you’re ready to figure out your next step, join me for the next Roadmap Challenge, where I’ll walk you through how to get started.
Show full transcript 👇
Transcript
00:00:00
I talked to literally hundreds of people who are trying to start their own assisted living business. And one of the most frequent questions that I hear is, "Can my five- bedroomedroom home actually be a profitable assisted living facility?" And in today's video, I'm going to tell you if it is, if it's not, we're going to draw the math up on the board and help you understand if five beds can be profitable and in what scenario it will be profitable. So, if you're interested in learning about
00:00:26
that, today's video is going to help you understand a ton about how assisted living works and how the finances work. And if you find this helpful, make sure you go check out the pinned comment down below to join me in my free workshop. All right, before I get into the math of showing you exactly how the math is going to work here though, I want to tell you a little bit of a story. A student of mine who watched my content on YouTube and was able to use that to start their own assisted living
00:00:51
business, which is pretty incredible on its own. I was talking to them recently and they said, "This was so cool. Like, you helped me get started." They had a six- bed facility and fast forward a little bit and they were trying to sell their facility. It was a six- bed facility and what they found out after operating their business for a period of time is they weren't making any money. It was actually really, really hard for them to do in a home that has five or six beds and actually make a profit. And
00:01:20
if they had worked with me previous, I would have told them this is why it's not going to make sense. We would have run the numbers. We would have done what I call foundation first to help you understand the numbers. And that's what we're going to be talking about in today's video. Because what I don't want you to do is what my student did and run into this and get started and then find, oh my gosh, I'm actually not making any money with this with this opportunity and I need to sell it because I'm not
00:01:49
only not making money, but I'm I'm potentially losing thousands of dollars every month when it comes to this. So, let's make sure we understand exactly how the numbers work when it comes into assisted living. Now, for those of you who are my math people, you're going to be like, "This is super easy math." For those of you that are not, and and you're just like, "Uh, I I don't like math. Why are we doing math here on YouTube?" This is easy math. If you can
00:02:12
do addition, subtraction, multiplication, you're going to be fine. This is actually really simple to help you understand exactly how the math works. We're going to draw five up here in the top corner so that we can revert back to that every single time we're doing this. And something I want you to understand is when you're working on a five bedroomedroom facility does not need mean you need to have five bedrooms. So we're going to really quickly level set on what this looks like. In most states there's going to be
00:02:39
a rule uh there's going to be some rules and regulations around zoning and how many people you're going to talk to the fire department. They're going to tell you all of this information. But in most states for a single room you need a 100 square ft per resident. Okay. So this is a 10x10 room on average. Okay. So we need that. If we have that big of a room, we can have one resident in there. If we want to do multiple residents, then we need to have usually it's 80 square ft per resident. All right.
00:03:15
So that would equal, if we have two residents in in a room, and I I would probably recommend you don't do more than two, but if you're going to do that, then we'd be looking at 160 square ft, which equals 16 by 10. Okay? So that's the type of home that we're looking for when we get into this. So when I tell you, hey, we got a 5- bedroomedroom home or we have five beds, we want to take this into consideration. How big are my rooms? How many people can I fit in there? And we want to
00:03:40
remember this for the phase when we're moving past this and looking at, okay, how can I maximize this space and actually put more residents into a room? And I have I've talked about this a lot about the idea of shared rooms in assisted living. And I think it's something that's important and a lot of people aren't okay with it. And I don't blame you because it it can feel a little bit um a little bit sticky and a little bit um icky really. But if you do it the right way and you are creating an
00:04:10
atmosphere that uh is good for the residents and you're taking into consideration who the roommate is and you're making sure that it doesn't feel like a tiny room, you're going to have a lot of success when it comes to doing multiple residents in a room. We actually do shared rooms in my facility and what we have found in talking to our residents is they actually like this because then they have a built-in buddy, they have a roommate, they have somebody to share things with and we're able to
00:04:34
create a great atmosphere. Now, it's not for everybody, um, but it is something that you might want to take into consideration so you can maximize the amount of rooms that you have and the amount of beds that you're able to put in your facility. We're going to show you exactly how the math works and why you might want to have more than five beds in your facility. The other thing that I want to tell you as I'm erasing this is that when it comes to smaller facilities like this, often times you
00:04:58
