How to Start an Unlicensed Care Home
May 13, 2025
Starting an unlicensed care home is a potential way to enter the senior care industry. But what exactly is an unlicensed care home, and how do you set one up the right way?
In this blog, I’ll walk you through everything you need to know about starting an unlicensed care home, from understanding what it is to setting up your business and running it successfully. Whether you're new to senior care or a seasoned investor looking for a different model, this step-by-step guide will give you the confidence to move forward.
Check out this video, too;
What Is an Unlicensed Care Home?
An unlicensed care home is similar to an assisted living facility, but it does not have a state-issued license. You’ll still provide room, board, and care services for seniors, but without the regulatory oversight that comes with a licensed facility.
β Key Points to Know About Unlicensed Care Homes:
β You care for two or more unrelated individuals in your home.
β You do not go through the state licensing process, avoiding fees and inspections.
β You still provide activities of daily living (ADLs) like meal prep, dressing assistance, and medication reminders.
β You may be limited in the number of residents you can have (usually 4-6, depending on local regulations).
β You cannot advertise yourself as a "licensed assisted living facility," but you can still offer high-quality care.
This model appeals to many people because it removes barriers like licensing fees, inspections, and strict state regulations. However, there are still important legal, financial, and business steps you must follow to operate successfully and avoid potential legal risks.
Step 1: Set Up Your Business
Before you open your home to residents, you need a strong business foundation to protect yourself legally and financially.
π Essential Steps to Establish Your Business:
1οΈβ£ Create a Business Plan – Outline your goals, target market, pricing, and expenses. A solid plan will help you clarify your vision, secure funding, and attract partners or investors.
2οΈβ£ Run the Numbers – Use an underwriting tool to check if your care home will be profitable.
3οΈβ£ Register Your Business – Even though you're unlicensed, you should probably still set up an LLC to protect yourself legally and separate your personal assets from the business.
4οΈβ£ Get Proper Insurance – Protect yourself with general and professional liability insurance to cover accidents, injuries, and potential claims.
5οΈβ£ Check Local Laws – Some cities or counties have rules about unlicensed care homes. Talk to a lawyer to ensure you’re in compliance with local and state regulations.
π‘ Pro Tip: Even without a license, having written policies and procedures in place will protect you and make your business run smoothly. This includes rules for resident care, emergencies, and staff expectations.
Step 2: Find the Right Property
Your care home needs a suitable property that meets zoning, safety, and accessibility requirements.
π‘ Key Considerations for Choosing a Property:
β Check Zoning Laws – Contact your city’s zoning department to confirm that your home can legally operate as a care facility. Some areas limit the number of unrelated individuals who can live together.
β Talk to the Fire Department – Even without official inspections, it’s smart to have them review fire safety measures to protect residents and avoid liability.
β HOA Considerations – Homeowners’ associations cannot ban you from operating a care home due to the Fair Housing Act, but you should still check their rules and be prepared for pushback.
β Accessibility Features – Ensure the home is ADA-compliant with features like ramps, grab bars, and wide doorways. Even if not legally required, these updates will make life easier for residents and caregivers.
Step 3: Secure Funding
Even without licensing costs, you still need funds to purchase or rent a property, furnish it, and cover operating expenses. Without a plan for funding, your care home could struggle financially before it even gets off the ground.
π° Funding Options to Consider:
β
Personal savings – Many owners start with their own funds to get the business running.
β
Traditional loans – A local bank may provide a small business loan or a real estate loan if you plan to buy a property.
β
SBA loans – While harder to get for unlicensed care homes, SBA lenders may still fund the real estate purchase if you can prove financial viability.
β
Private investors – Partnering with investors can help cover startup costs in exchange for a share of the profits.
β
Seller financing – Some property owners may allow you to pay for the home over time instead of requiring a full cash purchase.
π‘ Money-Saving Tip: Start with a smaller home and scale up once you have stable revenue. Keeping overhead low in the beginning increases your chances of success.
Step 4: Set Up & Market Your Home
Once you’ve secured a property and funding, it’s time to get residents and start running your care home!
πΉ Key Steps to Open Successfully:
β Hire & Train Staff – Even with just 4-6 residents, you’ll need caregivers to help with daily tasks and ensure high-quality care.
β Develop Policies & Procedures – Have clear rules for resident safety, daily care routines, and emergency protocols.
β Build a Referral Network – Connect with hospitals, social workers, and senior centers to find residents who need a care home.
β Market Your Home Effectively – Use online directories, local advertising, and social media marketing to reach families looking for care options.
