Licensed vs. Unlicensed Care Homes: Which One Should You Start?
Jun 05, 2025
Thinking about opening a care home but not sure if you need a license to begin?
You’re not alone.
Many people get stuck here. They ask:
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Do I need to get licensed?
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Can I start without it?
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What’s legal in my state?
This guide breaks it all down in a simple, clear way — so you can take action without second-guessing yourself. πͺ
Let’s get into it! π
Check out this video, too;
Why This Decision Matters π§
Getting licensed (or not) affects your whole strategy. Here's why this choice matters from Day 1:
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Changes how fast you can open
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Impacts who you can care for
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Affects what you can advertise
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Shapes your revenue and credibility
This isn’t about “right or wrong.” It’s about knowing what you want and what your state allows.
What Is a Licensed Care Home? π·οΈ
A licensed care home has been approved by the state to operate legally as a provider of personal care.
That means:
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You’ve gone through your state’s application process
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You meet their staffing, safety, and documentation standards
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You’re allowed to care for residents full-time
π‘ Some states calls these Residential Assisted Living, Group Homes, or Residential Care Facilities. The names vary — but the goal is the same: provide safe care to people who need help with daily living.
Licensed Homes Can:
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Provide personal care
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Serve multiple residents (usually 3+ depending on the state)
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Advertise publicly as a licensed senior care home
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Work with placement agents, referral sources, and other partners
What Is an Unlicensed Care Home? π«
An unlicensed care home is a setup where you’re providing some level of support — but not full-time personal care — and staying under your state’s licensing threshold.
That might look like:
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Running a legal adult day care
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Offering respite care (short-term stays)
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Housing 1-4 residents (depending on your state rules)
You’re not illegal — you’re just operating within the limits of what’s allowed without a license.
“You can absolutely start this business in a legal way without being licensed — especially if you’re doing adult day care or keeping it small.”
Unlicensed Homes Can:
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Get started faster
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Cost less upfront
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Avoid intense inspections
β Can’t advertise as licensed assisted living (you have to be specific on what you are and what services you provide)
β Can’t offer full-time personal care unless allowed by law
π‘ Always check with your state health department. Some states allow unlicensed homes with 1-4 residents. Others don’t. Just call and ask!
Licensed vs. Unlicensed: Quick Comparison βοΈ
| Feature | Licensed | Unlicensed (Legal) |
|---|---|---|
| Can provide personal care? | β Yes | β Limited |
| State inspections required? | β Yes | β No |
| Market as a licensed assisted living? | β Yes | β No |
| Upfront cost? | π° Higher | π° Lower |
| Time to open? | π Slower | π Faster |
| Best for scaling? | β Yes | β No |
When Should You Start Unlicensed? π‘
You don’t have to be licensed to get going.
Unlicensed may be the right fit if:
β You want to start earning while waiting for your license
β You’re testing the waters with day care or respite care
β You’re converting a home and need more time for licensing
β Your state allows 1-4 residents without a license
“I’ve talked to a lot of people who start unlicensed just to get moving. Don’t overcomplicate it — just make sure you’re not breaking the law.”
π‘ Keep it simple and legal. Make money and protect yourself.
When Should You Go Licensed? π’
Getting licensed from the start is a solid option if:
β You’re committed to building a long-term care business
β You want to scale beyond 4 residents
β You need credibility to attract referral partners
β You want to offer full 24/7 personal care
You’ll go through:
- Applications
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Fire marshal inspections
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Policies and procedures
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Staff requirements
But once you're licensed, you can grow faster and with fewer limits.
Fire Codes & Safety: What to Know π₯
Whether you’re licensed or not, your home still needs to be safe.
That means:
π₯ Fire exits and extinguishers
π¨ Smoke alarms and detectors
π· Safe conditions for residents
In licensed homes, these are required by law. In unlicensed homes, they're still a smart move. Don’t skip it.
Next Steps: Take Action Today!
π Want to launch your assisted living business in the next 12 months?
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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.
β
Step 3: Follow this guide, take action, and bring your vision to life!
