Why Your Assisted Living Deal Isn’t Producing Income (and How to Turn It Around)
Feb 21, 2026
You found an assisted living deal that looks good on paper. The numbers seem fine, but it is not making money. I have seen this happen many times. The good news is you can fix it.
Want the full breakdown? Watch the video below👇
You must understand your numbers before you can fix your profit
If your assisted living deal is not producing income, the first problem is usually simple. You do not fully understand the numbers.
Profit is not complicated. It is income minus expenses. What is left over is your profit.
In assisted living, income is usually easy to estimate. Take the number of residents and multiply it by your monthly rate.
If you have 10 residents paying $5,000 per month, that is $50,000 in income.
But here is where people get in trouble. They guess. They hope. They “make the numbers work” instead of truly underwriting the deal.
You need to know:
✅ How many beds you can realistically fill
✅ What you can actually charge in your market
✅ What happens if you are only 80% full
I always tell people to underwrite at about 80% occupancy. That gives you breathing room. Because residents move. Residents pass away. Care needs change.
If you do not know your numbers, you are flying blind. And blind businesses lose money.
You must control the five biggest expenses in assisted living
Once you know your income, you must understand your expenses. I call these the “WIFED” expenses because you are married to them long term.
They are:
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Wages
-
Insurance
-
Food
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Energy (utilities)
-
Debt service
Wages are the biggest one. They usually make up 50–70% of your total expenses. Not 50% of income, but 50–70% of expenses. That is huge.
You must know:
✅ How many caregivers you need per shift
✅ What you are paying hourly
✅ What payroll taxes and benefits cost
Then look at insurance. Property, liability, workers comp. It adds up.
Food is often tracked as “per resident per day.” If you do not measure this, it can slowly eat away at profit.
Energy includes utilities like power, gas, internet, and garbage. These are steady costs that do not go away.
Debt service is your rent, mortgage, or SBA loan payment. That payment is due whether you are full or half empty.
When you truly understand these five expense categories, you can see where the money is going. That is when you can start pulling the right levers instead of guessing.
Assisted living is not just real estate, it is a business
This is where many people get surprised.
Yes, assisted living is tied to real estate. But it is not a “set it and forget it” rental property.
You are running a small business.
Residents’ care needs change. Families move. Health declines. You must adjust staffing. You must follow state rules. You must build systems.
If you want this to feel passive, you still need:
✅ Clear standard operating procedures
✅ Strong leadership or an administrator
✅ Key performance indicators you review regularly
Without systems, you will feel overwhelmed. With systems, you can step back and manage from a higher level.
I have seen real estate investors jump into assisted living thinking it is just another asset class. It is not. It is people. It is care. It is operations.
When you accept that, you start acting like a business owner, not just an investor. That mindset shift alone can turn a struggling deal around.
Empty beds will destroy profit faster than anything else
Let’s go back to our example.
Ten residents paying $5,000 each equals $50,000 in income. Let’s say expenses are $40,000. That leaves $10,000 in profit.
Sounds great.
Now one resident leaves. Profit drops to $5,000.
Two residents leave. You are breaking even.
Four residents leave. You are losing money.
This is why marketing is so important!
You need:
✅ Ongoing relationships with referral partners
✅ A simple online presence
✅ A steady flow of conversations with families
Do not wait until beds are empty to start marketing. By then, you are stressed and scrambling.
I teach something called GENEROUS marketing. It means building real relationships in your community. Serve social workers. Stay in touch with discharge planners. Be helpful. Be known.
When a room opens, you want people already thinking of you.
That is how you protect your income.
Wrap Up
If your assisted living deal is not producing income, it is usually one of three things. You do not understand your numbers. You are not treating it like a real business. Or your beds are not consistently full.
The fix is not magic. It is clarity and action. Understand your income. Control your WIFED expenses. Build systems. Market often.