π‘ Why This Matters: Even though you’re unlicensed, you still need to run your business professionally to attract residents, gain trust, and stay legally protected.
Should You Stay Unlicensed or Get Licensed?
Many care home owners start with an unlicensed care home and later decide to get licensed for higher revenue potential.
π Reasons to Consider Getting Licensed Later:
β Increased Revenue: Licensed facilities can accept Medicaid, VA benefits, and long-term care insurance, which means more funding sources.
β Avoid Future Regulations: Some states may eventually require all care homes to be licensed, so planning ahead gives you flexibility.
β Higher Market Value: A licensed facility is typically worth more if you decide to sell the business in the future.
Even if you stay unlicensed, structuring your business properly from the start will give you more options in the long run.
Want to Start a Care Home the Right Way?
Starting an unlicensed care home can be a great opportunity—but you need to do it the right way to protect yourself and ensure success.
β
Step 1: Download the Business Plan Checklist to start planning.
β
Step 2: Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
β
Step 3: Follow this guide, take action, and bring your vision to life!
Have questions? Drop them in the comments! π
Show full transcript π
Transcript
00:00:00
a little bit more about that and get over to the website uh and check us out but today in in our live we're going to be talking about how to start uh an unlicensed care home it's a question I get all the time um people seem to be very interested in in starting unlicensed Care Homes um I've done a few videos um so make sure you go and check those out I'll try to link them up above um once I'm done with this we'll see if I if it'll allow me to to do it or not um but we will be putting some of those
00:00:26
out there and and you can check out on how to start one uh or why you would want to start one um today we're going to be talking about how you can actually start an unlicensed account home so go ahead and you know if you have any questions chat those in and we'll get into that in today's video also before I get started want to remind you to get over to the website and get our free resource we're going to have a ticker going across for our business plan checklist um that's at Assisted Living
00:00:52
investing. netb checklist and you can grab that and um and that will help you and I'm going to grab my microphone um sure hopefully we don't have issues like we had last week where I had to Res re re-record this um so excited to have you here with us let's go ahead and um have my screen on here so uh again we're talking about how to start an unlicensed care home today and go get that business plan checklist at Assisted Living investing. netb checklist um some background on me if you don't know who I
00:01:24
am my name is Brandon Gustafson I um have you know I own two assisted living facilities have been doing this since 2020 uh as well uh have secured over $1.5 million in SBA funding I oper out of operate out of state I live in Utah and operate in Colorado and in Idaho that's why I've got the Darth Tater hat on here uh so if you like that make sure you hit a like button um so you can uh you know I'd love to see who's here and I also have a masters in healthcare administration with over decade of
00:01:53
experience in the healthcare industry so I have a lot of experience just working in healthcare and and kind of doing this and then obviously uh Assisted Living since 2020 so let's get into this this topic what let's start off with what an unlicensed care home is uh when when we talk about unlicensed care home what exactly are we talking about so basically um it's like an assisted living facility it's like an assisted living home uh you're just not licensed you're still providing room and board
00:02:23
and and other services those those activities of daily living you're still helping out the population that you want to serve um for two or more unrelated individuals so if you're just doing this at your home um and and you just have your grandparents there or family um you're not really a care home in fact there are some rules around this that if it's a family and you are they they use a rule on this and there there's a federal guideline I've talked about this previously uh but if it's a a family
00:02:50
member and you are obligated to care for that that loved one you actually cannot get be re you're not allowed to be reimbursed um for these Services um through a program like Medicaid or something like that with a licensed facility so just something you want to be uh kind of be aware of so this is for two or more unrelated individuals inside of the home um but it's not licensed or certified by the state this is why some people um really like the idea of doing it because that barrier to entry is a
00:03:20
little bit lower um you don't have to go through the licensing process and and that can cost some money um a lot of States it's a few thousand dollars to get licensed in um so something that you're going to have to Pony up and if you go the unlicensed route then you don't have to do that often times though going the unlicensed route you're going to be able you're not going to have as many residents um inside of the home four to six is kind of um the spot where you get capped out at and then you are
00:03:45
going to have to start um going through things that's what an unlicensed care home is um very similar to to what you're doing with assisted living now let's get into the how you're actually going to do this and it is almost the exact same process you're going to follow when you start an assisted living home I've talked about my five-phase process that I take you through building the business foundations you know business plans underwriting research the legal structure your business
00:04:12
registration um that's that's where you have to start on on everything that's phase one both when you're unlicensed and when you're licensed you have to start here at the beginning you have to build that Foundation you have to get a really solid business plan for what you're going to do it's going to help solidify and clarify those goals for you give you you something if you need to find a partner to help you buy the real estate or a lender or something like that um give you something that you can