may get tempted to go the route of being an unlicensed facility. Now, I want to caution you against that. It's it does seem like it's the easy route to go and often times it is. And if you're doing a small facility, something like five beds, you can probably get away with doing unlicensed. But where I would caution you is often times it's going to be harder for you to get your insurance. Funding is going to be more difficult when you go the route of being unlicensed. It's something that um
00:05:26
you're you're probably going to still need to have all of the things in place that you would need in a licensed facility. You're going to want to have a manager. Maybe it's not a licensed facility administrator, but you're going to want to have a manager. You're going to have the staff. You're going to be going through the process. And if you go unlicensed, I strongly encourage you to still treat it like a licensed facility. Still have your policies and procedures. Still treat it that way in case the
00:05:49
state ever comes back and says, "We don't do unlicensed anymore. You need to get licensed." That way, you're prepared and you can jump into this. All right. Now, with all of that out of the way, let's talk about really quick the equation for helping you figure out the profit that you you're going to have in your facility. All right, so up here we have revenue and then we're going to minus out from there our expenses. Okay? And once we do that, then we're going to equal our profit. This is this
00:06:24
is the math and and how that's going to work for us. Revenue minus expenses equals profit. Super easy. And what I want you to understand is revenue right here does not equal profit. It is it's totally different. Okay. So, if you go at this and you're like, "Oh, cool. I can make a lot of money with this." You have to realize we're running a business here and we're going to have a certain amount of expenses that we need to account for. So, we're going to keep the
00:06:49
math here pretty simple. uh because I want to use it for illustrative purposes. These are not like vetted numbers. This is not deep underwriting or anything like that, but it's going to help you see exactly how these five rooms here are going to allow you to be profitable or not. And that's what we want to talk about here in this video. So, let's see. In here, we have two income levers. Okay? So, for for our revenue, we have these are these are levers. These are things you're going to
00:07:17
pull. All right? Okay. We have lever one, which is going to be the number of residents that we have in the facility. And lever two is going to be the dollar amount that we have um that we can charge for it. And we're just going to multiply those things together and that's going to equal over here our revenue number. Okay, this is how how we figure out our revenue. So, if I have five residents in a home and I'm able to multiply that by $5,000 per month, which is a pretty reasonable amount for you to be charging, then the
00:07:58
total revenue number that I'm going to have here is $25,000. Okay? So, that's what we want to understand. This is how revenue works. number of residents multiplied here by the dollar amount per month that people are going to charge. It's that simple. Okay. Now, what I really want you to understand is this $25,000 number right here. That is again revenue. It is not the profit. Okay? This is the revenue that we're able to generate. So, in our example here, we're going to say, hey,
00:08:32
we got five residents. Again, five residents, $5,000 per month. we're going to be able to bring in $25,000 in revenue. Okay, so we're gonna go ahead and erase this. Where's my eraser? Um, we're going to write our revenue number up here at 25,000 cuz we've got five residents at $5,000 per month. All right, so we've got $25,000 in revenue. Sounds good, right? That seems like it seems like a pretty good number for us to be shooting towards. Um, and I'm sure you're thinking, "Okay,
00:09:05
cool. I'm I'm making $25,000 a month. This is actually, you know, this sounds pretty good." You're thinking, "This is something I could actually make work for me." And I'm I'm here to tell you as well that this is probably a realistic number. $5,000 per month at five residents, $25,000 in revenue on a monthly basis seems very reasonable when it comes to the world of assisted living. Okay. But now, let's understand the expenses here. and I teach you um and if you want to learn a little bit
00:09:31
more about this, go to the pin comment down below and join me in my next workshop. What I call the wife expenses. Okay, is an acronym and it's uh it it stands for the the different pieces of expenses that you're going to have in your facility. Okay, the A is our wages. Insurance is over here on the I insurance. This is our food. We got to got to get food. We got to pay. We got to feed our residents, right? We got to buy the food. E is for the energy. So, this is like our utilities. And then D is our debt service. This is
00:10:19
going to be like the loans that we have on the business. Now, these five expenses, and there I call them the wife expenses because you're married to them. You have them in every single facility. I know it's a little bit cheesy, but it's true. These five things right here are going to be [laughter] 80 to uh 90% of your total expenses. Okay? So, it's not all of them, but it's going to get you a pretty good number here. Now, we need to understand exactly how these work. Your wages will always be your
00:10:51
biggest expense when it comes to this, unless you have some astronomical number for your death service. All right. So, when it comes to wages, we're going to say in this example, we've got about um $12,000 per month in wages. Look at that. We had $25,000 per month in revenue. We're minusing out now 12,000 just in wages. And I'm I'm I'm here to tell you that that's probably a low number as well. Okay, this is where you really have to be careful, but we need to understand that wages is is a