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
Hey, in today's video we're going to be talking about why the assisted living opportunity you're looking at isn't making money and how you can understand the finances and turn that around and turn it into a profitable business. If you're interested in that, make sure you stick around for today's video. Hey friend, I'm Brandon Gustafson with Assisted Living Investing. I help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses in the next 12 months,
00:00:22
creating prosperity, purpose, and peace in their lives. Super excited to be here with you. Before we get started, I want to make sure you stick around till the end of the video. I've got a special offer to work with me directly in my Roadmap challenge. So, if you'd like to learn more, go check out roadmapchallenge.com or stick around till the end of the video. I'll give you all the details on what that looks like to work with me there. And if you need some free resources, especially as we're
00:00:45
talking about financing today, get over to assistedlivinginvesting.net. You'll see a big blue box there on the site that says, "Get your free underwriting calculator." to make sure you go and grab that so you can use it to help you along in the conversation we're having today. With that, let's get into today's video. All right, so today again, we're talking about how to understand the numbers, how to make them work, and not just like fit them in and and try to pigeon hole it in
00:01:16
and be like, "Yes, I made it work. We're going to be great." You can do that all day long, especially if you're making projections. I don't want you to do that. I want you to understand what the numbers really are and how that's going to impact you. So, we're going to talk about that in today's video. The first thing that I want you to recognize is you're kind of flying blind when it comes to the numbers. If you don't know your numbers, you can't fix what your
00:01:40
profit is going to be. So, you need to really hone in on what the numbers are and what that's going to look like. We go really deep into this in my roadap challenge. Go check it out, roadmapchallenge.com. But it's basic underwriting at it at its core. You need to understand how those numbers are going to work and which levers you can be pulling as you're trying to figure out can this be profitable? Is it going to work for me or not? Really, it's quite simple. So the the formula for
00:02:06
figuring out profitability is income minus expenses equals profit, right? So it's that simple. How much money do you have coming in? How much money do you have going out? whatever is left is going to be what is profit and what's going to allow you to be profitable. So, if you can make the numbers work that way, then cool. Income from that standpoint is also very simple to figure out in assisted living especially because generally you just kind of have a a set amount that you are charging
00:02:34
your residents. It's kind of the number that you're charging them for the services. There may be some changes there based off of care needs and you know size of room and if it's private versus a shared room if they're on Medicaid. There's a few variables in there, but let's just make this really simple. You take the number of residents. You multiply that by the amount of money that you can charge. That's going to be your income. So let's say you've got 10 residents. You're
00:02:58
charging them $5,000 a month. That's $50,000 in income. Simple, right? Very, very simple math for you to figure that out. You need to understand the different levers that exist there. What are your price points? What can and can you not charge for there? There's a bunch of different levers in there. But you need to figure out at its core what does the income look like. The next thing is you need to understand the expenses. And I teach a fivephase framework. I call them the wife expenses. And that's because you're
00:03:25
married to them longterm. You're going to have to have these expenses as you get into running your assisted living business. So, I want to run through those really quick for you. If you're interested in learning more and doing a deep dive in these expenses though, type in waif w down below because we can do a special video that's specific to that. But the wife expenses, top five expenses, they make up 80 to 90% of all of the expenses you're going to have in assisted living. So, it's going to make
00:03:51
up the the majority of it. They are wages, which is you're paying your staff, right? You have you have to do this if you're going to be doing assisted living. You got to pay people to go in and do the work for you. Insurance, uh, you need some property liability and workers comp insurance. You're going to need to have those things in place. You have to buy food. You got to feed your residents. So, you got to buy food and and figure out how much that's going to cost you. And I I use a metric that it's called per
00:04:18
resident per day. If you'd like to have a deep dive on that, write PRPD down below in the comments and we can do a separate video that's specific to that topic for you and and helping you understand what that's going to look like. Your E is for energy, which is your utilities. So, this is your TV, your gas, your power, your internet, your god, what other ones are there? I know I'm I'm missing one. Garbage. There's a few utilities that you need to pay for, but you're going to need to
00:04:44
have those in place as well. So, that's your energy, your utilities, and D is your debt service. So, this could be if you're renting, could be your lease payment, could be if you have got a mortgage, your mortgage payment or SBA loan or whatever it is. the the amount of money that you have to pay so you could get access to the funds to have the property. That's your debt service. Okay. Your wages, that first one, the W in the wife expenses, is going to make up 50 to 70% of all of your expenses.