00:04:35
give to them um lenders are going to require that actually so you're going to want to grab that underwriting to make sure it's actually going to be profitable for you so you're not uh buying a house and thinking yep I'm going to do this um you actually want to run the numbers and see if it's going to work and then run the numbers again and again and you want to make sure you're comfortable with what this is going to look like from a financial standpoint um so you don't lose any money on on the
00:04:58
deal as much as you might think that uh Care Homes and assisted living is a guaranteed thing there's a lot that goes into it it's it's quite expensive to run these businesses and there's a lot of monthly expenses so you want to make sure you understand what those look like do the market research make sure you're in a good spot make sure you do the research um to just figure out can you do that um in the location where you want to do this with an unlicensed care home you want to look at that your legal
00:05:22
structure while it's an unlicensed home I would highly suggest again I'm not an attorney I tell this to people all the time not an attorney so go ahead and talk to an attorney but I would suggest that you get an LLC set up um that you have that business registered in the city county where you want to be operating because even as an unlicensed facility you still need to follow some of those legal requirements to help protect you um and your personal assets okay so that is that's the base it's
00:05:52
building the foundation there phase two for both a licensed facility and unlicensed facility is finding the right property and you got to talk to zoning you want to talk to the fire department um check with the HOA um hoa's because of the fair housing act can't stop you from doing this but it is something that you want to to have a conversation with them about and make sure you're good there but even though you're unlicense you still have to make sure that zoning is okay with it the zoning requirements
00:06:20
are it's an R1 R2 or an R3 I can't remember exactly which one but it's an R something uh and it basically allows you to run a business outside of the house and it's going to allow you to um have multiple unrelated individuals we talked about this earlier on multiple unrelated individuals living inside of the home um that's the zoning that you're going to be looking for so when you talk to zoning when you go and talk to the local municipality and you say I want to do an assisted living I want to do an
00:06:50
unlicensed care home they don't know what that is and so what you need to say is um I want to do an assisted living a care home um what that means is you know we're we're providing services to these people they're they're not related so it's an like an unrelated use some of their language it's an unrelated people that are unrelated are living inside of this home what type of zoning classification is that and is this home is this location right here where I want to do this at is it um
00:07:18
zoned properly for that they'll tell you yes or no you're still going to want to have the fire department come out and and explain to them what you're going to do you're not licensed so you're not going to have the inspections and things to make sure you have the fire supress system and all that in place but let's say that you start out unlicensed and then you want to move to being licensed it's going to benefit you quite a bit to start off having the fire department
00:07:40
come in and and review the home make sure that you know what might need to happen if you ever do become licensed uh and and who knows like a state may just come out and say we don't do unlicensed anymore anybody that wants to provide these Services as of January 1st you have to be licensed um you want to have this background um so you know what you're getting into to in the event that something goes on um and then also they're going to tell you um if if there's any rules because as much as
00:08:06
you're not licensed you're an unlicensed facility um somebody could have a complaint they could call um you know they could call the police they could call whoever um they comeing in come in do an inspection they find out that you're not in compliance with just like normal ADA rules or something like that and they shut down your business so you want to do these things by the book as much as you can even though you're unlicensed it's going to protect protect yourself you don't have to it's going to
00:08:32
protect yourself so I would highly suggest that you do that that's phase two get that property phase three is funding so even in in the world where you're doing an unlicensed home you still have to have the real estate you're still going to have to buy something now when you're going this route unless it's an existing unlicensed Care Home the chances of you using the SBA to do this I would say are are a little bit Slimmer um although you could still use the SBA or a small business
00:09:00
type of a loan at a local bank um to help you get some operating Capital um so that's a good thing but uh you got to buy that house you're going to want to look at all the funding options that are out there I teach a lot of SBA it's a lot of what I have experience with but the principles that I teach inside of you know my programs and things around the SBA are applicable to any lender you're going to need to have documents you need to have tax returns and bank statements and um pnls and um a personal
00:09:29
financial statement there's all these documents that you're going to need to have regardless of what type of lender you're looking at and they want to and they want to see what that's going to look like for them and so you want to have all of this um put together um learn how to have those conversations with your lenders so that you are making progress and you also might want to have some extra operating Capital so you need to know how to have excuse me you need to know how to have those conversations
00:09:52