00:11:24
huge amount. Like half of that revenue is going to wages like automatically. Just snap your fingers. There it goes. All right. Our insurance is in a smaller home like this, especially if we're licensed, it's going to be a little bit less. We're probably looking at somewhere around $1,000 here for our insurance. You know, give or take a few hundred. Our food, we're going to budget here. And this seems pretty high to me, frankly, but we're going just I'm going to make the math really easy for myself
00:11:49
cuz I'm trying to do this for you on YouTube, right? We're going to say it's $1,000 for food per month. And there's a really simple formula to figure this out. I call it the PRPD method. So, per resident per day. PRPD. So, we would take our our resident number. Again, five residents right here, right? Five residents. We're going to multiply that by let's say $10 cuz it's just really easy math for me. Again, doing this live. Can't can't make this too hard on myself. And then we're going to multiply
00:12:17
that by 30 cuz we have 30 days in a month, right? So 5 * 10, that's 50. Times that by 30 over here is going to be 1,500. Is that right? Yeah, that's 1500, right? So that that gives us um a pretty decent amount here. We're looking at this. We're saying a,000. I'm probably underbudgeting it. Sorry, I misspoke a little bit earlier, but it gives us an idea. All right, we're at $1,500 there um uh for for our food and you but this is how you can figure out really quickly how much money you're
00:12:48
going to need to budget for five residents. And if you're like a $10 isn't enough, just change that number to 125. Well, whatever number you're comfortable with is what we want to do here. All right. Now, we need to understand as well our energy, our utilities are probably going to be at around $1,000 per month as well. Okay. And then our debt service on here, we're going to say that this is around 5,000. Okay. So, if we add all of those things up, our expenses in this scenario are at
00:13:24
$20,000. Again, super quick underwriting. This is not scientific. We're not we're just using really quick round numbers to see and illustrate how this is actually going to work for us. All right? And I what I want you to know and see here is this is with five residents. This is going to show us, hey, are we going to be able to be profitable or not? So, we have $20,000 in expenses right here, which as you can see here from just a quick math perspective is plus $5,000. Yay. We're we're profitable. Woohoo.
00:14:01
Yeah, we're This is cool, right? Five residents in a home, $5,000 per month. We got enough revenue coming in to cover the expenses. We're profitable. Now, remember, there's a few things. I'm probably a little bit low on my expenses here. I'm This is only 80 to 90%. So, really, like I'm cutting into this. This is what I'm hoping you see here is five residents. This is actually maybe not the best situation. So, remember we have two levers we can pull. So, we could pull one of these levers and get more
00:14:31
residents in, or we could pull another lever and we can get we could charge more for it. But at five residents and $5,000 per month, this might not work. And what happens here, by the way, what if let's let's show you this this right here. Remember, we have our two levers. Okay, we have the number over here and we have the dollar amount right here. All right. So, we have five residents at 5K equals $25,000 in revenue. Yay. That's good, right? Well, what if one of our residents over here passes away or they
00:15:06
just decide to leave and now we're at four residents at 5K? That equals 20,000. Now, oh no, now we're now we're breaking even. We're just breaking even right here. What if what if two residents leave and and or pass away or something like that and we have 5K? That's a $15,000 per month in in our revenue number. Now we're losing $5,000 per month. And it happens like that. We have had two or three residents pass away in like a 2 or 3 week span like multiple times in running our facilities. So this is
00:15:38
something like this is real. Like these are numbers that you can very quickly dry up your profit here super fast. What if your desk service ends up going higher or you've got to pay overtime or something like that with wages and all of a sudden your expenses shoot up? This is where having a five bed facility right here, it really makes the numbers hard, especially if you're charging something like $5,000 per month. Okay, so this is where I would tell you pump the brakes on a 5-bedroom home. Unless,
00:16:08
let's do this. Okay, we're going to erase this because I want to show you a table here that's going to show you a little bit of how the revenue works and how you can take pull each of those different levers to help you make more money, make more profit. Right? As much as we want to do this to help people out, we also have to make some money or else we're not going to be able to to work and and sustain a business. All right? So again, we have our two levers here. We got lever one, we've got lever
00:16:41
two. We're going to multiply them together. Number of residents, we've got the dollar amount right here. All right, so scenario one, what we've been working through, we have 5 * 5K equals 25K. Okay, that's our baseline. That's what we want to look at. Now, what happens if we can pull this number right here? We still have five residents, but what if we can figure out a way to charge $10,000 per month? Now, I know I'm making a huge jump here, right? 5,000 to10,000, but I've got single rooms.