00:05:13
It's a huge number. Okay? It doesn't mean that 50% of your income is going to wages. Uh not necessarily. It just means of all of the expenses you have, wages is going to be your biggest one. 50 to 70% of all of your expenses are going to be wages. So, it's big. I use Gusto for payroll. I found it to be really helpful. We'll have a link down below for you to use Gusto. And if you'd like to learn a little bit more about Gusto, just type in Gusto down below. I will make sure we get you the link and we can
00:05:39
do a video specifically on Gusto and how payroll works and why I use them. Well, once you understand these five expenses, what they're going to look like in your situation, you are so much further along than almost anybody else. And again, in the road map challenge, we go through this. We actually do live underwriting together with you, a simplified version of it, so you know exactly how to put this together and I run through real scenarios with you so you can get confidence in the numbers you're doing.
00:06:05
So go check that out roadmapchallenge.com. Would love to have you there. But once you figure those out, you've got your income, you got your expenses, now you just minus the expenses from your income. Now you can see, oh, this is my potential for profit. It's not going to be 100% correct. And you can get really uh down in the nitty-gritty with it by going to assisted livinginvesting.net. Big blue box right there says get your free underwriting calculator. Go grab that. It's a free tool I've created for
00:06:31
you. I spent a spent hours creating it. I'm giving it to you for free. Make sure you go grab that. If you need help figuring out how to kind of manipulate that and work through it and understand exactly how to do it, you can get the Launchpad bundle. It goes really deep into that, plus the other things you need for your foundation. Go to assistedlivinginvesting.net/ /aunchpad to get access to that. We'll link that down below for you as well. But that's a tool that helps you build your
00:06:53
foundation, including going into deep underwriting more than what we do in the road map challenge. Uh like really deep um there's a 2-hour long master class where you underwrite with me in that course. So, I'd love to help you out with that. But once you do that, once you figure those things out, now you have an understanding of the numbers. And that's the biggest reason why the deal you're looking at is not profitable. because you don't understand the income potential. You also may think
00:07:22
that you have a lot of income coming in or income potential and that you're going to be super profitable when in reality you haven't figured out all of the expenses. So, you need to spend a lot of time figuring these things out because that's what's going to allow you to move forward with confidence that you have a profitable opportunity in front of you. So, I cannot stress enough how important it is for you to be spending time doing underwriting, understanding the expenses, understanding the levers
00:07:51
you can pull when it comes to getting income coming into the business. You need to figure those things out because if you don't, you can really put yourself in a bad situation and I I don't want that for you. So, make sure this is one of the most important things you can do. It's why I give you the calculator away for free. You have to figure this out so you can be successful. So, make sure you take advantage of that. That's the big one. You got to make sure you do that. The second thing that I want to talk to you
00:08:16
about is assisted living is more than just a real estate investment. There's a business attached to it. And that's something that I think a lot of people when they get they start looking at assisted living, they get excited. Real estate investors especially, if that's you, type in real estate down below. If you're a real estate investor, you're seeing this as, "Oh, this is a cool asset class. This is the thing that I want to get into. There's a ton of earning potential, right?" and and there
00:08:41
is that that's true that there's a ton of earning potential here, but you also have a business attached to it. And so you can't just look at this as, you know, it's it's a cool investment. You I can just get a property manager and and sit on it and and go to sleep or, you know, I can do this passively. It's pretty active. Whether that's you doing this or you're hiring somebody to do it, which comes with cost, you can still be very profitable with it, but it has a
00:09:05
business attached to it. You have to understand that if I'm getting into this and I want to be successful, I've got to run a business, I need to have systems and processes and I need to understand a little bit of the landscape, the the rules and regulations that exist in the healthcare industry. I need to understand those things so that I can then be successful. So, you need to figure those things out. It's really important for you to realize that you can't just fill the beds and walk away.
