Unlicensed Care Homes Explained: What They Are and How They Work
Jun 04, 2025
What is an Unlicensed Care Home?
Unlicensed care homes can be a powerful way to start helping seniors without going through the full licensing process. But what are they, exactly? And are they legal?
Let’s break it down in simple terms so you can figure out if this model makes sense for you.
Check out this video, too;
Why This Matters
Getting licensed takes time, money, and paperwork. But some states allow you to care for seniors without a license—if you follow the rules. This can be a faster way to get started, learn the business, and build momentum.
Let’s dive into what unlicensed care homes are, how they work, and how to start one (if it’s allowed in your state).
💡 What Is an Unlicensed Care Home?
An unlicensed care home is a residential home where seniors live together—but the home itself is not licensed by the state as a care facility.
Some key things to know:
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🏠 Seniors live in a home setting (not a facility).
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💼 No state-level license is required.
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🤝 Care is “non-medical” and limited in scope.
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✅ Some homes rely on family members or private caregivers.
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💰 You can still run a business and charge rent or service fees.
✅ Is It Legal?
Yes—in some states. But you need to follow the rules.
Here’s what to do:
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Research your state: Every state is different. Some allow unlicensed care homes if you serve a limited number of residents or don’t provide skilled care.
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Understand the limits: Many states allow 1–3 residents before requiring a license. Some say you can help with basic daily needs, but not meds or care.
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Use the right terms: Don’t call it an “assisted living facility”. You'd call it a "care home" instead, and you'll want to specify that it's unlicensed.
⚠️ What You Can’t Do Without a License
Every state draws the line differently, but here’s what typically requires a license:
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Administering medications
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Assisting residents with things like with bathing or toileting
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Providing 24/7 staff care
You can’t cross these lines without triggering licensing requirements. Be super clear on what your state says.
🛠️ How to Start an Unlicensed Care Home
Here’s a step-by-step guide:
1. Set Up Your Business
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Form an LLC (recommended for liability purposes, but talk to your attorney first)
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Get an EIN (Employer Identification Number)
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Open a business bank account
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Get insurance (property, liability, and workers comp if hiring staff)
2. Find a Home
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Make sure zoning allows for a group home (specifically, you want to make sure that multiple unrelated individuals can live in the home)
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Look for a property with private rooms and accessible bathrooms
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Set up shared living spaces and safety features
3. Hire an Insurance Broker
You’ll need:
- 🛡️ Property Insurance
🧍 Liability Insurance
👷 Workers Comp (if hiring staff)
Let a broker help you find the right coverage at the best price.
📍 State-Specific Rules (Do Your Research!)
Each state has its own definitions and thresholds.
Here’s what to do:
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Go to Google and search:
👉 “How to start an unlicensed care home in [Your State]”
👉 “Unlicensed senior care [Your State] regulations” -
Look up your state’s Department of Health or Human Services
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Consider calling the health department and asking directly
It’s okay to talk to your health department. You don’t need to keep this a secret.
🤝 Don’t Do It Alone
Talk to people. Ask questions. Share your vision.
Open your mouth and say the things you want to build. That’s how people show up to help you.
Whether you're trying to serve your first residents or build an entire network of homes—don't stay silent.
This journey is hard to do in a vacuum.
Next Steps: Take Action Today!
🚀 Want to launch your assisted living business in the next 12 months?
✅ Step 1: Download the Business Plan Checklist to start planning.
✅ Step 2: Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
✅ Step 3: Follow this guide, take action, and bring your vision to life!
