How to Start an Unlicensed Care Home (The Right Way!)
Apr 21, 2025
Starting an unlicensed care home can be a great way to enter the senior living industry without dealing with complex licensing regulations. But before you jump in, you need to know what’s legal, what’s not, and how to set up your business for success.
This guide breaks it all down for you—so you can start an unlicensed care home the right way and avoid costly mistakes.
Check out this video, too;
What Is an Unlicensed Care Home?
An unlicensed care home is a residential facility that provides housing and basic assistance to residents without offering medical care or services that require a license.
Key Differences Between Licensed & Unlicensed Care Homes:
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Licensed Care Homes: Provide medical services, require inspections, and follow strict state regulations.
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Unlicensed Care Homes: Offer housing, meals, and supervision but do not provide medical or personal care that requires licensing.
Step 1: Understand Your Local Regulations
Just because a home is ‘unlicensed’ doesn’t mean it’s unregulated. Each state has different rules about what you can legally offer.
π Research these key areas:
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Zoning Laws – Does your city allow group housing in residential areas?
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Resident Agreements – What can and can’t you include in your contracts?
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Allowed Services – Can you provide meals, transportation, or housekeeping?
π‘ Pro Tip: Connect with an attorney or local regulatory office to make sure you’re following the law.
Step 2: Define Your Business Model
What kind of residents will you serve? Your business model will determine how much you can charge, how you operate, and what services you provide.
π Common Unlicensed Care Home Models:
- Room & Board Only – Provides housing and meals but no additional services.
- Senior Group Home – Offers communal living with supervision but no personal care.
- Sober Living Home – Supports residents in recovery but does not provide treatment.
Step 3: Find the Right Property
Your location can make or break your success. Look for a home that:
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Has multiple bedrooms to maximize income potential.
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Is located in a safe, accessible area that appeals to your target residents.
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Meets zoning requirements for group housing.
Step 4: Set Up Your Business Legally
Even though you’re running an unlicensed care home, you still need to operate as a legitimate business.
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Register your business – Most care homes operate as an LLC for liability protection.
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Create a strong lease agreement – Protect yourself and your property.
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Get insurance – General liability insurance and property insurance are a must.
Step 5: Market Your Care Home
Once everything is in place, it’s time to find residents! The best way to fill your home is through referrals and online marketing.
πΉ List your home on senior living directories.
πΉ Build relationships with social workers and discharge planners.
πΉ Create a simple website so families can learn about your home.
π‘ Pro Tip: Word-of-mouth referrals are gold in this business. Provide an amazing environment, and residents will come to you!
Next Steps: Get Started Today! π
Starting an unlicensed care home can be a smart way to enter the assisted living industry, but you need to do it the right way.
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Step 1: Download the Business Plan Checklist to start planning.
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Step 2: Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
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Step 3: Follow this guide, take action, and bring your vision to life!
Show full transcript π
Transcript
00:00:00
hey friend welcome to Assisted Living investing this is Brandon Gustafson I help beginners like you launch their Assisted Living business in the next 12 months uh excited to have you here on the Channel with me today today we're going to be talking about how to start an unlicensed care home I've got a bit of a different setup here and so I'm G to try to keep my eye on the camera uh it's in a different spot than than is normal for me but excited to to jump into this topic with you today uh
00:00:26
because I think it's going to be a good one that will help out a lot of different people they are moving things along on their journey to launching an assisted living business so uh we're going to go ahead and share my screen here um and and talk a little bit about how to to go move forward with starting that unlicensed care home um for those of you who are new here would love to hear from you just type in newbie down below and for those that are are going to be here live make sure you typing in
00:00:54
questions I've got some time at the end of the video to answer some of those questions we have a hard stop um here at um half past the hour so I'll I'll need to drop off for that but you can always type in those questions um after the fact as well and or remind everybody to go and grab the the free business plan checklist as well go to Assisted Living investing. netb checklist um and that's a tool that you can use to really help you move things along on your investment Journey as you're trying to
00:01:23
