Do You Really Need a License to Start an Assisted Living Business?
Apr 15, 2026
If you're thinking about starting an assisted living business, one of the first questions you’ll ask is this: do I need a license to get started? I’ve seen a lot of people get stuck right here, unsure which path to take. Let’s make this simple so you can move forward with confidence.
Want the full breakdown? Watch the video belowπ
What a Licensed Assisted Living Facility Really Means
When you go the licensed route, the state is involved. That means rules, inspections, and clear standards you must follow. It can feel a little scary at first, but it also gives you structure.
I’ve found that being licensed allows you to offer a higher level of care. You can help with things like medication management, which unlicensed homes usually cannot do. This also means you can serve more residents and meet more needs.
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You’ll need to handle applications, inspections, and ongoing compliance
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You can provide more services and charge more for care
Why Unlicensed Homes Feel Easier to Start
A lot of beginners are drawn to the unlicensed path, and I understand why. It’s faster, simpler, and has fewer barriers.
You can often start in a regular home with just a few residents. That makes it feel more doable, especially if you’re just getting started and don’t have experience yet.
I’ve seen people use this as a stepping stone. They open a small unlicensed home, gain experience, and then move into a licensed facility later.
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Lower startup costs and faster setup
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Great way to gain experience as a beginner
The Hidden Trade-Off: Income and Growth
Here’s the part most people don’t think about at first. When you stay unlicensed, you limit how much you can grow.
You’ll usually have fewer residents, often around four to six. You’ll also be limited in the type of care you can provide. That means your highest-paying residents may need to go somewhere else.
I’ve seen this impact profitability more than people expect. Fewer residents and lower care levels can cap your income pretty quickly.
π‘ More residents + higher care = higher revenue potential
π‘ Fewer residents = limited growth and cash flow
Why Licensed Facilities Have Bigger Potential
If your goal is to build a long-term business, licensing can open more doors. You can serve more residents, provide more care, and increase your pricing.
There’s also a trust factor. Families often feel more confident choosing a licensed home. It’s not always required, but it can make a difference.
That said, it does come with higher costs and a longer timeline. You may need renovations, more staff, and time to get approved.
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Higher income potential with more residents
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Stronger credibility with families and referrals
How to Choose the Right Path for You
This is where you need to be honest with yourself. There is no one “right” answer. It depends on your goals.
If you want to move fast, gain experience, and just get started, unlicensed might be the best first step. It helps you take action instead of waiting.
If you’re thinking bigger, like building multiple homes or creating long-term income, then licensed is likely the better path.
I always tell people to think about their vision. Close your eyes and picture your future business. Is it a small, cozy home with a few residents? Or is it a growing operation with multiple locations?
π‘ Your vision should guide your decision
π‘ Action matters more than perfection
If you’re feeling stuck and need help deciding your path, you can check out the Foundation Builder Program to get clear on your next step.
Wrap Up
You don’t always need a license to get started in assisted living, but your choice will shape your future. Unlicensed can help you move fast and learn, while licensed can help you grow and scale. The key is to choose a path and take action.
If you need help creating a business plan for your assisted living business, check out the Free 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 π
Transcript
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Hey, are you trying to figure out if a licensed assisted living facility is the right thing for you or if you should do something that's unlicensed and what are kind of the pros and cons? What what decisions should you be making as you're getting into that? That is exactly what we're going to be talking about in two in in today's video. I'm super excited to dive into this topic with you and help you kind of navigate this process and determine if this is the right fit for you and what path you should be
00:00:30 - 00:01:17
going down. So, if that's what you are looking for, this is the video. Uh, welcome in. I my name is Brandon Gustafson. I help first-time assisted living entrepreneurs launch profitable purposedriven businesses creating prosperity, purpose, and peace in their lives. I am super excited to be chatting with you about this topic because I know it's something that a lot of people are struggling with as they're trying to to get started on their path to launching their assisted living business. They've
00:00:54 - 00:01:45
heard about the idea of being unlicensed. They they like it because it feels like, hey, this is a little bit lower barrier to entry. Um, you know, it seems like something that that might be a good fit for me. And I just want to clear up a few things in in this video for you. So, um, what we're going to talk about today is which is best, licensed versus unlicensed. We're also going to talk about kind of the pros and cons of each of those so you know what you're getting into, um, and help you
00:01:19 - 00:02:11