00:09:32
You're going to have residents that pass away, which is something you're not going to get in in traditional real estate. Um, generally, you're going to have residents that they decide, oh, I I got to move. I I need to move somewhere else because of care needs or families moving somewhere else, so they got to move somewhere else. You have weird scenarios that are coming up where people are leaving your facility. You can't just do that and then set it and forget it and and be cool. Their care
00:09:58
needs also are evolving over time. So, you're going to have to adjust your staffing model or maybe some of the amenities that you're offering so you can continue to meet care needs of your residents. So, you have to make sure you're doing those things. It's so important for you to really get in there and understand what that's going to look like because this is not a set it and forget it type of a business unless you're hiring people to do all the stuff for you, which again is going to come
00:10:21
with a cost. You have to have systems. You have to have staff. If you don't have those things, you will not be successful in this business. um your standard operating procedures, understanding KPIs, those are all really important, too. I actually talk a lot about that in my book, the profitable assisted living facility. You can get that at dalibbook.com. I've got links for you there. I will link those down below as well. But I talk a lot about having SOPs, standard operating procedures, and KPIs, key
00:10:51
performance indicators that are going to allow you as a business owner to know, hey, is this working? And if you want it to be passive, you can do that. But I would highly encourage you to spend some time figuring out what your SOPs and what your KPIs are going to be. Because when you do that, then you can look at it at a glance. You can implement, you can institute these SOPs, give them to your administrator, give it to the person that's going to run the business, that you know that they are following
00:11:16
the things that you want them to do, uh, that's going to help build the culture that you want inside your facility. So, you're going to have those things and you have your KPIs that say, "How many beds do we have filled?" Um, what's our staffing rate at right now? You can see those things at a glance and that allows you to then have very good quick conversations with the the people that you're interacting with that are running your business. So, you need to have these things in place for you to run a
00:11:41
successful business. So, if you don't have that and and you're looking at a deal and you're like, "Oh man, it actually looks like it could be profitable, but you have the foresight to know that there there's a lot that goes into this, you should be considering what that's going to take, your SOPs, your KPIs, having systems, having processes, hiring staff, understanding exactly what that looks like because you are not just real estate investing at this point. You are a small business owner and there's a lot
00:12:07
that comes with that. So, make sure you understand that as you get into that. The third thing that I want to talk to you about today is marketing. Marketing is absolutely key to what you're doing here. Empty beds are going to kill profit faster than anything else when it comes to assisted living. So, we're going to go back to the underwriting example we were talking about earlier today. You have 10 residents. They're each paying you $5,000 a month. So, you have potential for $50,000 in income.
00:12:35
Your expenses are going to be pretty high, though. Let's say that they're 40,000. Let's just make this really simple math, right? So, you're cash flowing at the end of the day $10,000 a month, which is great, and it's certainly possible, okay? So, I don't want to hinder you from there, but what I want you to recognize is that's only if your beds are full. And so, if you lose one resident, that $10,000 in profit is now down to 5,000. You lose two residents, and I would say like you
00:13:02
should underwrite your deals at being about 80% full. you lose two residents, so you're 80% capacity. All of a sudden, you make zero. You're breaking even. Now, what happens if things are great? You know, you've got 10 residents in in the home and you have what has happened to me before where you have just an exodus of residents for whatever reason, illness. We owned a mental health facility and we had a resident that brought in drugs and then shared those. So, we had to, per our policies and procedures, discharge some
00:13:33
of those residents that were involved in that. had a resident pass away. We had a period of time where we had like 15 of our 16 residents in the home, everything is going great to five of those residents leaving in about a six week period and all of a sudden where we were at, yes, we're profitable, everything's going well to, oh crap, now we're breaking even, maybe we're losing a little bit of money. Now we got to scramble and bring more residents in. And when you have to fill that many
00:13:56
beds, it becomes overwhelming. It can burn people out that are trying to fill the beds. It can can get really stressful really fast. and you go from, you know, this scenario, 10 beds, 5,000 a bed, you have four of those residents leave for whatever reason, all of a sudden now you're losing $10,000 a month. So, it's so important for you to go out and do marketing. And marketing is more a constant part of running this business, a constant part of what you need to be doing is building relationships. Having an online
00:14:26
presence, I think, is great. uh maintaining a website, maintaining a Facebook page or a group so that people can see you and you're kind of public and people can associate good things, good vibes from what you're doing. Those things are all very important. Running ads can be helpful as well. But I would say more important than that is building and maintaining relationships with key partners in your community. That's so key for you to do that because if you don't do that, then you're you're going