with a lender as well this is phase three you got to have the funding nailed down you need to understand what that down payment is going to look like for you um how you're going to get that um how much you're going to need and then how you going to move on to the to the next phases of this and actually running the business and doing it in a way that's successful this is for licensed home this is for unlicensed homes you got to figure out the funding piece so that's number three now number four
00:10:16
phase four for me is the phase that you get to skip when you're unlicensed phase four is the licensing the regulation piece of things um you don't you know you don't need to be licensed you don't need to be you can't be Medicaid certified if you're unlicensed um so you can skip all of those things in the UN in the licensed phase there's in the licensed process there's a fourth phase and it's it's that that's what I teach however when we go to unlicensed we just
00:10:43
skip that and we go into operating the business you have it up and running you're trying to get your residence you you're doing your marketing your Outreach um you're you're getting your staff in place you're you still want to build your policies and procedures even though you don't have to get a license you still want to have these um just in to peace of mind for yourself on how you're going to run the Business Financial Management kpi um some of those things around you know how am I
00:11:07
going to find um the right payroll vendor how am I going to plan meals for for the people that are coming into my home all of those things just operating the business um is what you're going to find in here so that's here in the unlicensed process it's the fourth phase in a license facility that's phase five you got to figure those things out now I go through all of these excuse me I go through all of these in depth in my Mastermind program if you are interested and would like to learn more go check us
00:11:35
out at Assisted Living investing. netmaster um you can learn about that program and see if it's a good fit for you um as you're trying to get this started whether it's a licensed or an licensed home um it's a really it's a fun program it's a yearlong uh it helps you get in there um get things started and then right here what we're talking about this last phase operating the business make sure you have the support as you're you have that Runway so you don't have to make the mistakes that I
00:11:59
made as I was starting around my business and you can learn from me and and I can kind of walk you through that and help you make some progress okay let's get into the Q&A um so if there's any questions go ahead and type those in um in the while you are typing those up want to remind people to like the video subscribe and ring the bell as well so you get notified when we put content out like this um we put our lives out on Tuesdays and we we do our long form stuff on Thursdays this time is a little
00:12:27
bit off because I've got meetings day I think next week we're going to be a little bit late as well um just a busy time for me right now during the summer weirdly enough you'd think it wouldn't be quite as busy but uh just have a lot going on so uh just want to remind you like the video subscribe ring the bell as well so you get notified when we put out this content would love to answer your questions and help you along the path of learning how to launch that unlicensed care home or launch an
00:12:53
assisted living facility whatever you are in need of uh that that's what I'm here to do to help you launch that business help beginners like you launch their business in the next 12 months so uh want to thank you all for watching and being here if you are watching this after the fact go ahead and and type in your questions down below as well so I can put in there um what that looks like you know answer your questions do another live video that's going to help you out and give you some guidance as you're trying to
00:13:19
figure things out um on your journey to launching that Assisted Living business if you are trying to figure out if you're going to do an unlicensed or a licensed care home I'd love for you to comment down below unlicensed for for that or licensed um let's see who's who how many of you are thinking one way or the other uh type in unlicensed if you're thinking to go that route or licensed if you want to go the licensed route I would love to hear uh what your what you're thinking there uh and other
00:13:47
than that does residential Assisted Living sound interesting to you at Assisted Living investing. net we're here to help you through the process start to finish to help you launch that Assisted Living business and uh reach your reach your financial goals that time of Financial Freedom that you're hoping for um oh one one thing really quick here before we go um yep you're welcome t uh I don't know t t DJ uh question what the average price is to start the from scratch assisted living facility at least 10 beds in
00:14:18
Florida Florida renting or buying a house okay so what I would tell you there um and thanks for the question um what I'm going to say is it's going to kind of depend a little bit on the real estate so the real estate is is the big piece of that your debt service or your lease payment uh whichever one you're going to go with um if you what I like to tell people find a number for um the monthly expenses and you want to have uh two to six months worth of monthly expenses in the bank ready to go for
00:14:54
that now if you're buying an existing business you can get this from the SBA you can kind of roll that into your loan um which is which is good but let's say that it costs you $25,000 to run the business on a monthly basis um you want to have $50,000 in operating Capital whether that's your own that that you have um to get things going um or if it's something you're asking from you know from A lender um if it's six months worth of operating Capital 6 time 25 is 150,000 so that's how much you'd want
00:15:25
there that's one piece of it the other piece is the down payment for the real estate or if you're leasing you might need to you know give give a chunk of money UPF front um the leasing amount is up to you in negotiating with the landlord could be 10,000 could be 50,000 I don't know what that's going to look like could be zero um as well if you're buying an existing business um you're going to be about 15 to 20% down um when you are going the route of the SBA so let's say it's a
00:15:55