make a better decision. And then I'm going to give you a little bit of guidance on which one you should choose, which path you should be going down for your specific situation, and make sure that uh, you're you're you're going forward with confidence uh, that this is the right fit for you. I just need to make sure that we are live. Looks like we're live. Uh my my software that's doing this has been having issues recently. So uh we're we're I I hopefully we're live. If not, we'll
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repost it later. Um I do see I've got people in here. So that's good. Anyways, uh let's see. Let's talk about first what a licensed facility means. Like what does it actually mean to be a licensed assisted living facility? So when it comes to this, it means that the um the state is regulating it. They're they're making sure that it hits a certain level, a certain standard of care, if you will. It's regulated. Um there's compliance requirements that you have to meet and that can feel really
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scary to a lot of people because you're just like, uh, I don't know if this is is if this is going to work for me or not. Um there will be an application. There's going to be inspections that that happen. you're going to have to have policies and procedures, which by the way, even if you're unlicensed, I highly recommend that you do policies and procedures because it is kind of your your road map of how you are going to run your business. So, even though it's not necessarily a requirement, I
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still would encourage you to do that. And uh there's going to be some ongoing oversight. So, you want to be aware of that and and what that's going to look like for for you know, for you. So, you're you're going to need to do those things. It's also um something that's kind of cool is it allows you to provide a higher level of care for your residents and meeting their needs. So when you're an unlicensed facility, there's a kind of a cap for what you can do because while assisted living does
00:03:11 - 00:04:05
not provide clinical uh care in any aspect. Um anybody that needs clinical care, you're going to have to bring in a nurse or discharge them so they can go receive that. But there is a little bit of uh medical attention that does happen inside of assisted living specifically when it comes to medication management and that is something that unlicensed facilities um typically are not able to do because that is a regulated area and so you have to be very careful with that when when you're working with this. And
00:03:38 - 00:04:36
another thing if you are thinking of accepting Medicaid residents then you're going to have to become a licensed facility. So, part of the application process to become a licensed or to become a Medicaid uh provider is to be a licensed uh facility, a licensed provider in that state. So, if you if that's something that you want to do, and I know not everybody does. I think it's the best kept secret. I think it's one of the best paths to becoming a profitable assisted living um that is uh
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Medicaid. But if if that's not something you want to do, then it's probably not going to matter. If it is, then uh you're going to need to become a licensed provider. So, that's what a licensed facility is. It's kind of what it means. Uh there's this extra regulation. If you are one of those people that you're like, "Yep, I want to do licensed," type in licensed down below. Would love to see you. And if you're one of those that's thinking, uh, you know, unlicensed is what I want to
00:04:29 - 00:05:34
do. Type in unlicensed because now we're going to talk a little bit about what is not allowed or what is allowed. Sorry, what what is allowed in an unlicensed home. So these are the things that you can do in an unlicensed home. One, there is minimal regulations. So this is depending on the state or the location that you're in. There's a lot less regulation to do this. There's a much lower barrier to getting started. Typically in an unlicensed home, you're also going to be serving fewer residents
00:05:02 - 00:05:48
that need lighter care. So that is, I think, why this is very appealing to people is, oh, cool. I've got a, you know, I've got I already have an existing, you know, property. I could just turn that into assisted living. I've got four bedrooms. We could do four to six residents. You know, uh, do this really easy. Uh, light care. Um, and and, you know, I can get a lot of income coming in. And, and that's true. You potentially could, but what you have to understand is there are also a lot of
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expenses when it comes to running this business. And this is not uh, like a traditional real estate play where they just live there and and they pay the bills and everything like they're paying you and you have to provide care and provide meals and you have to provide um just everything uh for for these residents. And so while yes, it can it is true you could have light care and fewer residents, it does decrease your pathway to profitability um a decent amount because you're limited in how
00:05:56 - 00:06:54
many residents can come in and the amount of care you can provide. So you just need to be careful with that. Doesn't mean you shouldn't do it. Uh let me be clear there. It just means you should spend some time and understand the numbers to see if it's going to be profitable or not. So you can see if you're going to to be successful here or not. The other really cool thing about unlicensed is uh it is a faster pathway to get started up um with fewer approval requirements. I've actually had students
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who have started off unlicensed serving whatever they can in their area in the home while they're working on getting licensed. So, they function as a an unlicensed facility while they're working on getting the license. That means, you know, maybe they have four to six residents in the home. Uh they're they're bringing them in, they're caring for them, uh all while working on getting the license, and then once that, you know, clicks into place, then all of a sudden now they can open the doors,