to get things going uh just a tool that uh will give you uh the tools that you need to write a solid business plan so make sure you go check that out uh for those of you who don't know me my name is Brandon gustofson I um own two assisted living facilities I started doing this in 2020 so I've been doing it now for as the recording of this about four years a little over four years um yeah and I I do this out of state as well I live in Utah have a facility in in Colorado and another one in Idaho so
00:01:51
I operate these facilities out of state um and have learned how to do that as well I have a masters in healthcare administration I have worked in the industry decade have secured over1 and a half million dollars in SBA funding um and and really understand uh this process and everything that kind of goes into owning and and launching an assisted living business and love sharing that with with people like you as you're trying to move things forward and get things started on your own so it I also want to start this off with a
00:02:20
disclaimer um when I talk about unlicensed in this facility we are not talking about illegal I think those two words um can be confused um and people use them interchangeably and that's that's not what should happen here um they are they are completely different so there are specific guidelines that you have to follow even as an unlicensed facility you're still caring for people so this is this is something that is legal it's just an unlicensed facility it's just a different way of of
00:02:51
providing these services and what you can and cannot do I always always suggest that you check your local laws um to make sure that you're staying in compliance with those and consult with an expert as needed as you are looking to get started so want to disclaim everything that we're going to be talking about by saying that hey just be aware uh everything you always want to check with a local professional or local laws okay um so let's talk about what an unlicensed care home is an unlicensed care home is it's a home that
00:03:24
provides assistance to Residents very similar to assisted living and there's a lot of you that that watch this Channel because you think to yourself you know I have that three bedroom town home and I'd really like to to do this and you're you're trying to figure this out so if that's you this this video is is very much for you for those people that have houses that are not the big ones that you typically would see in residential Assisted Living this is a little more geared towards those smaller unlicensed
00:03:51
homes something that I personally would not do um I for me um the the margins on there don't make a lot of sense it's not something I'm comfortable with but we're going to talk about how you can do this and why you might feel comfortable with it um as well as you're looking to to move forward and get started on your journey because my um inclination is going to be different than yours and my situation is different than yours and so even though I personally wouldn't do this um it's it
00:04:20
doesn't mean that you can't do it and can't be successful because I know you can um I've seen a lot of people do it and be successful you just want to know everything going into this as as you look to get started an unlicensed care home also does not require that formal state license that's why it's called unlicensed um it does not provide medical care no medical care is provided in here because you are unlicensed um and the services that fall under that licensing requirement you're not able to
00:04:51
provide that so that's a little bit of a delineating factor that you really need to be aware of that um anything that provides care does need step up into being in this world of of licensed facilities so if you want to be providing care um but you're not that interested in doing the the medical care then this might be a good fit for you as well so what is it specifically there what are the different types of care that you can provide in an unlicensed care home so um it is non-med assistance
00:05:26
like helping with groceries or errands or those types of things it's it's helping out and and moving things along from that standpoint um they can live in the home uh you can do social activities so that they're not isolated um you're you're preventing that isolation um you're providing meals and and cleaning you're ensuring it's a clean and safe living space and environment but you cannot administer medication absolutely not you cannot do that you cannot handle medical devices and um you can't provide
00:05:57
any form of clinical care um so those are the things you cannot do anything that is medical that that falls under a medical professional you're not allowed to do that inside of a care home an unli unlicensed care home you can do those types of things in an assisted living you can have nurses you can have med techs that can pass medications that have been delegated by a nurse you can have the nurses come in you can provide a level of Medical Care inside of an assisted living facility what you cannot
00:06:25
do in an assisted living facility is um Prov well you could provide higher levels of care if you brought in hospice or or other areas inside of an assisted living but oftentimes when somebody needs more care they're going to step up and go to a nursing home so unlicensed Care Homes you're you're still providing a little bit of assistance you know maybe they need help getting lifted up or they might need some help getting dressed or something like that you can do those things but anything that's
00:06:50
medical you cannot do this is where there's also delineation between a un unlicensed care home where you can provide that level of care and independent living Independent Living no care at all it's more of like shopping House services those types of things you can do in independent but once you start providing care have to move up to a care home where you could provide a little bit of hey we're GNA help you do this thing but once it gets into the medical realm then that bumps into assisted
00:07:20