Got questions? Drop them in the comments below! β¬οΈ
Show full transcript π
Transcript
00:00:01
hey friend it is Brandon Gustafson with Assisted Living investing excited to have you here with me on the channel today uh we are going to be talking about licensed versus unlicensed Care Homes uh for assisted living so excited to jump into this topic with you today uh and we I'm am trying to also get this to simcast into the Facebook group so um there we go I'm GNA see if I can get this thing to share over there um yeah I don't know that I'm going to be able to do it so that's fine um let's
00:00:33
jump into the topic really quick I'm going to share my screen and uh just remind you to uh get over to the website Assisted Living investing. net we are we're putting out a bunch of content there uh to kind of help you uh get things moving along and I have a free resource for you the business plan checklist Assisted Living investing umnet BP checklist we'll have a link kind of going down below so you can go and grab that if you would like to um so make sure you go and grab that a little
00:00:59
bit of information about me again we're talking today about licensed versus unlicensed Care Homes and the purpose of what I do here at Assisted Living investing is to help um help people help beginners grow their um grow their Assisted Living business start their Assisted Living business so that's what we're going to talk about a little bit today uh some background on me my name is Brandon Guston I own and operate two assisted living facilities I do that out of state I am I live in Utah one of my
00:01:27
facilities is in Idaho the other facility is in Colorado and have been doing this since uh 2020 um so for a few years have secured over $1.5 million in SBA funding as well and understand that process quite a bit I have a MERS in healthcare administration so um have a lot of experience just kind of in the healthcare industry and uh willing to share a lot of that information with you if you're new here make sure you type in newbie down below and if you are an operator have some experience with this
00:01:57
and maybe you're looking for the next one or or want some guidance type in oper down below so that I can see who is here even if you're watching this after the fact we're going to get into an opportunity to do some Q&A questions here as well um so make sure if you have questions you're typing those in and we can chat about those as we get um get further along in the call um I am going to really quickly um put something on the Facebook group actually I think I figured out how to do this we'll see how
00:02:26
it goes um and we're going to go ahead and post that there okay um hopefully that goes we're going to see new new system um and so trying to kind of Orient myself uh let's get into the topic for today licensed Care Homes let's talk about licensed Care Homes first uh what is a licensed Care Home basically they are governed by the state um they they come in and um the the state there there's certain requirements that you have to to meet there's an application uh you got to have policies and procedures there's
00:03:01
there's a whole process that you have to go through to become a licensed facility uh in order for you to to operate that way so as you're getting started that that it at its core is what you're doing you are then providing care underneath that license so when you get licensed it it will tell you you know you can serve this population you can provide these types of services uh it kind of limits you in Pigeon holes you into a spot where this is who you're serving how you're going to serve them the services you're
00:03:32
going to provide to them uh it kind of gets you into that that group this license is going to depend on the level and and type of care that you're providing as I mentioned so this could be based off of um how many beds you have it could be um you know are you doing nursing care are you doing something that's Memory Care are you doing something it's really basic um something along those lines there's different levels of care different sizes of facilities so if you kind of think of
00:03:59
this as a matrix um you can kind of see what that would look like um you get licensed to fit into one of those squares inside of a matrix and that's how you provide the care um you can also do this doing private pay or Medicaid as a licensed provider you can go to Medicaid and become a certified Medicaid provider I talk a lot about Medicaid uh it's something that a lot of people are not um comfortable with oops sorry about that not sure what happened there um a lot of people are um not familiar with Medicaid and it kind of
00:04:32
scares them and that's okay uh it's one of those things where it's um it can be confusing there can be a lot that goes into Medicaid and understanding what that looks like so if you're interested in learning more about that you know type in Medicaid we'll make sure that you get some videos um that help you along the path of understanding what Medicaid is and how it works and how it can help you uh because there's a lot in there that that can give you some guidance uh to help you get started but
00:04:57
when you're doing a licensed Care Facility you're able to do both of those private and and Medicaid uh now let's talk a little bit more about unlicensed homes so when you get to licensed unlicensed homes there's actually um there's a legal way to do this and there's an illegal way to do this so what I'm going to suggest to you is that you always go the legal route of doing things um you still are going to have a business um you're just not going to get a licensed a license to be able to do
00:05:24
this if you look at this in the news um in recent years you're going to see that there's actually um some some tampering down on the illegal unlicensed homes uh especially in Arizona I I've seen this quite a bit um down there because this is such a a prominent industry um you still want to follow good rules you still want to you probably should have policies and procedures even though they're not required um these are going to be things that just help you understand what you should be