00:06:48 - 00:07:43
they have more residents coming in. So, it can be a little bit of a stepping stone to getting you there. Kind of a cool idea, right? Um and there are lower barrier to entry for beginners. So, something that a lot of people struggle with is trying to get funding, right? And a big thing that uh lenders want to see when they're trying to fund you is do you have experience? And if you don't have the experience, it's really hard. But you can get into an unlicensed facility um you know, start an
00:07:15 - 00:08:07
unlicensed facility at a much lower uh barrier to entry. Uh get in there uh start working with people even as a beginner and then a year, two years later, now you have that experience. You have that on your resume. you can take that to a lender and the chances of you getting the funding that you need at that point are going to go up um quite a bit because you have the experience, you've run the business, you know the ins and outs, you know what to expect. Okay, so that's where I think unlicensed
00:07:41 - 00:08:41
can make a lot of sense is you're working on that. So, which one are you thinking? Put it in the chat below uh in the comments. Licensed, unlicensed, which one are you leaning towards? Why? You know, tell me a little bit there. Um what does that look like? Now, let's get into the pros and cons uh of these. Let's start with our licensed facilities. So, from the reason why you might want to do a a licensed facility is there is higher revenue potential and that's because you can have more
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residents. You're not capped at four to six depending on your state. Um and you're providing higher levels of care for them. you're able to do things like medication management um that you can't do in an unlicensed facility and that means that higher level of care you're able to charge more for uh for the services that you provide. It also uh gives you a little bit more credibility amongst the the families um and other referral sources. uh just it is I would say uh not being licensed is not a a
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deal breakaker for a lot of people, but it does just like subconsciously give them a little bit of extra um confidence that you know what you're doing and that you're a licensed facility and that holds a little bit of sway. Okay, so that's that's a that's a big thing. Now, the reasons why you might not want to do a licensed facility are um there's increased costs for compliance um and staffing and upgrades. So, because you have more residents in there, you're going to have more staff. Um, the
00:09:14 - 00:10:08
upgrades or renovations you have to do on your home that you wouldn't necessarily have to do in an unlicensed facility can be costly. Specifically, like fire suppression systems are something um if you want to maintain your license, there are annual fees associated with that. They're minimal. They're, you know, $1,000, $2,000 a year depending on how many beds you have. But that's something you want to just be aware of. There are ongoing fees associated with that and typically it it
00:09:41 - 00:10:36
is going to take you a little bit longer to open the doors. I have had students um had a student in Colorado who um it took about a year for them to get their facility license. So it it kind of depends if you're going the licensed route then you might need to um you know just take into consideration this could take me a little bit of time. There are ways around that. Um, uh, like we mentioned, you could do something that's unlicensed before, whether that's adult daycare or unlicensed assisted living
00:10:08 - 00:10:59
care. Uh, you could do that while you're working on your license. So, that's a possibility. Um, you could also buy an existing facility and go through a change of ownership or a cow process. That typically will accelerate your ability to get a license. So, that's working with somebody that already has a license and they're looking to sell the facility or something that has been previously licensed um in the past couple of years and maybe they let the license lapse for whatever reason and
00:10:34 - 00:11:32
then you're able to get into it and it's it's a slightly um more it's a slightly quicker uh process to become a licensed facility at that point as well. Okay, so those are the reasons why or why not for uh for licensed facilities. Now, let's talk about unlicensed facilities and the pros and cons there. The reason why you might consider an unlicensed facility is it is a faster path to getting your first home open. Um, this is something that I think a is is very appealing to a
00:11:02 - 00:12:06
lot of people. You're uh and I think um taking action um is is very attractive to um the universe to to to good energy, right? The faster we take action, money follows action, right? um when we take action, we follow through on those things and we're starting to do stuff, that's where we're going to be successful. And uh the more time that we spend uh actually taking action rather than just thinking about taking action and sitting on on, you know, sitting down and just waiting. Oh yeah, I want
00:11:35 - 00:12:28
to I want to get started. Um I was talking to to a student of mine um the other day. I don't know how many of you have seen there's a commercial. I think it's a Chase Bank commercial. Um, and there's there's a a gentleman who uh he keeps talking about needing to we're going to renovate our kitchen. We're going to do our redo our kitchen. It's going to be great. Oh, have you seen like the the um waterfall kitchen sink and we're going to paint it uh white or or maybe uh eggshell or mauve or
00:12:01 - 00:12:55