00:14:55
to get to a point where it's like crap, now I've got all these all these beds I need to fill and I haven't been working with the local social worker. They don't know the needs. They don't know that, you know, we were having this issue. This resident, their health was declining, so we may be having a bed opening up soon. You need to have those conversations with the key partners in the community because that's what's going to allow you to very easily shift to, yes, Sally wasn't doing well and she
00:15:20
actually just passed away 2 days ago and we're working through the funeral arrangements. We're helping the family out there. We're working on cleaning up the room, but now we have a room who can come in here. And that's something that I have found having done this uh since 2020 that building those relationships in the community and and making sure people know a little bit of what's going on and creating a a waiting list. But more than just a waiting list because a waiting list is going to be fluid. Um
00:15:46
just because you have somebody on your waiting list doesn't mean they're not going to go find another opportunity. It needs to be fluid. You need to be working with people consistently um on a regular basis because when something does come up, that's when the iron is hot. You got to strike and you got to bring people in. It's so important for you to do that. I teach something in my success system called generous marketing. It's an acronym, but I I I say that for the people in the success
00:16:14
system, but generous marketing at its core is components of networking, giving to others. That's why it's generous marketing. It's you are giving to people. Figure out what they need and get out there and serve them. And then also building relationships with the right people while also adding in a little bit of that, you know, social media presence, that online presence so that people know where to go and you can capture their information as you go through it. Generous marketing is such
00:16:41
an important. If you're interested in learning more about that, just type in generous in the comments down below. We'll get you a link to our our quiz. It's at aliquiz.com. you can take that if it's a good fit for you for the success system based off of the quiz. We'll send you all the details on that um to see if it's a good fit because I teach so many fun things and that it's just frameworks galore and it's so much fun to get in into that program and help people like you launch their assisted
00:17:04
living business. Okay, so we talked a lot about today why something's not profitable and how you can turn that into something that is profitable. So you understand the numbers, right? You got to really dig in and understand exactly what you're getting into. You need to realize this is more than just a real estate investment. That's the wife expenses as well. It kind of trickles down into that. But you have to come to recognize that you are running a small business is super important and
00:17:29
marketing is absolutely key in everything that you're doing and you need to do that generous marketing process so you can really be successful in your assisted living business. Now, I mentioned at the top of the video that I've got a special offer to to work with you in my roadmap challenge. Before I do that though, I want to remind you to 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
00:17:51
Thursdays, and I would love to have you here with me inside of YouTube. If you want more though and you need some extra coaching and some guidance, then go check out the challenge, roadmapchallenge.com. It is a live coaching experience. It's not a sales call. It's not a bunch of videos. It's not random. It's not pre-recorded at all. It is live. You and me, same room. We are working through things. I'm answering your questions, helping you make progress. Ultimately, you're going to have a milestone roadmap
00:18:18
that lets you know exactly what you need to be doing. We get into vision work. We talk about the different models that are available, underwriting, funding, licensing. Uh we talk about all the things that you need to have an understanding of so you can really move things forward. And it it's so much fun. I love helping and coaching people. It's one of my favorite things to do. And the roadmap challenge is the best way for me to do that and get in front of you and help you get unstuck and actually make
00:18:44
the progress that you want to make as you're trying to launch your assisted living business. So, please go check it out roadmapchallenge.com. Would love to have you in there. We have a we have a challenge starting soon. Details will be on the site for when our next challenge is, the cost and everything like that, but it's super affordable coaching experience. Like, people pay me $15,000 for this type of experience. So, I would love to be there with you and help you along your path as you're trying to
00:19:08
launch your assisted living business. Are you curious about assisted living, but you're not sure how to get started? At Assisted Living Investing, I help first-time assisted living entrepreneurs launch profitable, purposedriven businesses, creating prosperity, purpose, and peace in their lives. I would love to do that for you. Go check out roadmapchallenge.com. Get over to assisted livinginvesting.net. Go grab the free underwriting calculator. Take our 30 secondond quiz. Move things forward. Start taking action
00:19:32
so that you can be a differencemaker in the world of assisted living and have the impact in the world that you want to have while creating time and financial freedom for you and your family. And remember, it doesn't take a lot, just a little bit. Just keep going step by step by step. I promise you, if you do and you are consistent and persistent, you're going to be successful. Thanks for watching and have a great day.
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