$500,000 property um you're looking at you know uh what's the number there um 100,000 is 20% so between 75 and $100,000 is your down payment um on a $500,000 home it's very much contingent on on the real estate um like I mentioned though you could roll in that extra operating Capital through that process you're buying an existing home and you're going to do a conversion at that point um typically you're buying the real estate um but your down payment there because it's going to be more of a
00:16:26
traditional type of a loan it's an investment property is probably going to be closer to like 25% down unless you do something a little more creative like a subject two um or seller financing or something like that to allow you to to kind of go in and and get the property and then you might need a chunk of money to do some of the renovations um and you could negotiate that potentially with the person you're buying from from A lender something along those lines if you have to put in a sprinkler system
00:16:54
you're looking at 20 to $40,000 depending on the size of the house so there's a lot of for you that kind of thrown them at you um I would say you're looking at anywhere between $50,000 to $150,000 regardless of the route that you're going to go is probably what you need to be um looking at for how much money you need to have in order to do this there are other situations seller financing could get you something that that's a lot less down um you could go private money routes where um you do a
00:17:28
low down payment with interest only loans and then refinance it once the business is Cash flowing there's a lot of strategies to get into this for less but in the you know the normal situation uh 50 to 150 is probably a ballpark number for you to go off of so hopefully that helps you out there um Vita has a question what's the process of securing land and building from the ground up what funding can you get along the way um with the new business okay good question here Vita um so when you're
00:17:59
going through a groundup process there's there's a few different loan types that you could do you could get like a construction loan um that's something you could go with the SBA actually will also do this I have a buddy in Idaho who uh he is um he's building from the ground up he's got an approval on an SBA loan for over four million um to build what he wants to do so that's a route that you can go as well um you in that scenario though SBA 15 to 20% down of $4 million I don't know if I can do the math really
00:18:31
quickly off the top of my head but that's probably close to a million dollars as a down payment um so you know just kind of gives you an idea now the process for doing that the construction um you have to check Zoning for sure um like we were talking about um phase two um that's a zoning thing um I've been working with some people down in in San Antonio that want to do this as well um and they're finding that zoning is just not friendly for them in that location uh and so it's just not going to work um
00:18:58
you could get something rezoned um in the when you're doing a new build you're probably going to have to go out for public comment and it's going to be a little bit more of a process but you want to make sure zoning is in place and then um you want to check with your state so we're actually doing a big construction project on a grant um in Colorado and through that um we have to go and and get information on on how we're going to uh we have to go through a process there uh there's an F what's
00:19:29
called an fgi application I cannot remember what it stands for um but it is I believe it's a federal guideline for senior housing developments and uh whichever State you're in I would check and see what this looks like but you're going to need to work with an architect um preferably an architect that works in Senior Living um that architect will understand what types of applications and permits and things need to be pulled and applied for when you go through that process and then um you would then
00:20:00
submit those applications submit those permits get everything approved make sure zoning is in place um and while you're doing that you're going to try to find your lender as well and then once you have all of that then you're going to start building um things from the ground up once you have all those approvals and everything in place there a lot of boxes to check funding options SBA construction loan um potentially a private lender who's willing to to take on the risk of of something that's a new
00:20:25
build um you know those are some of your options from A lender perspective when you get to that route as well um so hopefully that gives you some guidance there on on what that process looks like and how you're going to do it it's it's a really cool option um like if you can do it and you got the the background in construction you want to build things and you can figure out all those other pieces all those other steps um you can make something that's exactly like you want it to be for assisted living which
00:20:51
is really cool so um yeah that is that's kind of the process for for how that works so hopefully that was helpful for you there as well um all right with that I don't see any other questions but thank you both for for those questions uh and and hopefully that helps you out and gives you some extra guidance there if you if anybody else has questions go ahead and type those in otherwise I want to thank you all for being here thanks for watching um make sure you go grab that free business plan checklist at
00:21:19
Assisted Living investing. netb checklist again we're we're doing that as a ticker down below sorry about the video being choppy I don't know what to do about it it's just kind of I think it's an internet thing so yeah you're welcome vaita um and uh thanks everybody for watching uh make sure you go check out The Mastermind program as well Assisted Living investing. netmaster mind U because at Assisted Living investing. net I'm here to help you help beginners like you launch their Assisted
00:21:46
Living business in the next 12 months and we do that through our Mastermind program it's the best way for us to help you out with that and yeah with that said thanks for watching and have a great day
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