Why the Assisted Living Deal You’re Looking At Doesn’t Make Sense Financially
Feb 25, 2026
If you’ve ever looked at an assisted living property and thought, “I don’t even know if this will work,” you are not alone. I hear that all the time from first-time operators. The good news is this is not as complicated as it feels once you understand the numbers.
Want the full breakdown? Watch the video below👇
You Need Both Clarity and Confidence to Make a Smart Decision
When you first look at a deal, it can feel overwhelming. You might feel blind when it comes to the finances. I get it. I’ve been there.
In my Roadmap Challenge I teach something called the FOCUS Clarity Quadrant. You need clarity and confidence. If you have neither, you feel overwhelmed. If you have clarity but no confidence, you get stuck in research mode. If you have confidence but no clarity, you hustle in the wrong direction.
The goal is to get into the FOCUS zone. That is where you understand the numbers and feel confident moving forward.
💡 When you understand how the income and expenses work, you stop guessing and start making smart moves.
Start with Basic Underwriting: Income Minus Expenses Equals Profit
Let’s make this simple. Underwriting is just a projection. You are asking one question: will this be profitable?
The formula is easy:
Income minus expenses equals profit.
First, look at income. Income is the number of residents multiplied by what they pay each month.
For example:
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10 residents
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$5,000 per month
That is $50,000 in potential income.
But here is the keyword: potential.
You will not always be full. That is why I suggest underwriting at 80% occupancy. If you are licensed for 10 beds, run your numbers at 8 residents.
✅ Always test your deal at 80% occupancy, not 100%.
If the deal only works when you are full, it is too risky.
Know Your “WIFED” Expenses Before You Say Yes
Now let’s talk about expenses. I teach what I call the WIFED expenses. These are your five biggest costs:
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Wages
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Insurance
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Food
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Energy, meaning utilities
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Debt service
These make up 80 to 90 percent of your operating costs. Wages alone can be 50 to 70 percent.
If you do not understand wages, you do not understand your business.
Let’s say your total monthly expenses are $40,000. If you make $50,000 at full occupancy, that looks great. You see a $10,000 gap and think, “This works.”
But what happens at 8 residents paying $5,000 each?
That is $40,000 in income. If your expenses are $40,000, you are making zero.
Now imagine one bed is empty. That is $5,000 gone. Your expenses barely change, but your income drops fast.
That is why empty beds kill profit faster than almost anything else.
Assisted Living Is a Business, Not Just Real Estate
If you are a real estate investor, this part is important. This is not just a rental property. You are running a business.
You need:
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Staff
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Systems
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Licensing compliance
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Marketing
If you ignore these, you risk fines or shutdowns. You also risk burnout.
I have seen administrators work themselves to the bone. I have learned the hard way that you need systems, SOPs, and KPIs from day one.
💡 The more you treat this like a real business, the easier it is to grow and attract lenders or partners.
You cannot just fill beds and hope for the best. You need structure behind the scenes.
Marketing Keeps Your Beds Full and Your Cash Flow Alive
Many people tell me they are scared they will not find residents. I understand that fear. But in most markets, demand is strong.
The bigger risk is not marketing consistently.
If one resident pays $5,000 a month and that bed is empty, that is $5,000 in lost income. Your payroll still needs to be paid. Your utilities still need to be paid. Your food still needs to be purchased.
That is why marketing is not optional.
I like to call it GENEROUS marketing. It is relationship-driven. You build real relationships with hospitals, social workers, and people in the community. You give first. You help first.
When you do that, referrals come naturally.
✅ Always be building relationships, even when you are full.
Because when a resident moves out, you need the next one ready.
Wrap Up
If the assisted living deal you are looking at does not make sense financially, it is usually because the numbers were not underwritten correctly. Run your income at 80% occupancy. Understand your WIFED expenses. Make sure marketing is part of your plan.
This business can create real prosperity, purpose, and peace. But only if you treat it like a business and understand the levers you can pull.