Got questions? Drop them in the comments below! ⬇️
Show full transcript 👇
Transcript
00:00:00
ha homes what they are I get a lot of questions around this so really wanted to touch base on this um before we get started though I wanted to remind you to get over to the website Assisted Living investing. net where you can get access to um we have a free business plan checklist over there so if you go to Assisted Living investing. netb checklist you can get access to that and I'm going to put the S the ticker down below nope not that one um sorry I have the wrong thing okay I'm going to put it
00:00:32
right there for just a second get Assistant Living investing uh. netb checklist and get that free uh business planning checklist to help you out along the way um and we'll have links for that down below as well or if you are on Facebook then make sure you reach out to me and um and get access to that as well so as I mentioned we're going to be talking about uh an unlicensed Care Home what it is and and kind of how that works for for people as as they get into this and are trying to get started um I am getting the link really
00:01:05
quick so I can put this on the Facebook page or Facebook group and hoping that that is going to come through for everybody all right learning how to adjust things on the Fly here now let's get over here and give you kind of an introduction for who I am and uh why I'm qualified to help you out and give you some guidance so my name is again Brandon Gustafson and I own two assisted living facilities uh one is in Colorado one is in Idaho and I live in Utah so I operate those remotely have secured over
00:01:36
$1.5 million in SBA funding as well as I've gone through this process have been in the industry for over three and a half years now and have been in the healthcare industry for over a decade uh have a masters in healthcare administration as well if you're new here and you're just kind of trying to figure out if this is a good fit for you make sure you type down newbie below uh and if you're you know trying to figure this out but you've been operating or maybe you're pretty experienced in here
00:01:59
put in operator as well uh would love to see just kind of who's in here watching and and how I can best serve you we're also going to have some time for questions at the end so make sure you type those in down below and uh if you're watching after the fact type your questions in so I can get those out to you as well so let's hop over here what is an unlicensed care home let's start there so at its core um you're kind of doing a lot of the same things that you would do in a licensed care home we
00:02:27
talked about this in a previous video I'll try to link it up above I think it's going to be over there um we'll see if I can get there uh doing it on these lives kind of gets makes it hard but um at its core you're helping people with ADLs ADLs are activities of daily living so you're going to hear that acronym quite a bit as you get into the industry but essentially ADLs are you'll help with dressing bathing toileting feeding um those types of things giving medications those are ADLs activities of
00:02:58
daily living so you're going to do that as an unlicensed care home you're going to provide that level of care to your residents um one thing that is different is you do not have that state issued license to operate um as a license facility so you kind of go through a slightly different process and that's a lot of what we're going to talk about today in in our video today you are also providing services such as meals and personal care uh as as you get started down this path uh you're you're going to
00:03:27
have to feed the residents you have to do those ADLs that are personal care uh dressing bathing those types of things you're doing a lot of the same stuff as you get into this but that is what an unlicensed Care Home does now let's talk about how many residents you can have inside of this unlicensed care home really it's going to come down to what the stay says it really depends on what they're going to tell you their guidance is because um they set the rules for what that looks like and when you get
00:03:55
over a threshold now all of a sudden you need to have a license and you're going to to need to operate that if operate it as a license facility typically you're going to see that it's less than six beds though I've seen it um actually I was talking with somebody um one of the states I think goes up as high as eight in an unlicensed care home I can't remember which state it was um but I've seen it a lot of States they want to keep you at two or three and I have a video and
00:04:21
we'll try to link this one up above as well um where I talk about can you actually be profitable with a two or three um bed facility care home with two or three beds so I I'll try to post that up there as well because it kind of gives you an idea of what that would look like but typically you're going to be less than six um is is what you're going to be looking at as as you start operating this way with with your facility or I guess with your care home um now let's talk about the type of
00:04:50
Resident that you're going to be serving inside of this care home we're going to talk a little bit about eligible versus ineligible residents here as well so just so you can kind of feel get a feel for what that looks like for you an eligible resident is somebody that does not require intensive Medical Care um and this is the same for assisted living honestly um assisted living is for people that don't need that intensive care because they would need to then go to a license facility um so typically
00:05:20
what you're doing is you're caring for people that just need some help maybe some prompting with things and you're kind of helping them along the way um helping them get dressed or going to the B all those ADLs that we just talked about that's a lot of what you're going to be serving when you get into into this phase now the type of person um that you could do this could be elderly could be special needs could be mental health could be any number of of things that that you need to people that need
00:05:49