00:17:16
I've got um you really nice amenities. We're we have a private chef. We're making this like a really nice spot. We're an affluent area. We can charge for this $10,000 per month. And this is, by the way, I know of people that do this. This is not hard. I know people that charge $15,000 per month for assisted living, which I know some of you are like, "No way. There is no possible way." But I promise you it is cuz I've seen it happen. Okay, that's going to be $50,000 in revenue. Now, if
00:17:44
you remember what we had previously with our So, we had our our revenue up here and then we minused out the expenses, right? And then that equals our profit over here. If that expense number was at 20K, now we look at this and oh, look at that. That's a big gap right there. Right, cool. We just pulled a lever. We pulled one of these levers. We're in a good spot. We're much better. Okay. Now, what happens if we we looked at those those room sizes, right? We've got a 10x10 room over here with a single
00:18:21
resident or we have some big rooms in here and we have a 16x10 room and we can fit two residents in there. One resident, two residents. What if we have big rooms and we can fit multiple residents in a in a room? We take this and we double this and we're still charging people 5k per month. that 10 10 residents times $55,000 per month is again $50,000 right here. Now, we have more residents. Our expenses are probably going to go up a little bit. We're going to have to probably have a little more staff. We're going to pay a
00:18:56
little bit more for food. You know, those types of things, but it's not doubling. I'll tell you that it's not going to double just because you did it. And so, you still have a pretty big margin here. Now, let's just go crazy here. And let's say, and this is what I would encourage you to do, rather than doing five beds and saying to yourself, I have a home that I could do this in and I could put five residents in it and oh man, I could get $25,000 in revenue right here. I want you to
00:19:25
pump the brakes on that and think to yourself, how can I maximize and pull these different levers? How can I get more residents in? How can I charge more money? How can I make this this work? Now, let's say we go crazy and we pull both levers. All right, we have 10 residents and we are charging $10,000 per month for that. That puts this number at $100,000 per month. Now, look at the gap. Yes, we've got more residents. We're probably doing more amenities. We're we're making things up. But even if this number right
00:20:02
here triples, and it probably won't, but even if it did at that number right there, this is $60,000 right here. Okay, $100,000. Is that more than $60,000? Yes, it's $40,000 more. And even at this where I had 10 residents at $10,000, that means I could have four residents leave and still be breaking even, still get $60,000 in revenue coming into the business. This is why having five residents in a home, I got to tell you, I think it's a horrible idea. I don't think you should do it. I I really I
00:20:41
honestly don't think that having a five- bedroomedroom home is going to make sense for you because these numbers prove it out. the more residents we have and the more money we can charge, the more profit we're able to generate and the more we're able to sustain a business and then give back to our residents. And maybe we create a nonprofit or we create scholarships to let other residents come in and and we're able to like allocate some certain funds to to bring people in that maybe
00:21:05
they can't justify the 10,000, but we still want to help that population. It's when we do these things and we're able to stabilize our business and not feel like we're nickel and dimming everything and doing things because we have a charity that we're able to have success and we're able to bring more people into the facility. We're able to help more people and have a much bigger influence on the lives of the people in the communities that we are trying to serve. That's what I love about assisted living
00:21:31
is we get to do this, but we can't do it if we're running a charity. If we're doing five beds at $5,000 per month, and we're losing $10,000 a month, we can't do that. We're doing a disservice to ourselves, to our staff, to their families, to our residents, and to their families because we can't create a facility that these people can stay in. And as much as you might think that I can do this better than anybody else, and I can't charge that much because that is too much, people will not pay
00:21:56
it. Unless you can get to a point where you feel comfortable doing this, you're not going to be successful. Okay? So you have to realize that this is the reality of the situation. You you have to understand the math because what I don't want you to do is get into the situation like my student did who didn't work with me directly and rushed into this and they they got started and they got it done and I'm so proud of them for doing that and then come back to me a little bit later and
00:22:26
say, "Brandon, I'm losing $5,000 $10,000 per month. I cannot sustain this." And as much as I want to serve my five residents that I have in my home, I can't do it because it's just it's just not working for us. I want you to avoid that. I want you to go through it the right way. I want you to understand the numbers. I want you to figure out, hey, there's actually a process for this. And what I teach you again workshop in the in the link down below in the pin comment is the focus
00:22:55
framework. And you need to understand there is a process for getting started on your assisted living journey. And if you follow that process and go through it correctly and go through it the right way, you're not going to get yourself in a bad situation where you're losing money. You're going to realize five residents is probably not enough. And you're going to realize that I can make a much bigger difference if I can charge higher prices and have more residents that I can serve. And then you're not
00:23:20
trying to nickel and dime this and trying to put yourself in a bad situation just because you know you can do it better and you want to give and you want to create a charity because that's not going to be successful. is not going to allow you to make a difference in the lives of the residents and the people that you want to uh impact. Now, if you found this video helpful, I've got another video for you right here that's going to tell you, can a two or a three bed facility be profitable or not? And hey, if you watch
00:23:45
this video, you know it's not going to work. But go go go check that video out because it's going to tell you a lot about the process there and help you understand exactly how this works.
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