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 - 00:00:51
Hey friend, in today's video we're going to be talking about why the assisted living deal you're looking at doesn't make sense and how to understand it so that you can actually make the finances work. So, if you're interested in learning about that, make sure you stick around for today's video. Hey friend, welcome back to Assisted Living Investing. I am super excited to have you here on the channel with me today. My name is Brandon Gustoson. and I help first-time assisted living
00:00:30 - 00:01:22
entrepreneurs launch profitable, purpose-driven businesses, creating prosperity, purpose, and peace in their lives. Super excited to dive into our topic today, which is all about financing and understanding how the finances work to see if this is actually going to be a profitable opportunity for you. This is something I hear from people all the time, like I don't even know if this is going to work. Like, does it really make sense financially? So, I want to really kind of demystify that for you today and dive into it and
00:00:56 - 00:01:46
help you understand what those look like. I do want to mention at the end of the video, stick around because I will be giving you a special offer for us to work directly together. But if you want to learn more about that, go over to roadmapchallenge.com and you can check out our next challenge which is coming up soon. I would love to have you on there. But I'll tell you a little bit more about that here at the end of the video. Also, if you need help in launching your assisted living business,
00:01:21 - 00:02:18
go grab the profitable assisted living facility book at theibbook.com. Um, I've got my book up there. It's a bestseller on Amazon in in a couple categories, real estate investment and in nursing homes. So, it's a great book. Can really help you out as you're trying to launch your assisted living business. So, make sure you go check that out. With that, let's hop into today's video. Again, we are talking today about how to make the numbers work when you're looking at an assisted living property.
00:01:50 - 00:02:44
So, I really want to help break this down so you understand what the numbers are that you're looking at and help guide you through all of this. And in our in the road map challenge, we actually go through this in one of the sessions where I give you an example like your example and help you work through this. But let's talk into this your numbers. oftentimes when you're in the beginning phases of this, like I I totally get it. You're flying blind when it comes to numbers. You just don't know
00:02:17 - 00:03:09
what you should be even looking at. If that's you, type in blind down below because I I I'm going to share something here with you that will really help simplify the numbers and make it really easy for you to understand how the income and the expenses are going to work so that you can move forward with confidence. There's something that I teach, I call it the focus clarity quadrant. And really what you're going to see is you have this quadrant. Imagine that you've got a line that goes
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straight up. We'll try to put this on on the screen for you. You got a line that goes up and down and you've got one that goes across. You've got an x-axis and you got a y-axis, right? And you need clarity and you need confidence. So let's call our x-axis our confidence. So you've got your your y-axis, which is your clarity, and you got your x-axis, which is your confidence. So you need clarity and confidence for you to be able to move forward and get into the focus zone, which is I teach my focus
00:03:07 - 00:03:56
framework, right? And so what you need to do is you need to get both of these things. When you don't have them, you feel overwhelmed, right? When you don't have clarity or confidence, you're in my bottom left. You're in what I call the overwhelm zone. And it just feels overwhelming. And when you start getting some clarity, but you still don't have the confidence, you're in analysis paralysis. You're in what I call the research zone. You're just researching stuff. Or if you're the inverse of that,
00:03:32 - 00:04:19
you don't have the clarity, but you've got confidence. You're in the hustle zone. You're just moving. You're making you're just a bowl in the china shop. You are just taking action, which is great, but you're maybe you're taking the wrong action or taking the wrong steps at the wrong time. What I want you to do is combine clarity and confidence and get you into the focus zone. You know, that top right section up there. That's what's going to help you out as
00:03:55 - 00:04:41
you're trying to move forward. So, that's a lot of what we're teaching you here today in this video is helping you shift from feeling overwhelmed or maybe you're in the hustle zone or you're in research mode and help you get into a spot where you're focused and you're able to move forward with this. All right? Because if you don't understand the numbers, you're not going to be successful with your assisted living business. You're not going to know the levers you can pull when it comes to
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profitability or to get a lender to tell you yes. You're just not going to know what those things are. So that's what we're going to try to really dive into here for you in this video. So when it comes to your finances, we're going to do some quick basic underwriting for you. All right. So underwriting at its core is telling you this is a projection to see, hey, is this going to be profitable or not? Can I make this work or not? And the the simple formula is income minus expenses equals profit.