help so you don't have to Pigeon hold yourself and say well I'm an unlicensed facility and I have to just help um young adults that um have special needs like you don't have to do that is just one of the routes that you can go very similar to Assisted Living there's a lot of things that you can a lot of different types of people you can serve now those that are ineligible are those who need 247 Medical Care um again that would kind of go to a nursing home but if you need somebody that that really
00:06:18
needs attention 247 um it's probably better suited for that license type of a facility um to be frank with you that's probably the route that you need to go um anything that is more complex medical condition so if it's dementia um they need to go to a licensed home um if they you know if they're maybe uh they have a catheter or um they have a medical device or um there you know there's something that that's a little bit deeper than just like needing some help doing things then they should probably
00:06:51
go to assisted living or go to a nursing home and not be inside of the unlicensed Care Home it just is going to probably benefit the resident a little bit more um to be honest and and it would make it a little bit harder for you then the other one is if there a safety risk to themselves or to others they're probably better suited for something that has a higher level of care or a licensure just to to make sure that they're you kind of are avoiding some of the liability that might come on you as an unlicensed
00:07:19
facility so the type of Resident uh we went through ineligible and eligible U but who you're going to serve that's not going to matter nearly as much um you can build these types of homes for any type of Resident that needs that type of assistance now let's talk about the approvals that are needed so while you are not an a licensed facility there are still certain types of approvals that you need to get in place um they're going to vary from state to state um and also potentially County to County uh as
00:07:51
you get into this because one of the big things that you need is zoning um zoning is a big piece of assisted living and one of the big things that I talk about in in my coaching programs is understanding the the ins and outs of what zoning looks like for for for people so you know what you're getting into the same thing is going to apply here to a unlicensed care home you need to make sure it's licensed correctly that you can operate a business out of the home that you can have a certain
00:08:21
amount of people inside of the home uh as well um something that you want to look at is um they'll say like unrelated persons living in a home that's that's kind of some of the language you want to be looking for as you get into zoning and uh you know as you get into that it will kind of inform you whether or not you can get there you may have to get special permits as well um and and see what that looks like sorry I've got allergies in my nose is itching um but there's going to be local regulations as
00:08:49
well as you get into this so you want to just have a conversation with the city planner um understand what zoning looks like for you inside of that home in inside of the area where you want to be doing this this unlicensed care home the other thing is going to be fire department and I'll try to link a video we talked about um fire um stuff a couple weeks ago as well and in there something you want to make sure that you get done is inspections so you want to make sure you have fire department come
00:09:19
and do an inspection on the house make sure that it um meets the needs see what type of fire stuff you need to put the the life what's it called the life fire safety um I think is what it's called um but there's safety standards that you have to adhere to and make sure that your residents are um they're safe and secure from in the event that there is a fire and that happens whether you're a licensed facility or not these are rules that you have to follow so you're still going to have to do that um you're just
00:09:48
not going to have to go through a licensing process to become a licensed care home or assisted living home because you're an unlicensed home but you're still going to need to get these checks and balances in there the next one is starting a business and we talked about this in uh our video last week yeah recently I've done quite a few videos on on starting the business and a lot of that starts with uh business plans legal structure proper Insurance like all of those things kind of come into play they are the base of
00:10:20
what you want to build as as you get into this business spend some time building the business plan spend some time figuring out exactly um what you need for to to be in that business plan so that you can be successful and um and make the plans so that you know how to to handle things when they come come through this and you want to kind of go through the legal structure figure out how you want that to be structured are you going to own the home or not own the home and if you are owning the home do
00:10:49
you need a separate entity that's going to own the home the real estate and a separate one that does the the business um do you want to have that wrap into one thing are you just doing the business and so you just need the one um entity to do that do you want to do an es Corp or an LLC or so proprietorship U there's so many questions there that you need to kind of figure out and and understand what is going to to work best I have some videos on that on the channel as well um and I'm running out
00:11:15
of things that I can link up above so you might need to just go in and search uh for those but um I highly suggest going the route of an LLC u based off of conversations I've had with my attorney um but your situation could be very different and so I highly suggest I'm not an attorney I highly suggest talking to one to help you out and and help you understand so you make the right decision that's going to help you out and then getting the proper Insurance you want to make sure you have property
00:11:41
insurance uh liability insurance with your staff you're going to need workers comp insurance those are the three big things that you need to have and getting an insurance broker to help you find that is going to um be big in helping you save some time making sure that you have the right coverage and getting the best price for that so all of these things are kind of kind of a part of starting that business and getting things up and running um they're the same things that you need when you have