00:05:52
implementing in the home but you don't have to go through a licensing process you bring people into the home you care for them and help them out just like you would in a license facility you're just kind of going about it in a different way for those that may be scared or confused at the licensing process this could be a really good route for you or if you just don't want to deal with government um stuff this could be a really good option for you to consider as well um but really at its core you
00:06:17
are caring for two or more unrelated individuals inside of a home um the when we bought our second facility in Idaho the the person who uh had been running that facility she wanted a break but she still wanted to care and so she created an unlicensed home and just ran it out of her house and had two or three beds and had those people come in and was caring for them and because she loved doing it she just didn't want to do it for a 16 bed facility anymore so it's very doable for you to do this type of a
00:06:44
of a facility um when you get to this point though you are dealing specifically with private pay um they basically become tenants you want to still follow the same rules you want to still have rental agreements and um those types of things in place just in case uh still have the same Insurance a lot of the same things but because you're unlicensed um you're not a licensed provider and therefore you cannot get certified with Medicaid so you're not going to be able to accept those that group of people so if you are
00:07:12
really dead set on wanting to help the population the Medicaid population um and and you know you're not going to be able to get those funds from people that are in that Medicaid population uh without you being a licensed facility this might not be the best option for you um you might want to go the route of of doing that but you're dealing with something that's private pay and and kind of helping them out through that process that's that's the difference between licensed and unlicensed so who
00:07:38
can you care for as you get into this and really all of these things apply to both a licensed and an unlicensed facility you're dealing with the same populations uh could be mental illness could be disabilities norly homeless it could be somebody that has limited Financial Resources as well um you could be looking at the elderly it really depends like who who do you want to serve what population are you passionate about and you can build your home to to do that a lot of what I teach in my courses and things is um there there's
00:08:07
five pillars and the first one is building a business plan we talked about this a few weeks ago in the live building that business plan building that base and getting that Clarity for yourself on how you're going to move things forward um helps you out a ton and a big part of that is identifying who are you going to serve when you do that it gives you the clarity so that you can move things forward and get more you know have more success uh in in everything that you're trying to do um inside of the home so figure out who you
00:08:36
want to serve but in an unlicensed or licensed facility you're going to be able to work with whoever it is that you want to serve whoever is important to you and you want to work with what about the care that's provided again here it's the same thing um you are providing assistance with activities of daily living um doing some meal prep providing a room and and bed for for the residents to to live in for a licensed or an unlicensed facility you're providing the same type of care you're helping them
00:09:06
get dressed helping them bathe helping them um eat um potentially like there's there's a myriad of things that that go into this and uh it really kind of depends on who again you want to serve but you would be able to to serve those people um you just have to be careful when you're in a unlicensed facility uh you want to make sure you have the appropriate insurance coverage um make sure that you're doing things correctly and even though you're unlicensed I would still highly suggest you go
00:09:35
through a lot of the same processes you document things um you follow um all all the rules that you would in a license facility it's going to protect you in the event that you know somebody comes in you you have cops knocking on your door saying hey you're an unlicensed facility um we need to see the type of care you're providing and the residents and the the situation that they're in um and what that looks like for people um that's it's going to help people kind of get a a good just make them feel more
00:10:02
comfortable in what you are trying to do as you are operating your business so it's not going to be required in that unlicensed scenario but it's still going to benefit you quite a bit um to have all of that information um in there track it uh it just protects you so uh I highly suggest that you do that uh as you're going through and caring for your residents and helping them out um I mean ultimately what we're here to do is help people right and the more um we're able to document those things um it just
00:10:31
proves that we're actually doing that and and it will avoid any um potential bad things on the back end so what's best for you unlicensed versus licensed um unlicensed facilities are going to have less regulations they're going to have less oversight if you don't like those things and not very many people do then going the unlicensed route might be good for you you have to understand though in an unlicensed facility um you're not getting a 16 bed you're not getting a 10 bed you're going to be a
00:11:00
much smaller um facility there's guidelines on what is approved and what is unapproved uh typically what I see is like four to six um in a state for an unlicensed facility so you just are going to be below that threshold so if you are really dead set on doing 10 16 20 50 beds you can't be unlicensed um it's going to be a smaller home so just something for you to keep in mind but you're going to have less regulation you're going to have less oversight and give you more autonomy to work and