00:04:47 - 00:05:44
Okay? So whatever you bring in minus whatever you have to pay to run the business whatever is left over that's your profit that it's simple it's that simple. So you need to understand how all of these levers are going to work. Let's talk first here about income. So income is a very simple formula. It is the number of residents multiplied by the amount of money per month that they're going to pay you. So let's keep numbers here very simple. Let's say you've got 10 residents and they pay you
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$5,000 a month. 10 time 5,000 is $50,000 in potential income. Now, I want you to be very careful when you are doing your underwriting. You can go grab my underwriting calculator, by the way. Go to assisted livinginvesting.net. It's the light blue box. It's just right there. It says, "Get your free underwriting calculator." Go grab that tool. It's going to help you out with this. When you are doing your underwriting though, what I want you to realize is it's that's income potential.
00:05:42 - 00:06:36
10 time 5,000. That's $50,000 in potential income. does not guarantee that you're going to always have 10 residents in your facility. In fact, I would highly suggest that when you do your underwriting, you just underwrite it and see if you can be profitable. If you can get your profit goal at eight residents and in, you know, 80% occupancy is is what I would encourage you to do. Okay? But you can figure out your income potential, what that's looking like by number of residents multiplied by the amount of money that
00:06:09 - 00:07:10
you're going to bring in. Very simple. Okay? Then you need to understand your expenses. And I teach what I call the wife expenses. W I feed D. They stand for the five top expenses that you're going to have when you run an assisted living business. If you're interested in like a deep dive on the wife expenses, type in wife down below, wf, and I will either get you a video for it or we'll do another one and point you to it. So the wife expenses stand for wages, insurance, food, energy, which is your
00:06:40 - 00:07:32
utilities, and debt service. Okay, these are your five top expenses. They make up 80 to 90% of all of your expenses. All of your operating expenses are going to fit into one of these categories. So, if you can figure what those are going to be, then you've got a really solid understanding of it if you can be profitable or not. And wages are probably 50 to 70% of all of your expenses. Huge one. So, if you can hone in on your wages, then you are in a good spot. If you want to learn more about
00:07:06 - 00:07:58
wages, you want me to do a separate video that's specific to wages, just type in wages down below. All right. So, in our again our next roadmap challenge, I actually go through this and in a real example and and share with you what those numbers would look like and how to figure each of those numbers out. So, go check it out, roadmapchallenge.com. Would love to see you in there. But at its core, what I want you to understand is you have your income, right? You've got 10 residents at $50,000. We got
00:07:31 - 00:08:31
$50,000 in potential earned income. Simple, right? Let's say that I look through my wife expenses and I get to a spot where it's like, "Okay, cool. This is $35,000 for me to run the business. Okay. And I've got to add a little bit more in. Let's say I got to add an extra $5,000 in for just miscellaneous stuff, other expenses. So, I'm I have $40,000 in expenses. Now, what what you need to realize is that $40,000 in expenses. And this is just a number to illustrate. This is not something that you should
00:08:02 - 00:08:59
use as like, oh, Brandon said it on a YouTube video. Must only cost $40,000. Please do these specific numbers for your facility. Okay, let's say though it's $40,000. It's going to cost me about that much to run the business regardless of if I have four residents in or 10 residents in. My food will fluctuate a little bit. Um but for the most part, my expenses are going to be pretty similar regardless of how many residents I have in there. Okay. So now I can see I've got income earning
00:08:30 - 00:09:32
potential of 50,000. It's going to cost me $40,000 to run my business. That's a $10,000 gap. Cool. Sweet. But remember what I just told you. I want you to be able to get that $10,000 goal that you have at 80% occupancy. All right. So, let's say 80% occupancy. We're licensed for 10, but we only have eight residents in the home. We've got $5,000 per month is what we're charging people. That's $40,000 in income. We have $40,000 in expenses. Not making any money, right? This isn't