living okay so those are kind of the different levels I hope that makes sense um as as you're trying to figure out you know where where do I fall on this uh this Continuum of of care and providing care to the people that are that are in the home that's that's what you want to be aware of let's talk about the legal structure and some of the compliance things that you do want to to make sure that you're adhering to so when you are doing an unlicensed Care Home you still are going to want to have some type of
00:07:45
an entity I'm not a an attorney I so disclaimer uh go talk to somebody um I would suggest that you get an LLC um protects you from a li liability standpoint as you're trying to get things up and running while you're an unlicensed care home and you're not providing medical care you're still dealing with people and their lives somebody Falls you you want to make sure you're protected so um having some type of an entity setup is going to give you that level of protection so highly
00:08:12
suggest that um I have B I have videos that are on business structures and and what type you should be doing so make sure you go check out the channel Assisted Living investing um subscribe to that like videos all those things um so you get notified but you can go dig into those and I've got some videos on the structures that you um might want to consider um setting up so watch those videos um zoning laws you're still going to have to adhere to zoning laws within the state and and the ones that you're
00:08:40
going to be looking for specifically there are going to be things like how many unrelated individuals are are in the home um that's that's something you want to be looking at um and and how you can provide those services so still going to have to figure out um what that looks like and potentially navigate things from that perspective you're looking at the home so really important for you to do um Insurance you're going to want to make sure you have insurance you're going to need property insurance
00:09:06
you're going to need to have liability insurance for the business as well so as you're running this business and providing this level of care um even though it's it's less than what you would see in a traditional assisted living or a nursing home you're still going going to want to have that because you're still having staff that are interacting with the residents in the home so insurance is is a big piece of this and then policies and procedures policies and procedures are extremely
00:09:30
important they're a requirement for a licensed facility um they're not necessarily going to be requirement for an unlic care home but it is a best practice and something you should be doing is writing those those policies and procedures it's going to help you um with your insurance rates um gives you a playbook for how to handle certain situations when they come up policies and procedures are extremely important and something that you should be doing as you are getting things up and running
00:09:57
with your facility uh it's a good best practice you want to have those policies and procedures now let's talk about marketing and finding the residents for the facility um and a lot of what we're going to talk about here is applicable to assisted living homes as well uh whether it's residential or more of a commercial style um it it all it very much comes down to building relationships within the local community um this community centers could be churches senior organizations um
00:10:26
discharge nurse at a hospital could be other assistant living facilities that maybe somebody can step down independent living facilities where somebody needs a little bit more care um those types of places are good for you to be building out relationships um with people and and the more you are in the local community and and getting word out there the better off you're going to be um it just can be really beneficial somebody this is a kind of a quick tip um I was doing some networking with somebody at a lunch
00:10:53
a few years ago and she did um uh what's it called she would do auctions at houses that had been like repossessed basically or um estate um auctions um both of those things and what she said is you know what I have people that are actually good feed in source for you that that do that have to do an estate sell because they're not in the house anymore they need somewhere need some level of care um this might be a really good relationship I wasn't able to do the partnership with her because she was
00:11:23
here local to me in Utah and my facilities are out of state but actually a really good person for you to be networking with is somebody like that because um it's a population that's going to need those types of services now or in the very near future so U building those types of relationships really key um using social media platforms is also going to to go well um just social platforms Craiglist uh you can list um openings for the home um there it's it's a pretty good spot um Facebook Marketplace Facebook just in
00:11:54
general um getting out and networking with people on Facebook it's it's I would say a pretty good spot for you to to be especially the population you're like catering to a lot of them are going to be on Facebook um it is a bit of an older generation and and so it works pretty well with Facebook and then um you can also offer some facility tours you can go out um and and show people um you know do open houses those types of things where you're bringing people in the nice thing with a an unlicensed care
00:12:21
home is typically they're going to be less than six beds um once you get beyond that you're going to probably have to be licensed um so you're small um and it doesn't take a lot to fill those beds and so just a little bit of networking getting out into the community and and advertising yourself um you can fill the beds pretty quick um but that's how you can really get out there market and find some residents for for your facility and and to get people in the house now some common pitfalls
