Top Strategy for a Successful Residential Assisted Living Launch

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Starting an assisted living facility is super exciting, but it can also be tricky, especially if it's your first time. There's a lot to think about—hiring staff, getting licenses, and making sure you have enough money to cover all the costs. But here’s a little secret that can help you get off to a great start: Ask for extra operating capital.

This one simple strategy can make a HUGE difference. Why? It gives you a financial cushion to cover early costs before your facility starts making money. In this blog, we’ll explore why asking for extra operating capital is so important and how it can help your assisted living business succeed!

Check out the video, too:

The Thrill of Starting an Assisted Living Facility

Imagine buying your first assisted living facility. You sign the paperwork and celebrate this big step—woohoo! You’re ready to change lives and make a difference. But then, reality hits when you have to pay for that first payroll.

Hiring staff, buying groceries, paying for insurance—it all adds up fast! And the worst part? You might not make any money right away. The costs start piling up before you get your first resident or approval from Medicaid. That’s when things can get a little stressful.

The Solution: Extra Operating Capital

Here's the best advice I can give you: Ask for extra operating capital when you’re getting a loan. This extra money is like a safety net. It covers the costs of running your facility in those early months, so you don’t have to worry while waiting for your income to start rolling in.

For example, when I bought my second facility, I asked the bank for more operating capital—around $30,000. That money covered about a month and a half of costs, like payroll, food, and insurance. It was a lifesaver!

The best part? Banks usually say yes to this request if it’s in your business plan. Lenders want you to succeed, so showing that you’ve thought ahead and understand the costs helps them feel confident about lending you more money.

How to Ask for Extra Operating Capital

Okay, now you might be wondering, "How do I actually ask for extra operating capital?" Don’t worry, it’s easier than you think. Here’s a step-by-step guide to help you out:

Calculate Your Monthly Costs: Use an underwriting calculator to figure out how much it will cost to run your facility each month. Let’s say your monthly expenses are $20,000.
Ask for 1.5 to 3 Months of Extra Capital: When you apply for your loan, ask for enough to cover 1.5 to 3 months of costs. If your monthly expenses are $20,000, you’d ask for an extra $30,000 to $60,000.
Explain Why It’s Important: Include this in your business plan. Highlight why you need the extra money, like for payroll, licensing, and startup costs.
Talk to Your Lender: Discuss your request with your bank. I got the extra capital because I had it well-documented in my business plan, and my lender understood the importance.

Why Extra Operating Capital Matters

If you don’t have enough money when you start, running an assisted living facility can be really stressful. You might struggle to pay your bills, cover staff salaries, or buy supplies. Extra operating capital gives you breathing room—it helps you focus on managing your facility and giving great care without constantly worrying about money.

And don’t worry about it adding too much to your loan payments. If you borrow an extra $40,000 to $60,000 on a $1 million loan over 25 years, the monthly payment won’t go up much. But the peace of mind and financial stability it gives you? That’s priceless.

Your Path to Success

So, what’s the bottom line? If you want to start an assisted living facility successfully, plan for extra operating capital. This one step can reduce your stress and make your startup phase much smoother.

Before you talk to a bank, download our Business Plan Checklist. This resource will guide you through the steps of building a solid business plan. If you need more help and guidance, apply to the Assisted Living Investing Mastermind program. This comprehensive 12-month program is designed to guide you through every step of owning an assisted living facility and provide you with invaluable coaching support.

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