whatever. And people start actually finishing his sentences for him because he's taking so he's been talking about it for years, right? You don't want to be that person that's just sitting there and talking about um what you're going to do and just sitting on it and never taking action. And that is something that is actually a really good benefit of going the unlicensed route is that it it does allow you to move a lot more quickly as you're trying to get things started. So, it's
00:12:28 - 00:13:25
something that's worth considering uh whether it's adult daycare or doing something that's assisted living related. But being unlicensed does let you move faster and that's a good thing. Uh the other one is you're typically going to have lower startup costs and it's going to be simpler operations especially in the beginning because you can just go quickly. It's small. It's more nimble which is good. Now the reasons why you might not want to do an unlicensed home is it's it's kind of
00:12:56 - 00:13:58
limited scalability um without transitioning into more of a licensed model. Um, you you could have a series of unlicensed homes, but I I would venture to guess just based off of my experience having done this, run the businesses since 2020, understanding how the numbers work and things like that, that you're not going to be generating that much income from it. And so, your ability to scale and and really grow this out in an unlicensed model is is going to be somewhat limited. And um, it can also restrict the type of resident
00:13:28 - 00:14:27
that you're going to serve. you're going to be working with people that have very basic needs. And anybody that needs a higher level of care, you're going to have to pass off to somebody. And those people that need higher levels of care are the ones that you're typically able to charge more for um to when when you bring them into your home because they they need more care. Uh that's just the way that that this works, right? And so, um, when you're doing that, it means your your best paying clients, you have
00:13:57 - 00:14:52
to hand them off to somebody else and that can really hurt your your cash flow and then you've got to go find other residents, right? So, that's something that I want you to be aware of um as as you're getting into this. And we did also talk a little bit earlier in the video about the idea of um your revenue potential. um when you have less residence, your your earning your revenue earning potential is reduced, right? I've talked about this on the channel before. Uh if you're interested
00:14:25 - 00:15:27
in learning a little bit more about this, type in revenue down below. And uh I I'll do a video that's kind of specific on revenue and how that works in assisted living. But basically, um if if I'm charging, let's just use $5,000 a month as as a base rate, uh just to for illustrative purposes. If I'm charging $5,000 per month and I can only have four residents in my home because that's, you know, I'm an unlicensed facility and uh that's all I can can do. Four times 5,000 is $20,000 per month in
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revenue earning potential. Okay? And I want to reiterate its potential because not always are you going to be 100% full. So that can can reduce. All right? So, you know, it's it's decent, but then you're going to have to pay all your bills and and staff and you know, all of those extra things. But if you were to get licensed and all of a sudden you could have 10 residents in the facility, 10 times that $5,000 amount is $50,000 in income. And your operational costs will go up slightly, but not not um
00:15:30 - 00:16:36
exponentially to to align with That is a horrible thing about being live. I could not do anything. I guess I could have tried to mute. I'm sorry. Y'all got to listen to me sneeze. Uh try to make that stop. Anyways, um you can see the difference there. Type in sneeze. If if that scared you, I apologize. Uh anyways, uh you can see the difference there between four residents at $5,000 per month and 10 residents, right? That's a $30,000 gap. It's 150% more. It's a huge amount. And so that's what I want you to to look
00:16:09 - 00:17:17
at this and realize that in an unlicensed facility, you you you are really capping yourself in the amount of money that you can bring in. So that's something as you're looking at this, I just want you to be aware of it. It doesn't mean that you shouldn't do it. It just means there is a cap there and um you know just take that into consideration as you're trying to figure that out. So here's the big question and hopefully the one that you have stuck around to to get an answer on. Which of
00:16:42 - 00:17:36
these paths should you choose first? Now, if you want speed and you need the experience and you want to go, then I think unlicensed is a great way to get started. Um, like we were just talking about, you don't want to be the person that's sitting there thinking about this for years trying to make some some progress, take some action, and move forward. You don't want to be that person, the the dude in the commercial who is like, "We're going to finish our kitchen. We're going to remodel it. It's
00:17:11 - 00:18:08
going to be great." And everybody's like, "Sure you are because you've been talking about this for years." You don't want to be that person. You want to take action. And going the unlicensed route can allow you to get there a little bit faster. If, however, you want to build a long-term scalable business that has a lot more income earning potential and profit potential, then I think going the licensed route is a better option for you. So, you need to figure out which of
00:17:38 - 00:18:28
these things are going to be best. I would also suggest that you consider your risk tolerance. Um, here there's there's risk associated with both sides, but typically in an a licensed facility because it's bigger. It's a bigger investment. There's more risk uh inherently involved. There's more there's more staff. There's more residents. There's more points of potential points of failure. Um, and that can can be something that that you struggle with. So, take that into
