How to Know Your Assisted Living Business Will Be Profitable

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Starting an assisted living business is exciting — but scary too. One of the first questions everyone asks is:
“Will this even make money?”

Good news: you can know the answer before you open your doors.
In this guide, I’ll show you how to run the numbers, understand your costs, and feel confident about your profit potential — even if you’re brand new.

Let’s dive in! 🚀

Check out this video, too:

Why Knowing Your Numbers Matters

You wouldn’t buy a house without knowing if you could afford the mortgage.
The same is true for assisted living — profitability starts with the math.

If you don’t run the numbers first, you could:
✅ Overpay for a property
✅ Underestimate your expenses
✅ End up with a business that barely breaks even

When you know the numbers upfront, you’ll make smarter decisions and feel confident moving forward.
💡 Pro tip: Download the free Underwriting Calculator to make this part 10X easier!

Step 1: Underwrite Your Business (This Is the First Thing You Do)

The word “underwrite” might sound fancy, but it’s simple: it’s just the math behind your business.

📊 Here’s what to do:

Look at real past numbers from similar homes.
Build a proforma — a simple forecast of what you expect to earn and spend.
Ask: “How much will it cost to run?” and “How much will I bring in?”

The difference between those two is your net profit.

💡 Want help with this step? Grab the free Underwriting Calculator to plug in your numbers quickly and accurately.

Step 2: Know the 5 Big Expenses (The “WIFED” Expenses)

About 80–90% of your costs will come from these five areas. Master these, and you’ll understand your financial picture fast:

💸 Wages – Your biggest cost. Expect staff wages, taxes, and benefits to be 50–70% of all expenses. Be conservative and plan for more staff than you think you’ll need.
🛡️ Insurance – Property, liability, and workers’ comp. Work with a broker to make sure you’re covered.
🍽️ Food – Meals and snacks for residents. Budget about $8–$12 per resident per day (about $3,000/month for 10 residents).
🔌 Energy – Gas, power, internet, trash, and TV. If you own the property, these are easy to estimate, but they’ll rise a bit with more residents.
🏠 Debt Service – Your mortgage or rent. This is your monthly loan payment and a major part of your budget.

✅ Add these up and you’ll know most of your operating costs.

Step 3: Project Your Income (It’s Easier Than You Think)

This part is simple math:

Monthly rate × number of residents = gross income

📈 Example:
If you charge $5,000/month and have 10 residents, that’s $50,000/month in gross income.

Now subtract your five big expenses and smaller costs. What’s left is your net income — your profit.

Step 4: Make Sure You Actually Collect Payments

This step sounds basic, but it’s a big deal.
If one resident misses a payment, that’s a huge chunk of revenue gone.

💡 Tips:

Use clear contracts.
Offer simple, reliable payment methods (checks, ACH, etc.).
Put billing systems in place from day one.

In a small facility, missing payments from even 1–3 residents can mean the difference between profit and loss.

Step 5: Be Conservative With Your Numbers

When you’re forecasting, always play it safe. Here’s how:

⚖️ Be conservative:

Assume 80–90% occupancy, not 100%.
Round expenses up slightly to prepare for surprises.
Plan for repairs, temp staff, and new equipment.

Also calculate your break-even point — the minimum residents you need to cover costs.
👉 If you need 8 out of 10 residents to break even, that’s risky.
👉 If you only need 5 out of 10, that’s safer.

Quick Action Plan ✅

Here’s your 6-step profit checklist:

Download the free Underwriting Calculator.
List your five big expenses.
Set a monthly rate per resident.
Multiply rate × beds to get gross income.
Subtract expenses to get net income.
Check your break-even point — and be conservative.

Do this, and you’ll know exactly if your business will make money before you spend a dime.

Next Steps: Turn the Numbers Into Reality 🚀

Want to launch your assisted living business and know it will be profitable? Here’s what to do now:

✅ Step 1: Download the Business Plan Checklist to start planning.
✅ Step 2: Join the next Assisted Living Roadmap Challenge for hands-on support running the numbers.
✅ Step 3: Use this guide, run your numbers, and build a profitable, purpose-driven business.

Got questions? Drop them in the comments below! ⬇️

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