00:11:30
provide the care that you want to provide to your residents uh which is which is really great in a license facility it gives you some added credibility um to the services that you're providing so you can go out and Market yourself as a licensed facility um and do things I I talked to a lot of people where they start off unlicensed because they're waiting for the licensing process to start um and that could be unlicensed doing adult daycare or respit care or even kind of doing the Assisted Living route um just as an
00:12:00
unlicensed facility while you're waiting for that license to come into place which is going to allow you to generate more income as you get into this so um yeah it's definitely an option for you to help you get started and get things moving along um there as well um so hopefully that that give you some some good guidance on that um what I would highly suggest that you do is not do something that's illegal I don't want you to do something that that's going to jeopardize you and and what you're doing
00:12:29
um what you're trying to build inside of your home and and the type of people that you want to serve so I don't want you to do that um for sure uh I want you to spend time and and do things that are legal and make sure things are kind of buttoned up and and helping you get along um so hopefully that that gives you some guidance um so any questions that you have and I see somebody has put something in here about Medicaid I'm pulling up a couple links for you right now um so you can get access to those um
00:12:57
so I'll put those here in the chat um let's see becoming [Music] certified and Medicaid Medicade overview um but while I'm doing this I want to remind you to um like the video subscribe ring the bell as well so you get notified when I put out this content we go live every Tuesday uh I put the the content uh what we're going to be talking about on our Facebook group so you know exactly what's going on when we're going to be doing that live stream um to help you kind of get the the guidance that you
00:13:29
need there um if you have questions and you're trying to figure things out as you're getting started and and need to know um you know something last time we talked about um the the life safety um something I can't remember but like fire codes and what that looks like because I want to make sure I'm providing you with value so if you have questions or things like that you you need um some guidance on a specific video topic type those into the Facebook group and I will make sure I I get those out to you so that
00:13:58
that you have the guidance that you need um hopefully that getting those links over to you will be helpful um those are some of the the good important I guess popular links that talk about Medicaid um for you um Blossom manner so um yeah but I love interacting with people uh love talking with you want to remind you as well to get over to the website Assisted Living investing. net you get access to that business plan checklist I forgot to turn the Ticker on um so we'll have links um for those the YouTube and
00:14:31
if you need something like that on Facebook then message me and I will get that over to you in Messenger as well so you can get access to that or just go to Assisted Living investing. netb checklist you get access to that free business plan checklist um it sets the base for everything that you're going to be doing inside of your assisted living world it's going to really give you the guidance it's you give you the clarity on who you want to serve why you want to serve them uh what type of home you're
00:14:55
going to have and help you make some progress there as well um so highly suggest that you you utilize that and if you're interested in learning more about what it's like to work with me get over to the website as as well Assisted Living investing. net strategy to set up a free strategy call or if you're interested in learning about the Mastermind program go to Assisted Living investing. netmaster mind and uh we can chat about that as well the prices on that uh if you're watching this live
00:15:22
they go up today so if you're interested in getting into that program today is the last day um to get it at the price that it's at it will be going up by $1,000 um at midnight tonight so if you're interested in getting into it make sure that you get in there that is today which is May 7th um 2024 so um if you miss the price the if you miss that um program is still going to be active but the the price is going up so just want to make sure everybody's aware of that uh I'm super excited to help those
00:15:51
that have joined the program as well uh just I'm over the moon um for how just all the people that are interested in in doing this and so excited to get to work with you here in the next couple weeks as we after we get everybody on boarded and some of the fun exciting things that are going on there so I just wanted to remind you of all of those things and also remind you um what I'm here to do with Assisted Living investing I'm here to help beginners like you learn how to launch their Assisted Living business in
00:16:22
the next year I love helping people coaching people and guiding people it's one of the things that just like gives me energy I'm passionate about it and it's so much fun for me so I'm super excited to to work with those that um that are joining The Mastermind and and hopefully I can work with you here in the future as well and uh does residential Assisted Living sound interesting to you but you don't know how to get started at Assisted Living investing I'm here to help you through
00:16:47
the process start to finish to learn the ins and outs of investing and assist the living so you can get that time and Financial Freedom that you are seeking thank you for watching thanks for being here uh and let me know if you have any questions or need any extra guidance and we will talk to you next time thanks for watching and have a great day
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