Why Most Assisted Living Investors Fail in Year One (and How Not to Be One of Them)
Dec 26, 2025
Running an assisted living business is hard, especially in the first year. I’ve seen a lot of well-meaning people jump in with big hopes, only to get overwhelmed fast. The good news is most failures come from the same few mistakes, and you can avoid them.
Want the full breakdown? Watch the video below👇
Staffing Is Not a One-Time Problem, It Is a Forever Job
When I first got started, I thought filling beds was the hardest part. I was wrong. Staffing is the real challenge, and it never fully goes away.
In assisted living, turnover is normal. People leave for small raises, life changes, or burnout. If you assume staffing is “handled” once you hire a team, you will get caught off guard. You will always be hiring, training, and adjusting schedules.
What I’ve seen work best is focusing on culture. When people feel respected and supported, they stay longer, even if they could make a little more money somewhere else.
✅ Follow this simple process: hire carefully, train well, and retain through culture and growth.
Licensing Always Takes Longer Than You Expect
Licensing timelines surprise almost everyone. Even when you buy an existing facility, transfers can take months. If you are starting from scratch, it can take even longer.
During that time, you still have expenses. You still pay staff, utilities, food, and insurance. But you may not be getting paid at full capacity yet, or at all.
I always tell people to plan for delays. Expect an extra three to six months before everything is fully approved. That buffer can save your business and your sanity.
✅ Build extra time and capital reserves into your plan from day one.
Beds Do Not Fill Overnight, Even in Great Markets
Many first-time owners assume residents will show up fast once the doors open. Sometimes that happens, but it is not something you should count on.
Filling beds usually takes 30 to 60 days, and sometimes longer. This is why buying an existing facility can be easier: you have residents and cash flow from day 1.
If you are starting new, you can still market your facility early. You just need to be clear that you are “coming soon.” The real key is not flyers or business cards. It is relationships.
Building trust with hospitals, case managers, and community partners brings residents far more reliably than fancy marketing.
✅ Start relationship-building early and do not rely on instant occupancy.
Ignoring the Numbers Will Catch Up to You Fast
Assisted living is expensive to run. That does not mean it cannot be profitable, but you must understand the numbers.
There are five core expenses that make up most of your costs. I call them the WIFED expenses because you are "married" to them 😉:
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Wages
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Insurance
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Food
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Energy (utilities)
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Debt service
Wages alone are often 50 to 70 percent of total expenses. If you underestimate these or hope they magically shrink, the business will struggle.
This is why underwriting matters. You need to know what the business looks like on paper before you commit.
✅ Know your core expenses and plan for them.
Losing Sight of Your Vision Makes Everything Harder
This is the one that causes the most burnout. When things get hard, and they will, it is easy to forget why you started.
You need a clear vision. Who do you want to serve? What size facility do you want? What kind of life are you building for yourself?
When you write that down and come back to it, the problems feel more manageable. The rules, the staffing issues, and the long days make more sense when they connect to a bigger purpose.
I’ve seen people quit not because the business could not work, but because they lost sight of their “why.”
✅ Write your vision down and revisit it when things feel heavy.
Wrap Up
Most assisted living investors do not fail because they are lazy or incapable. They fail because they underestimate staffing, timelines, numbers, and the mental load of the business. If you plan for these realities and stay connected to your vision, you give yourself a real shot at success.
If you need help creating a business plan for your assisted living business, check out the Free Business Plan Checklist.
And if you’re ready to figure out your next step, join me for the next Roadmap Challenge, where I’ll walk you through how to get started.