00:12:48
and things that you should avoid and how to avoid them is number one not understanding the legal requirements while you are an unlicensed facility so you don't have to be um licensed with the State there are still rules and regulations and and things that you have to follow uh from a legal compliance standpoint um and this has to do with the amount of care that you provide with residents you cannot overpromise on the services that you cannot legally provide you will get in trouble you will get
00:13:16
shut down you could get sued um you you want to avoid those types of things and so you want to be very clear this is the amount of care we can provide this is the services we can provide if somebody you your loved one needs a higher level of care we cannot provide that and so you will be discharged and we will recommend you go to another place and we can help you find that place but we cannot provide you know we can't do medication management we can't do um we can't uh do some of the more medical um
00:13:49
medically intensive types of care that you would see inside of a traditional assisted living home we cannot provide that you want to be very clear and upfront with what you can and cannot do um so you don't get into any issues there um you it could cause you to end up needing to be licensed and then you're providing services that you're unable to as an unlicensed facility opens you up to legal action things like that you want to be very very careful with with what you're doing there and
00:14:15
then also just understanding the importance of a clean and safe environment while you are not going to have the state coming in and doing um you know a survey on your facility because you're unlicensed so they they don't have the ability to do that they don't govern you um you still want to make sure you're kind of adhering to those types of rules and regulations um because you just you don't want to to open yourself up to having a an environment that is uh that has bed bugs
00:14:43
or has rodents or um is unsafe because you don't have grab bars or or those types of things it is best practice to still have those things in place um even though you're not regulated to have it uh to have those things it's going to benefit you quite a bit and if there ever comes a day where um states are like we don't do unlicensed everybody that provides this type of care has to become licensed you don't have to do a big renovation um and get things done one big thing that you and most of the
00:15:10
time that's not a big deal one big thing that that you shouldn't have to worry about though I would check with a fire department on this is fire suppression systems so in a smaller unlicensed care home you're probably not going to need a fire suppression system unless there's something with zoning that requires it um in which case you're going to have to do it um but beyond that it might just be fire extinguishers and that should be um sufficient and that's a huge cost for
00:15:33
people and and a reason why people that are kind of on the edge of um unlicensed and and assisted living um they consider doing an unlicensed care home because of a lack of a need for a fire suppression system which is can be quite expens quite expensive so that's a lot of information for you um if you need some help with uh with this I would love to have you apply to The Mastermind program um Alim mastermind.com while my process I talk about assisted living and and things like that it's
00:16:03
it's still applicable it works for residential assisted living it works for large commercial buildings it works for unlicensed Care Homes um I go through a five-phase process it is building the business Foundation it is finding the the perfect property and navigating zoning and and understanding um how to have those conversations and and fire uh the fire department and and everything that goes into that the funding aspect of things you know if you need to do Renovations you need to buy a house um
00:16:29
what what are some of those those things that that go into it um the funding number four is the licensing and just navigating the rules and regulations and while there's less of a need for that in an unlicensed home there's still a level of hey we've we've got to do some of this stuff here um and you want to get familiar with what that is and how to navigate it so I help you out there and then number five is launching and scaling the business this is hiring the right people and putting in kpis uh to
00:16:56
to make sure you know if your business is going well and and you the right types of software and and and planning systems and things like that to make sure that you are running an efficient business so that's what I go through in that program uh help you out and and give you some guidance there you can apply to it at [Music] a mastermind.com you acceler through a lot of this as well that's at assisted living investing. netal for assisted living accelerator so with that said um I'm gonna open up for questions I have
00:17:26
about eight minutes before I have to drop to my jump to my other meeting um and while people are typing up those questions um I just want to remind you to like the video subscribe and ring the bell as well get notified every time we go live we try to do these on Tuesdays um every week on Tuesday we we do a live and we put out content on Thursdays and we putting information on all of our social media platforms as well so like the video subscribe ring the bell make sure you get the tools that you need and
00:17:52
