Buying an Assisted Living Facility
Why Searchers Target Assisted Living
Assisted living rides the clearest demographic tailwind in small business: the over-80 population is climbing for two decades, and someone has to house and care for them. The field spans two buyable shapes, a small residential care home of roughly six to sixteen beds licensed as an RCFE, board-and-care, or adult family home, and a larger purpose-built community; searchers usually buy the residential end or a single community. Demand is non-discretionary and mostly private-pay, and the field is thousands of small licensed operators, so exits are common. The catch is that this is a licensed care business inside a real-estate asset, so a buyer underwrites both the operation and the building and inherits a state care standard.
What Assisted Living Trades For
Assisted living is valued two ways at once, on the operation and on the real estate. Operators normalize earnings and apply an EBITDA multiple, roughly 6.5x to 9.9x for stabilized communities, or capitalize net operating income at a cap rate near 6.75% to 7% for institutional-quality assets; smaller residential care homes trade more on price per bed and the value of the house. Per-bed pricing runs from about $20k to $30k in tertiary markets to $80k to $250k and up in coastal metros. Occupancy and payer mix move a facility within these ranges more than anything else, so read stabilized occupancy and the private-pay share before crediting a multiple.
Occupancy and Payer Mix
Two numbers set the value: how full the building is and who pays. Occupancy is the operating leverage, since most costs are fixed, so a stabilized facility above 90% with a waitlist earns core pricing while one below 80% prices as distressed. Payer mix is the margin: private-pay residents pay operator-set rates that reset annually, while Medicaid, where a state allows it for residential care, pays a fixed low rate that moves with budgets, so a private-pay-heavy book prices above a Medicaid-dependent one at the same occupancy. Read the rent roll for occupancy trend, private-pay share, average rate, and length of stay before anchoring on the trailing number.
The License, the Building, and the Care Model
Three constraints decide whether the facility runs after close. The license is first: the state residential care license is tied to a named licensee and does not automatically transfer, so a change of ownership needs state approval and a qualified, certified administrator, which is the gating item and the long pole in timing. The building is second: the real estate usually conveys with the business under one loan, so read the physical plant, code and life-safety compliance, and deferred capex. The care model is third: staffing ratios, the level of care licensed (assisted living versus memory care), and any medication-management and incident history set both the cost base and the regulatory risk a buyer inherits.
What to Verify in Diligence
The record to assemble before the offer holds:
- Stabilized occupancy, the trend, and any waitlist
- Private-pay share versus Medicaid, average rate, and length of stay
- Residential care license transfer, state approval timeline, and administrator certification
- Real-estate condition, life-safety and code compliance, and deferred capex
- Staffing ratios, the care level licensed, and wage pressure
- Survey, citation, and incident history with the state regulator
- Whether the building conveys or a lease transfers, and its terms
Financeability Notes
Assisted living finances well under the SBA 7(a), which funds the business and the real estate in a single loan; SBA treats assistance with daily living as sufficient care, so a licensed nurse on staff is not required. Expect underwriting to weigh the license transfer, since a facility that cannot re-license under the buyer cannot operate, and to read occupancy, payer mix, and the building's condition. Model debt service net of a market wage for an administrator and care staff if the seller runs the floor, and net of the real-estate capex the building needs. The risk to underwrite is an occupancy drop or a Medicaid rate cut a private-pay strategy must offset, so confirm the rent roll and the license path, not just the trailing margin.
What the Data Says
Assisted living is valued on both the operation and the real estate: stabilized communities trade around 6.5x to 9.9x EBITDA or at a cap rate near 6.75% to 7% on net operating income, and per-bed pricing runs from roughly $20k to $30k in tertiary markets to $80k to $250k and up in coastal metros.
Source: Assisted living/senior care valuation multiples (First Page Sage)
Occupancy and payer mix drive value most: national assisted living occupancy ran about 87 to 88% in late 2025 and early 2026, a stabilized facility above 90% earns core pricing while one below 80% prices as distressed, and residential care is paid mostly privately since Medicaid and Medicare do not cover it in most states.
Source: Assisted living facility valuation and occupancy (Buy Sell Assisted Living)
Licensed residential care facilities (RCFE, board-and-care, adult family home) are SBA 7(a) eligible for acquisition, and the 7(a) finances the business and the real estate in one loan; SBA policy treats assistance with activities of daily living as sufficient care, so a licensed nurse on staff is not required for eligibility.
Source: SBA financing for residential care facilities (ThinkSBA)
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Who Else Is Buying in This Industry
No consolidator is confirmed in this trade from a primary source. Silence means unverified, not uncontested: check the current list before assuming a quiet market.
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The Numbers That Run This Business
- Stabilized occupancy and the trend
- Private-pay share versus Medicaid
- Average rate and resident length of stay
- License transfer path and administrator certification
- Real-estate condition and deferred capex
Terms in This Industry
Residential care license
The state license (called an RCFE, ALF, board-and-care, or adult family home depending on the state) that authorizes a facility to house and assist elderly residents with daily living, tied to a named licensee, a specific building, and a bed count.
Private pay
Residents or families paying for care from their own funds, as opposed to Medicaid, which in most states covers little or none of residential assisted living.