Show full transcript 👇
Transcript
00:00:00 - 00:01:03
Running an assisted living business is hard. Margins can be tight and it can be a really rude awakening for first-time assisted living entrepreneurs when they get things started. In today's video, I want to get into why most people fail in the first year and what you can do to avoid that. [music] Hey friend, I'm Brandon Gustafson. I help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses in the next 12 months, creating prosperity, purpose, and peace in their lives. Super excited to have
00:00:35 - 00:01:19
you here with me on the channel today as we get into this topic to help you launch your assisted living business successfully. And make sure you have what you need. If you need help, make sure you stick around to the end of the video. I got a special offer for you. But if you want to learn a little bit more about what that offer is, go to roadmapchallenge.com. Would love to see you over there. Stick around till the end of the video. I'll tell you a little bit more about what that looks like to
00:00:57 - 00:01:39
work with me in that challenge. It is such a fun experience. Would love to have you there. Also, make sure you get over to assisted livinginvesting.net. I have a bunch of other free resources and things like that for you over on the website. Would love to see you over there. Let's chat about what you can do to avoid failing as an assisted living business owner. I've got five things that I want to go through with you. Make sure you stick around for number five. It's a big one. Something actually that
00:01:18 - 00:02:23
I can help you out a ton with. That's something I focus a lot on. So, make sure you stick around for number five. Number one is understanding staffing and turnover. When I was first getting started in assisted living, I was so focused on, oh my gosh, how many residents do we need? Can we get residents? That was my main focus. But as I got into the business and actually owning the business and and running the business, what I found is staffing is the most difficult thing for you to be dealing with in this business. There's a
00:01:51 - 00:02:41
lot of turnover. You have to find the right people. People will leave because they get paid an extra 50 cents an hour somewhere else. It's kind of cutthroat and it can really lead to a lot of turnover which creates a bad experience for your residents. Creates a bad experience for the rest of the staff. Maybe you have to go and get temporary staff or something like that that to just fill the hours that you need to have to make sure you're meeting the needs of your residents. And that can be
00:02:15 - 00:03:09
really hard. So the big mistake here is thinking, "Oh, cool. I got all my staffing done. Everything's good. We're We're in a great spot. And that could be the case. But more than likely, you're going to be constantly hiring. That's the reality of it. You will always be hiring. There's always something happening in assisted living. Maybe you bring in new residents. Maybe somebody a staff member gets sick. Maybe they have a baby. Maybe they leave because they get paid a little bit more somewhere
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else. And so you have to kind of understand that this is something that you will be doing in perpetuity. like it is something you're going to constantly be doing for the entire time that you are running an assisted living business. So, you better get used to doing that and bringing people in for interviews and getting to know them and their stories and making sure you have really good people. Now, I have found that you are able to retain people a lot better when you build a strong culture in your
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facility and people will typically even maybe take a little bit less money if they feel like you are respecting them and you're creating this opportunity, this environment where they can thrive. So, something that I would like you to kind of know a little bit about is a little bit of a framework here. Um, when it comes to the hiring process, number one, you've got to hire people, right? So, this is think of this as as a bit of a flywheel. You have to hire people. Then you need to train your people. And
00:03:38 - 00:04:36
then you've got to retain your people. So hire them. Make sure you spend a lot of time hiring the right people. Train them. Make sure you are giving them the tools and and the resources they need so they can be successful in their job and they feel appreciated. And then do what you can to retain them. And that can be through continuing education or creating a pathway for them to, you know, get promotions or things like that in your facility. And when you do that, then you can just do that with the next person.
00:04:08 - 00:05:05
You just kind of recycle it. But if you follow that path, you're going to be a lot more successful. Hire, train, retain. that's going to make your life so much more simple as you are going through the process of trying to find the right people for you for your facility and maintaining this this really good atmosphere for your residents which is honestly the thing that you need to be doing the most. Okay, number two is forgetting licensing timelines. This is something actually as the recording of this video 4 months ago
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we sold our facility in Colorado. We'll link that video up above for you so you can go watch that video about why we sold it, what that looked like for us, and where I'm going on the next phase of of my journey with assisted living. But we sold our facility in June. Okay, it is now October as of the recording of this video. That's four months, by the way. No, it's November. A little over four months. And we just like 3 days ago were able to finish the licensing process in the state of Colorado to transfer ownership,
00:05:12 - 00:06:14