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good. So, you have to be very careful with exactly what that's going to look like for you and make sure you understand those levers. Now, you can you could increase your income potential by getting licensed for more beds, bringing in more residents, or you could charge more for the services. So, let's say same scenario. We've got we're licensed for 10, but we only have eight residents in there. But instead of charging people $5,000 a month, we're able to charge $6,000 a month. 8 time
00:09:26 - 00:10:29
6,000, that's $48,000. 48,000 minus that 40,000 base in in our expenses, we're cash flowing $8,000 a month. Boom. And now if we get two more residents in at 6,000, that's an extra $12,000. Guess what? You're cash flowing $20,000 a month right there. So simple math, it works. But what I'm hoping you are understanding here with that is if I'm charging somebody $5,000 a month, that's great, right? But if I lose a person or I don't have that person in my home, that's $5,000 less in income that I'm
00:09:58 - 00:10:46
bringing in and my expenses don't change at that same rate. Okay? So, you really need to get a hold of what this looks like. Again, we go deep on this in the road mapap challenge. Go check it out. Roadmapchallenge.com. Now, assisted living is so much more than just a real estate investment, too. So, that's something for you. Those of you who are my real estate investors watching this video, type in REI down below, cuz I love you guys. I think you're you're on the right path. This is a great business
00:10:22 - 00:11:16
for you to be in. But this is more than just like a rental property. You are actually running a business here. This is going to take a lot of time, a lot of effort. So, you either need to learn how to do this or you need to be prepared to hire somebody that can do this stuff for you. All right? So, when you're getting into it, you need to realize that you can't just fill the beds and have everything be okay. Marketing is a big component of it. You need to fill the beds. Yes. But you also are going to
00:10:49 - 00:11:37
need to have systems in place. You're going to need to have staff to run the business. You need to have these things because if not, then you're out of compliance. You can get fines that can shut you down. You want to avoid all of those things. And that's one of the big things that I hear from people about getting started is the licensing process and the rules and regulations. And it's just confusing, right? And so that's something else I talk about in the roadmap challenge. If that's you, type
00:11:13 - 00:12:09
in licensing down below because I understand that that's something that a lot of you have concerns with and you need to be in compliance there and you don't need to do that yourself. I operate out of state. I go to my facilities a few times a year. I have regular touch points with my administrator. I make sure things are going well. We have conversations. I look at the pictures. You know, we have a video feed. I can check in on things whenever I want, but I'm not physically there. I'm not doing the work. Now, that
00:11:41 - 00:12:28
comes at a cost, which is something that I'm willing to sacrifice so that I don't have to be in there all the time. But it's something that you need to be aware of because you need these systems and the staff to run this business. Even if you're doing this by yourself and you want to be the living caregiver/administrator, you want to do all this stuff, you will get burned out because you have to provide 24/7 coverage. You have to be turned on all the time. So, you're going to have to
00:12:05 - 00:13:02
have some staff at some point. you're going to need to do some respit type of care and go off on vacation at least, you know, every now and then. So, you need to have staff in place that can come in and help. You cannot do this all by yourself. You will work yourself to death. And as hyperbole as that sounds, like I I really think that it's true. I've had administrators quit on me because they have worked themselves to the bone. They are unhealthy. They get so stressed out and it's hard. And
00:12:33 - 00:13:27
that's something that as an owner and having done this for a few years now, we are very aware of that with our staff and and the people that we have working for us. And we try to make it a much better situation than it was when we first started and we were just trying to figure things out. So don't make the same mistakes that I made and go and make sure that you are understanding how this is all going to impact things. All right? And the more SOPs, standard operating procedures, and the more KPIs that you
00:13:00 - 00:13:48
have so that you can see how this is all working at a high level for you as the owner and you can make sure that everything is going well, the better off you're going to be. You're going to be so much more successful when you have these things. It's so important. is something that I'm actually working on refining for us now because as we start looking to expand our portfolio and start looking to bring in partners and and all of these types of things and and start getting funding again and