go apply to The Mastermind Alim mastermind.com so newbie um from Belinda um that's awesome how much um can you charge uh that's a good question so um when you're working with unlicensed care home um the amount that you could charge you're not going to be able to do Medicaid um because a piece to be come um contracted to be able to do Medicaid one of the requirements is that you are a licensed facility so when you're doing unlicensed Care Homes you are serving specifically a private pay um type of a
00:18:22
clientele so in that vein it is whatever the market dictates so that could be in your area could be $2500 $3,000 could be $10,000 it really depends on on where you're at uh what the market is going to allow how nice the home is uh different amenities and things that you have you're so your your competition is going to be Assisted Living um because you provide a slightly lower level of care you're probably going to charge slightly lower rates than Assisted Living um and that also allows you to be competitive
00:18:56
but then like I was saying you want to make sure you are clear and explicit on the amount of care you can provide to an individual because if they come in and and you end up finding out that they need medication management that is a big thing that they need you cannot do that in an unlicensed care home and so you want to make sure that you are um you're following what you can and cannot do and you're explicit um you explicitly state that to people to make sure that you're meeting their the level of care where
00:19:25
you can provide it in an unlicensed care home but the amount that you charge that is completely up to you um you're like I mentioned though you're probably going to be slightly less than Assisted Living you're probably also going to have a a smaller um Staffing requirement uh as well because that's not going to be regulated um the the the the entire idea of doing Care Homes and assisted living is you meet the level of care needs of the resident and so if you need somebody there always 247 uh at least in
00:19:59
access to the facility that person is going to have to be paid and have to you know take that into consideration so yeah hopefully that answers your question it it really can depend um you you can run a pretty big gamut of of how much you could charge um to people and based off of the services and the amenities that you're going to offer them um all right I I'm not seeing any other questions here but thanks Belinda if there are other questions go ahead and please type those in um otherwise
00:20:28
I'm I'm going to close this out so I can get ready for my next meeting um it's been a a super busy day for me um but I appreciate uh those of you that have been watching um and if you haven't gotten the business plan checklist yet make sure you go and grab that Assisted Living investing. netb checklist great resource to really help you move things along and and make some good progress um as you're trying to launch your Assisted Living business um yeah Belinda one more question can I do independent living for
00:20:57
elderly care for non-medical for for elderly care for non-med care home um yeah and no problem thanks for thanks for watching um so independent living and a and an unlicensed care home they do offer slightly different services so in a an independent living facility independent living home um you really can't do anything you're you're basically renting out the space you could maybe do some Mill prep um and maybe pays you a little bit for meal prep um but it's not included inside of their fee for for
00:21:35
living there you are uh basically just it's a landlord tenant relationship and that is that is the extent of it you can't provide services like at all um where you shift over into being a care home is where you could be providing some of the services where you include Mill prep in into um what you're doing um where you're maybe you're doing some housekeeping maybe you're doing some um helping out with um dressing them or uh uh I don't know potentially potentially showering showering might be might be on
00:22:09
the line um but those are the types of things you could offer in a care home that Independent Living cannot provide and so there is there's kind of a step up um a lot of people when they're in independent living um they're more apartment style um types of of units um so they they are slightly different in my mind uh Independent Living you're going to have more apartment style in a care home it's going to be more of a home that you're providing a little bit of this care uh and helping somebody out
00:22:40
uh as as needed up to the level of care that you can provide um so that's that's the difference I hope that that makes sense uh it's kind of it is a bit gray area it's kind of a line and um you know they're both not regulated and so who's going to know um what type of facility you are and are you um adhering to it like I don't know it's it's a little bit of a gray area um you I would highly suggest that you work with an attorney that you understand the local rules and regulations around those
00:23:09
different things um that you have strict policies and procedures that you follow so that you are doing the things that you need to do to make sure you're in compliance with that that's that's what I would tell you um I'm not an attorney so go talk to one but that's that's the guidance I would give you to to help you out with that all right um that is all the time I have um but thanks again for watching you know does residential Assisted Living sound interesting to you but you don't know how to get started at
00:23:36
Assisted Living investing I'm here to help beginners like you launch their Assisted Living business in the next 12 months I love doing I love helping people and guiding them through the process and remember it doesn't take a lot just a little bit just keep going step by step by step and I promise you if you do and you're consistent and persistent you're going to be successful thanks for watching and have a great day
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