transfer the license from the previous owner over to us. Okay? And that's through what's called a cow, which is a change of ownership process, which typically goes a little bit faster. And I would say it probably did go a little bit faster than a brand new license. So you need to take into consideration that oh my gosh I can't and if you don't have your license and you are doing a 12 10 16 20 bed facility you're going to be very limited in in the population you can serve. You could still bring people
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in in an unlicensed facility capacity even in a larger home. You could offer other services like adult daycare or daytime services or there's a bunch of other things out there that you can do that can help supplement some of that income in the meantime, but you're going to have to wait for the state to process everything. And as much as our partners at the state are great people and they want to help out the residents and making sure that they have what they need, they also have rules and regulations that they need to
00:06:13 - 00:07:14
adhere to. And so you have to make sure that you are getting them everything. They're also not always great at communicating exactly what you need. The hold up for us in this Colorado situation was a bill of sale that transferred the ownership from us over to the new owners and it was just slight wording on there. Little tiny sticky things. Um, when we were trying to get Medicaid certified in Colorado previously, it took us four to 6 months to do that because of a bank statement thing that they needed that was very
00:06:43 - 00:07:34
specific. It's going to take you some time as you get into this. And so, you need to understand that, you know, I may, as much as I might close on this business, uh, it doesn't mean that I'm automatically going to have the license in place. And if you're buying an existing business, hopefully you have somebody that you're purchasing the business from that is willing to work with you and work on the transfer. But if you're doing this from the beginning, then it can really throw a wrench in
00:07:09 - 00:08:03
things and make it really difficult for you to progress and get the license that you need, which is going to be the catalyst to getting the money that you need to become profitable. So, it's very important that you take all of this into consideration because if you don't, you can find yourself in a situation where you are providing services. You have to hire staff to provide those services. You still got to buy the food. You still have to do all of the expenses. And you're not getting paid because you're
00:07:36 - 00:08:22
not a licensed facility or not getting paid to the capacity that you have the potential to get paid because you don't have the license in place. Now, it's going to be a little bit different. If you want to go the unlicensed route, and that that's you type in unlicensed below. I've got a few videos before you that talks about this. Um, in an unlicensed world, you still are going to want to follow the rules and regulations. You're still going to need to get things up and running. You might
00:08:00 - 00:08:55
not have to wait on the state to give you a license, but there's still this long runway of time that you need to have your house get ready. U make sure zoning is in place, make sure that you have fire department approvals. Those are not licensing specific things. Those are I'm running a business out of this home and I'm caring for people. So, you have to meet certain regulations that are just based off of what you can and can't do inside of a home. So, there's there's still red tape that you got to
00:08:27 - 00:09:20
learn to navigate as you're going through this. So, don't don't just assume that everything's going to be, you know, great and you can open right after once you get the house, you know, everything's approved at the house or you purchase the facility. I would honestly expect that it's going to take you an extra 3 to six months to get everything in place. You should plan for that because if not, it can really make your life difficult. That's where I I really believe in getting an extra 3 to
00:08:53 - 00:09:47
6 months of capital in reserves so that you can weather that storm as you're trying to get to the spot where you can run this successful and profitable assisted living facility. The third one is misproing how quickly you're going to fill your beds. And this is something honestly I talked to a lot of you about this and this is something that I think you're cognizant of which is great that you're aware that hey this actually might take me a while to get the facility all the beds filled. Probably
00:09:21 - 00:10:19
isn't going to take you as long as you think it is. But what I don't want you to just assume is that you're going to open the doors and the floodgates are going to open and boom, you know, within 20 days you got a full facility. Certainly could happen, but I honestly wouldn't plan on it. This is exactly why I like to buy existing facilities. The pathway to profitability, it accelerates significantly because you already have residence in the home. You already have built-in cash coming into the business
00:09:49 - 00:10:39
and it makes your life that much easier. Doesn't mean that it's the only way to go. I I I really think there's four different paths that you can get into when it gets into assisted living. If you're interested in learning about those, type in four down below. That'll be my key that hey, you want to know about the four paths to getting into assisted living. So, type in four down below. But there there's four paths that you can get into in assisted living. And each of them have pros and cons for
00:10:14 - 00:11:11
where you're going to go. And in doing that, you probably need to plan. Again, this is why I tell you 3 to 6 months of contingency funds, capital reserves, because it could take you a while to get residents into the home. I think you should be planning on 30 to 60 days. One thing that I will tell you though is for those of you that are starting an assisted living from scratch, you're building something, you're renting something, you you don't have that built-in base of people that are are