00:13:24 - 00:14:18
everything that that entails. I know that, you know, we've been successful for, you know, five plus years. This has been going great, but I also know that I need to demonstrate how it's going great, right? And so having those SOPs, the standard operating procedures, the KPIs, the things that we want to improve on and taking those and handing them to my administrator so we can improve our cash flow and we can demonstrate we've got all of these things in here. That's only going to benefit me as an owner, as
00:13:51 - 00:14:42
an operator, and allow us to grow my portfolio. And when I'm looking for lenders and I'm looking for partners and I'm looking to expand and grow, having those things in place is going to make this so much better for me. Okay, so that's something that I personally am working on and I cannot emphasize enough that it is important for you to do this. It's something that took me a couple years to learn on my own. Um, you should be doing this from day one. As hard as it is and as overwhelming as it is, the
00:14:17 - 00:15:13
more you do this, the more successful you're going to be. I will also tell you that marketing is absolutely key. So, marketing is something that a lot of people when they reach out to me, they tell me, "I'm worried about getting residents." And my thought is, let's get the facility first. You will be able to get residents. I I promise you that there's enough demand, like there's just an incredible amount of demand for people that need assisted living services. So, you will find people. It's
00:14:45 - 00:15:46
a little bit of, you know, if you build it, they will come a little bit. Um, you will need to do marketing, but you're going to be able to fill the beds. Okay? But you have got to figure out ways that you can do this. Empty beds, like the example that I just showed you, empty beds will kill your profits faster than any of the expenses will. You do want to really hone in and try to figure out a good balance with staffing. That one is one that can kill you, but having less residents, being at 60% occupancy, is
00:15:16 - 00:16:11
going to kill you a lot faster than having high wages. I'm listening to a book right now and it's for service- based businesses, not really applicable to assisted living, more like lawn care. But the principle in there is very similar. It's you have got to figure out those expenses. You have got to have lead generation and make sure that you have enough jobs, enough people in the world of assisted living that you can bring in enough income so you can pay your payroll and buy food for your
00:15:43 - 00:16:31
residents and things like that. You're going to have to do those things anyways. you're going to be paying these expenses. Your wife expenses are the base expenses. So, you're going to have to pay them. You just need to make sure you have enough residence, enough volume of income coming in. Cuz if you don't, that is what is going to kill you. Let's go back to that example that we're talking about. I want to reiterate this for you. If you're getting $5,000 a month from a resident and that bed is
00:16:07 - 00:17:02
now empty, that is a huge hit across your income. It takes what was $5,000 in income. It is removing that and now you don't have that income coming in and that that will kill you. It will it will hurt really hard and makes it very difficult for you to be profitable. So the more that you get people in the better off you're going to be. I like to teach something I call it generous marketing and it's because I can't figure out a good way to do it. It's a mixture between like network marketing
00:16:35 - 00:17:25
and giving to others and building relationships with the right people. I think it's the best way for you to do your marketing efforts in assisted living. So, if you're interested in learning more about that, just type in generous down below. But, let me give you kind of a quick overview here of what generous marketing is. It is networking. It's going out and building relationships and talking with people and getting to know them and what their needs are. And once you find those needs, start helping to fill those
00:17:00 - 00:17:51
needs. Maybe it's, hey, you know, we don't have the right nurse and you have somebody in your network that's a great nurse that could help them out. Or maybe our place is just super dingy and we just like we can't buy light bulbs or we it would be great if we just had some flowers and you go and you get those things for them and you give to them and you just freely give and you help people out. That is going to even just a simple letter, right? I got this letter from my daughter yesterday.