00:18:04 - 00:18:56
consideration as you're looking at this. And then just consider what your vision is and what your goals are. When you think about assisted living and your assisted living business and what that looks like and how it makes you feel and you you just close your eyes and you think about it, what does it look like? Like is it something that is small as just this nice little cottage home and um you just have a handful of people there. it's it's your parents and their friends and everybody's fine and you you
00:18:30 - 00:19:25
don't care about making that much money um and and everything's good. Or do you want something that gives you time and financial freedom that you can scale and you know you get one two 10 facilities um and and now you've got uh like a really solid business. You're having an incredible impact in your communities and uh you're creating a legacy for you and your families. You know which which thing do you want? Only you can answer that. But when you close your eyes and you think about this, and I would
00:18:57 - 00:19:54
encourage you, by the way, to journal on this, like take take some time and pull out a piece of paper like or a recorder, whatever, on your phone, um, and record your thoughts on it. And then I would probably, if it were me, I would feed it into AI and be like, what what do you see? What are some trends you see here about what I say that I want? And what's my best path forward uh to getting into this assisted living business? and and see what it says because I think that's something that's going to help you out
00:19:26 - 00:20:26
immensely as you're trying to to figure out how to get started. Now, if you are trying to figure out how to get started and you're confused and you feel overwhelmed, um do me a favor, type in foundation below. I am actually today launching a new program. It is the doors are only open through this Saturday, at least as of the recording of this video. Um so, if you want to join me in this program, you need to take action fast. Um, I'm doing this as an initial thing to see how it works because, uh, this
00:19:55 - 00:20:42
program is designed to help you figure out how to get started. If so, if you if you're just like, I don't I don't know. I don't know how to get started. I don't know how to move forward. I don't like I I I feel overwhelmed. I feel confused. I've been thinking about this for months or even years, and I don't know where to go. That is what this program, it's called, the foundation builder, is is designed for. So, if that's something you're interested in in learning more
00:20:19 - 00:21:16
about, type in Foundation. I'll get you the link uh down below in the comments. But please do it quickly. Um do it after the fact, even if it's past this this coming Saturday. Um because uh you know, I I hopefully we'll be uh doing this this program a little bit longer um and and creating something here for people. But I I need to make sure this thing works. And if you want help, um this is the perfect time to do that. So hop in, type in foundation, and we'll get you in the program and would love to have you
00:20:47 - 00:21:40
in there. Um, also want to remind you if you have not already, we're going to have links down below. Um, type in roadmap if you need some help. We'll get you the the link to our roadmap challenge or type in book down below if you want access to the profitable assisted living facility. This is my brain in a book. Uh, teaches you everything you need to know for how to launch your assisted living business and help you make progress. And we'll get you the link. Uh, so type in one of those things down below as well.
00:21:14 - 00:22:09
We talked about a lot here today, uh, specifically around licensed versus unlicensed facilities and which one should you should be considering. And really, I think it needs to align with your goals, what you're trying to accomplish, and how you're going to get there. Because when you have alignment there, and you've figured out this is the thing that I want to do, and then you start taking action and start moving forward, that's what's going to help you ultimately reach your goals and get to
00:21:41 - 00:22:45
where you want to be. So sit back, take a second, think about it, and once you have thought about it, and you have a plan, start taking action. Okay? Don't go the path alone either. Um I I highly suggest that you have some kind of a guide, whether it's a book or a coach or something like that. Even if it's AI, um get use something that is going to uh help you out as you're trying to figure out how to get started. It's going to help you take better and and more consistent action and that is what is
00:22:13 - 00:23:03
going to lead to you starting your own assisted living business. Okay. So, does residential assisted living sound interesting to you but you don't know how to get started? At assisted living investing, I help first-time assisted living entrepreneurs launch profitable purpose-driven businesses creating prosperity, purpose, and peace in their lives. I would love to help you out inside the programs that I have. Uh go check me out at assistedlivinginvesting.net. type in foundation challenge or or road map or
00:22:39 - 00:23:20
book down below. We'll get you the links to the different programs that I have. I would love to see you in any of those. If you found this video helpful, make sure you like the video, subscribe, and ring the bell as well so you get notified every time we put out content like this to help you make progress towards launching your assisted living business. And remember, it doesn't take a lot, just a little bit. Just keep going step by step by step. I promise you, if you do, and you are consistent
00:22:59 - 00:23:12
and persistent, you are going to be successful. Thanks for watching and have a great day.
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