00:10:43 - 00:11:38
paying you already that you get when you're buying an existing facility, you can still market it. You cannot market yourself as a licensed assisted living facility, but you can market yourself as assisted living facility coming soon to LA. I don't know. I can't think of a a good city off the top of my head, but you can put that in there in in your marketing materials. You can go out, you can start building relationships with people in the community. You can start talking to them about, hey, we're going
00:11:11 - 00:12:09
to be starting an assisted living facility. We serve generally elderly people or we serve people with mental health or people with disabilities or whatever population you want to serve. create your marketing collateral. Create your marketing message and then go out and start building relationships with people. And the relationship building is far more important than the collateral, by the way. Flyers, business cards, those are great, but do not spend a ton of time on that. And don't make it
00:11:40 - 00:12:27
feel like that's fake progress for you because that's not the thing that's going to bring in a lot of residents into your home. It's you building relationships in the community. That's what's going to bring a lot of residents into the home. So, do not forget that. Okay. So, that's number three. People that just like, "Oh, you know what? Yeah, I mean, it'll take us a while, but we can have the beds filled in 30 days." Um, probably going to take you a little
00:12:04 - 00:12:58
bit longer than that. Don't fall into that trap um as you're getting into it. Okay. Number four, ignoring the numbers. Now, I tell you, and get over to assisted livinginvesting.net. There's a big blue box just right there. Boom. You cannot miss it. It says download free underwriting calculator assisted livinginvesting.net. That's where you get that. But that's why I tell you and I I I focus on this so much. It is so important for you to understand the numbers. Part of my fivephase process,
00:12:31 - 00:13:27
my focus framework of starting an assisted living facility is building your foundation first. That's what the F stands for. And a big part of that is underwriting, understanding your numbers and also I would say not making an assumption that everything is going to be correct. Okay. When you're doing those numbers, you also are going to as you get into underwriting and I talk about this in the road map challenge. We actually go through this entire process together with you. So go to roadmapchallenge.com to learn more about
00:12:58 - 00:13:57
that. But you need to understand the big five expenses. I call them the wife expenses because you're going to be married to them the entire time that you are running your assisted living facility. They are wages, insurance, food, utilities or energy. That's the E, but it's your utilities and debt service. And those five core expenses are going to make up 80 to 90% of your total expenses. And if you understand those and what they look like and you don't try to skimp and save on them,
00:13:28 - 00:14:23
especially wages, which we talked about as number one in this video was was staffing. If you don't skimp on that, understanding that wages will be 50 to 70% of your total expenses, you're going to be in a much better situation. You should plan on those things. You can find deficiencies in it definitely, but you should just plan on that from the beginning because it's going to be really expensive and if you ignore those things, it's going to take a lot of money for me to run this business. It's
00:13:56 - 00:14:49
okay. I'm going to be bringing in a lot of money as well. So, it's it washes out. You can still be very profitable in this business. You can make a lot of money with it, but you need to understand that you are running a business. It's expensive. Okay? So, make sure you have an understanding that that's going to happen. go to the roadmap challenge roadmap challenge.com and on it's on day three in that challenge we get really deep into how to actually underwrite or maybe is day two
00:14:22 - 00:15:11
day two or three one of the two we go through exactly how to underwrite how to underwrite a facility how you can understand the numbers and make it really simple because I'm sure you go to assisted livinginvesting.net that you grab the come to writing calculator. You download it. You're super excited. You open that thing and you're like, "Oh my gosh, what is this guy thinking? This is so much stuff. I love numbers. I love working at Excel. That's why it's it's so complex." And for those of you that
00:14:46 - 00:15:38
know that um like you open it, you're you're super excited for it. Type in calculator down below for me because I I'd love to hear like is that if if you're that person that you're just like, "Yep, I love it." Um type in calculator. You and me are are we're on the same wavelength. But if you are somebody that needs help with that, type in challenge down below because I also get that it can be hard. If that's for you though, if that if that's you and it's hard and you don't know what you're
00:15:12 - 00:15:58
getting into and everything just looks confusing, go to the road map challenge because I'm going to break it down for you in very simple terms and we're going to work through it together in a workshop and it's going to give you so much clarity. watching light bulbs go off in people's eyes when we do the challenge. It's super rewarding for me for them to be like, "Oh, that's how you do it." That's what I want for you. So, make sure you go check that out. Again,
00:15:35 - 00:16:34
roadmapchallenge.com. Okay. Now, that's number four. Number five, I teased this at the beginning, but number five is what I honestly think is going to be the thing that propels you to moving forward, and it is losing sight of your vision. In the beginning, if you haven't done this yet, you need to. And we do this in the road map challenge by the way. You need to create a vision for yourself. You need to say this is the population I want to look at. This is how many beds I want to have in the facility. And you