00:12:05
an assisted living home that's licensed a lot of similarities here uh it's just kind of that licensing process it's going to be different now let's talk about State specific rules each state their rules are going to vary um and I don't I'm not an expert in every single state and what they all say so you've got to do some research and figure out what it means for you if you're in Texas or Florida or New York or um Wisconsin or wherever you are California I don't I
00:12:32
don't know where you're at but wherever you are do some research on what an unlicense Care Home looks like for you you're going to do an internet search for something like unlicensed care homes in my state um and you're going to put that in there and it's going to come up with uh or how to start an unlicensed care home in my state that's the type of um initial query that you want to put in there and it's going to give you some really good guidance on how to help you make the right decision for for your
00:13:00
specific state so you're doing things correctly and making some progress towards um your goal of of owning that care home that that unlicensed care home the other thing that I would say is you don't have to worry about this being a secret um it's okay to like even talk to the health department and say Hey I want to start a care home but I think I want to go the route of an unlicensed care home um do you have any resources around that it's okay to have these conversations people are going to find
00:13:28
out regard L um so you might as well start talking to people about it early on so that they can help you make the right decisions and you may find out that it makes no sense to do an unlicensed care home in your in your state or you may find out that man this is the best way to go and I'm going to build a business structure like like an Empire of these unlicensed care homes in my state because it's super friendly to what I'm trying to do here um doing the research having conversations and don't
00:13:59
letting don't let it be a secret these are all really good kind of points that can help you along the way in making some really good progress as you get into this I I don't want you to do this in a silo U talk to people I was talking can't if this was in a video or I was talking with somebody about it but open your mouth and say the things that you want to do the things that you want to build and share that with other people because um that's that's how you get these things to kind of come to fruition
00:14:29
for you and people start coming into your lives to to help you out in making progress so that's just a just a general good overall point regardless of what you're doing here now um we've got a couple people live if you have any questions please type those in uh they can be about the unlicensed care homes or uh any topic I'm happy I've got a few minutes I can chat with you about things uh so go ahead and type in your questions while you're doing that though I want to remind everybody to like the
00:14:57
video subscribe and ring the bell as well so you get notified every time we do these lives we do lives on Tuesdays and we do long form videos on Thursdays uh we're starting to put blog content out on the website as well so get over to the website and get subscribed to the newsletter so you get get informed about all that content it's going to kind of help you along the way in in getting things out we're trying to build some robust stuff there and then we're going to be um launching a podcast here as
00:15:24
well a lot of it's going to just be simoc cast of what we're doing on YouTube um but we'll eventually create more more um content there um as well so putting out a lot of stuff for you trying to help you out along your path along your journey uh at Assisted Living investing really what I'm here to do is help beginners like you launch their Assisted Living business in the next 12 months that's it's my goal I love coaching people love helping people uh helping you along the way and helping
00:15:49
you achieve your dreams of time and Financial Freedom that you want to have so really excited to do that and want to remind you to you know if you're interested in doing a strategy session with me I I was late on the live today was having a super fun conversation with uh with somebody that had reached out to me on LinkedIn actually and just really enjoyed that conversation so if you want one of those strategy sessions go to Assisted Living investing. net strategy we can talk about your goals um barriers
00:16:19
that you have in the way and see if you know ultimately what I want to do is see if I'm a good fit for you but I'm not going to try to push you into anything as well um so you know go and grab grab that if you know that you want coaching go to Assisted Living investing. netmaster you can join The Mastermind program it's a year-long program um we're doing some fun things actually later this week um with that program that I'm super excited for a really in-depth Workshop um that that's going
00:16:46
to help people build that business plan and build that base and really excited for where that's going to go so if you um are interested in getting involved in some of those things then make sure you get over to the Mastermind program and and get signed up we can get you going and help you along your journey to help you launch that Assisted Living business I want to thank you again for watching and you know ask you the question does residential Assisted Living sound interesting to you but you
00:17:12
don't know how to get started at Assisted Living investing we're here to help you through the process step by step by step so you know how to um do the things that you want to do so you can launch that business in the next 12 months and Achieve that time of Financial Freedom that you're seeking and I want remind you that it doesn't take a lot just a little bit just keep going keep making progress step by step by step if you do and you're consistent and persistent I promise you you're
00:17:37
going to be successful thanks for watching and have a great day
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