When Assisted Living Doesn’t Make Sense (And What to Do About It)

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Starting an assisted living business can be exciting—but there are some situations where the numbers just don’t work. Not every house makes sense for residential assisted living (RAL). In this blog, we’ll break down when assisted living doesn’t make sense, and more importantly, how to fix it.

Let’s get into it! 📉➡️📈

Check out this video, too:

Why This Matters

Someone recently left a comment on my YouTube channel asking if assisted living made sense in their situation. They broke down their numbers—and they were right. In that scenario, it made zero financial sense.

But there are ways to adjust a bad situation and make it work.

I want to help you avoid bad deals, and more importantly, understand how to run the numbers the right way.

The Scenario That Doesn’t Work ❌

Let’s say you have a house with:

4–5 residents
Each paying $3,200/month
You're paying caregivers $20/hour to cover 24/7 care

Here’s the math:

24 hours x $20/hour x 30 days = $14,400/month in caregiver wages
4 residents x $3,200 = $12,800 income
5 residents x $3,200 = $16,000 income

You’re barely breaking even—or worse, losing money. And that’s before your other big expenses like:

Food
Insurance
Utilities
Debt service

Fix #1: Raise Your Rates 💵

If you can charge $5,000/month instead of $3,200:

4 residents = $20,000/month
5 residents = $25,000/month

With $14,400 in staffing costs, now there’s room for profit.

$5,000 is often still a deal in private pay markets.

But remember:
Don't assume 100% occupancy. Underwrite for 80% occupancy.

Fix #2: Add More Beds 🛏️

Let’s say your home is large and you can add more beds or offer shared rooms.

8 residents x $3,200 = $25,600/month
10 residents x $3,200 = $32,000/month

Now you're making real money—even without raising your rates.

It's really hard to make a profit in a facility with six beds or less.

And staffing? It doesn’t always increase with resident count.

8 to 10 beds likely won’t need more staff than one person covering a shift at a time.

Fix #3: Raise Rates AND Add More Beds 🚀

Now we’re talking!

8 residents x $5,000 = $40,000/month
10 residents x $5,000 = $50,000/month

Even if your caregiver costs go up to $20,000/month,
You still have plenty of room for other expenses.

This is how assisted living starts to make sense—and becomes a much stronger business model.

What Kind of House Actually Works?

People often ask:
I’ve got a 3-bed, 2-bath house… Is it good for assisted living?

Short answer: Nope.

It’s probably not going going to work (and money will be REALLY tight). Even 4 or 5 bedrooms might not work unless you’re charging higher rates.

My homes in Colorado and Idaho each have 10–12 bedrooms.
That’s what makes them profitable and sustainable.

Don’t Feel Bad About Charging More

Charging $5,000/month might feel like a lot. But remember:

You’re providing food, 24/7 care, a place to live, and peace of mind for families.

Many families can pay for care using:

Medicaid
Reverse mortgages
Long-term care insurance
Retirement funds

It ends up not being that much when compared to home health care—which doesn’t even provide 24/7 support but often is more costly than assisted living.

Want to Make It Work? Do These 3 Things:

✅ 1. Build a solid foundation
Download the Business Plan Checklist to create a real plan that works.

✅ 2. Run the numbers
Use our free Underwriting Calculator to make sure your business can be profitable—even at 80% occupancy.

✅ 3. Get guidance
If you want support, check out the ALI Basics community.

It’s the least expensive way to work with me directly.

Or go deeper with the ALI Mastermind and get access to my full Launchpad Bundle.

Final Thought

Starting a residential assisted living facility is doable—but you’ve got to be smart.

Don’t jump into a deal blindly.
Make sure the numbers work before you spend thousands—or millions.

Download Your FREE Calculator

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