00:16:05 - 00:17:07
need to write these things down. And then once you have that done, you need to not get so distracted when you are going through the process of getting things started because it can be a slog. It can be hard. It's difficult. It's not always fun. You're dealing with rules and regulations. because you're dealing with angry people and then you also are ultimately going to have angry residents or angry staff or once you are owning the business and you're running the business, it also doesn't necessarily
00:16:36 - 00:17:40
just get better and everything's, you know, sunshine and lollipops, it continues to be difficult. And if you can't retain that vision that you have, you can't remember the why behind, you know, this is why I'm doing assisted living, it can make it really hard for you to progress and and reach your goals and become profitable. And then you get burnt out and then you're like, why did I why did I do this? Why did I get into assisted living? If you can go back to your why and the purpose for why you
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wanted to do this in the first place, it's going to make those things become a lot more manageable for you, you're going to be a lot more successful. You're going to be more profitable. You're going to be able to serve your residents better. You're going to retain your staff. You're going to be able to handle the financials and understand what those look like. You're going to be able to do all of those things and that's going to help propel you forward. So, make sure you take some time with
00:17:33 - 00:18:31
that. Um, I love coaching people and taking them through the vision exercise. That's why I do that in the roadmap challenge and for people that are in my success system, we do it there as well. And it's so important for you to create this vision and to focus on it so that you can go back to it when things get hard because things will get hard in this business. I promise you that. But if you have this vision, this this thing, this why for why you are getting into it, it makes everything that much
00:18:02 - 00:18:52
easier. So you have to remember that you have to stop losing sight of the vision at any point along the path. You have to retain that that part of the vision and that's going to help you move forward and be successful. All right. So I would love to hear from you. Which of these five things are you just like that's the one that's the one that I needed to hear? We talked about staffing and and how big of an undertaking that is. You need to understand what that looks like and especially the turnover part of it.
00:18:27 - 00:19:20
We talked about licensing and time to licensing time to obtain your license. misprojing how quickly you can uh get your occupancy up and to a level that you're comfortable with. We also talked about ignoring the numbers and why you need to spend time underwriting and we got into just losing sight of your vision and and how that can be hard. So, which of those five was the one that you're just like that's the one I needed to hear? Type that in the comments down below. We'll love to hear from you
00:18:53 - 00:19:41
there. And I I mentioned at the start of the video I had a special offer for you. I would love to have you in the road challenge. This is it's a live coaching event. This is not something, this isn't a sales call. This isn't something that's pre-recorded. This isn't courses. This is me in the room with you, helping you out, answering your questions, helping you move forward and get unstuck so you can launch your assisted living business. I love coaching people and this is the best way for me to do that
00:19:17 - 00:20:05
is kind of in a group setting. I also you're going to learn from other people that have questions and I found that courses are great, right? I my courses I put so much time and effort into creating those for people like you to launch your assisted living business. But also I know that like just realistically you're you may not watch all of the videos or if you watch all the videos you're not taking all the action steps that I give you in those videos. And so that's why I created the
00:19:41 - 00:20:27
roadmap challenge because it is an opportunity for us to work together. It is a challenge though. There's homework. There's a lot that goes into this. So come prepared to work. It's not hard homework but you have to put in an effort if you want to be successful. By the end of it, we have this awesome road map that is going to give you guidance on what you need to do, all the milestones that you need so you are actually making progress towards launching your assisted living business.
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Again, I would love to see there roadmapchallenge.com. We will see you in the next challenge that's coming up soon. So, make sure you go and check out that check out the website there. Are you curious about assisted living investing, but you're not sure how to get started? At Assisted Living Investing, I help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses in the next 12 months, creating prosperity, purpose, and peace in their lives. I love helping and coaching people. Uh, it would be an
00:20:27 - 00:21:16
honor to do that. Make sure you go check out the roadmapchallenge.com. You'll get free resources. Assisted livinginvesting.net. Make sure you like the video, subscribe, and ring the bell as well so you get notified every time we put out content like this. We go live on Tuesdays, we put out content on Thursdays, making sure you have everything that you need to successfully launch a profitable, purpose-driven business. And remember, it doesn't take a lot, just a little bit. Just keep going step by step by step. And I
00:20:52 - 00:21:10
promise you, if you do and you are consistent and persistent, you are going to be successful. Thanks for watching and have a great day. [music]
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