00:17:25 - 00:18:22
She's 12 years old. She had to in her art class uh of all things write a letter like a letter of gratitude to somebody that meant something to her and she wrote it to me and like that is a little tiny piece of paper is the size of a sticky note. It is something that I will put in a lock box and will cherish forever because of the words that she put in there. And using something just something as simple as that is going to have such an impact on people. just giving to people. And when you do that
00:17:54 - 00:18:44
and you're building relationships with the right people, when they see that you have a need, they want to reciprocate because you've built this relationship. You've given to them and when you need something, they will do what they can to help you out. And that might not be them directly doing it, but it could be somebody else in their network that can really help you out. That is the way that you should be doing your marketing in assisted living. It is all about relationships. Everything in the world
00:18:19 - 00:19:15
of assisted living, in my mind, is relationship driven. So, you need to be building these relationships. All right, we went through a lot in this video. We started off with understanding how the finances work. We did some basic underwriting to help you out and learn exactly what that looks like, your income levers, your wife expenses, understanding what those look like. We talked about how assisted living is more than just real estate investment. And for my real estate investors that are out there,
00:18:47 - 00:19:40
it can be scary. It can feel overwhelming because you've got all these other things. I promise you, you can do it. But I also want you to realize that this is a business and you're going to have to run it as a business. And the other piece of all of this is marketing is so important because as we talked about in our underwriting example, $5,000 a month, if that's what you're charging people when you don't have that $5,000 a month, that is unrealized income. And that is money
00:19:13 - 00:20:04
that you could be taking home. And so if you don't have your beds filled, which happens through marketing, you're going to be losing money. You're going to be hemorrhaging money. And so you have got to be very confident that this will work. Marketing, in my mind, is easy. It's not as hard as you think it is to fill the beds in assisted living. But you do have to keep them filled. You have to continually be building relationships so that you can keep the beds filled. Because when you don't,
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that hurts your cash flow. It's a huge hit to it. So, make sure you do those things. It's going to help you out a ton. All right, so with that, I hope you found this video helpful. If you did, make sure you like the video, subscribe, 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 as well to help you out in launching your assisted living business. And like I mentioned at the start of the video, have a special
00:20:00 - 00:20:47
offer. I would love to work with you in my next roadmap challenge. This is a live coaching experience. You're with me in the room. Uh if you get a VIP ticket, you get an extra hour with me. you get extra time with me to ask me whatever questions you want to help you out as you're trying to launch your assisted living business. They're super fun. I love teaching this challenge. It's a wonderful experience. I vacasillate between one and five day challenge challenges trying to figure out what's
00:20:23 - 00:21:20
best for you. So, um if you're interested in this, type in one or type in five down below. Let me know which of those options you think would be better for you because I want to be aware. Hey, some of you guys are are nurses and trying to get to me five times in one week is is really hard. Um, but I also know that hey, making a commitment to sit with me for four or five hours in in a teaching room is also hard. So, which of those is going to work best for you? Because what I want to do, what I do in
00:20:52 - 00:21:43
these is I give you like I just pour into you guys. I'm teaching you all of this stuff. I want to make sure you have everything that you need so that you can be successful. and I want to make sure that I know exactly what it is that you're looking for. But I know that this challenge helps you out. I have seen it have such an incredible impact on so many people that have come through the challenge. And I know I can do the same for you. So please go check it out. roadmapchallenge.com. If you can't
00:21:17 - 00:22:06
commit to that for whatever reason, the price isn't right, the length of time it's not right. By the way, if you buy a VIP ticket, you get access to the recording for a longer period of time. But if you don't have those things, go grab the book the alibook.com. It's the profitable assisted living facility. It took everything in my brain. I put it into a book. It is a bestseller on Amazon. Make sure you go check it out. I would love to have you grab that thing. It will help you out as you're trying to
00:21:42 - 00:22:31
launch your assisted living business. Again, at Assisted Living Investing, I am here to help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses, creating prosperity, purpose, and peace in their lives because I know the difference that it can make in your life, in the life of your residents, in the life of your family, in the life of your staff and their families. It just this business is so rewarding and it's incredible. And I would love to help you out as you're
00:22:07 - 00:22:35
trying to launch your own assisted living business. 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 are consistent and persistent, you are going to be successful. Thanks for watching and have a great day.
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