How Much Does It Cost to Start a Group Home?
Starting a group home to care for people with disabilities or medical needs is rewarding but also requires major upfront and ongoing costs.
To start a 6-bed group home, you must budget for significant upfront and ongoing costs. Financing the project requires careful planning and dedication. You need to invest approximately $400,000 initially for the property, renovations, furnishings, licensing and insurance. Expect to spend $350,000 or more annually for staffing, administration, food, supplies, activities and other operating expenses.
If you’re considering this path, understanding the full financial picture is essential. Here’s a detailed look at what’s involved:
Table of Contents
Buying or Renting a Suitable Property
First you’ll need real estate. Aim for a 3-4 bedroom, 2 bath home around 2,000 sq ft for 4-6 residents. The purchase price in an average U.S. town is $250,000-$350,000. In higher cost areas like Southern California, expect to pay $600,000+.
Renting may be more affordable at $3,000-$4,000/month. Look for homes with amenities like a backyard, wheelchair ramps, and community access. Avoid major renovations to reduce costs.
Typical Renovation Costs
Renovations for accessibility and safety will likely cost $30,000-$60,000. Key items include:
- Widening doorways/hallways: $2,000-$5,000
- Installing ramps/lifts: $5,000-$10,000
- Upgrading bathrooms: $5,000-$10,000
- Flooring: $3,000-$5,000
- Painting: $2,000-$3,000
- Lighting: $1,000-$2,000
- Miscellaneous repairs: $5,000-$10,000
Save by getting volunteer labor and donated materials from community partners and contractors.
Furnishings and Supplies
Furniture, appliances, linens, and supplies can cost $8,000-$12,000. Check thrift stores and list donated needs on your website or social media.
Ongoing costs for supplies like food, laundry, activities, etc. will be around $1,000-$2,000 monthly.
Licensing and Inspections
Research local zoning laws and get licensed as an official care home. Fees are often $500-$2,000. Inspections will likely cost $300-$600 to confirm you’ve met safety standards. The full licensing process can take 2-6 months.
Insurance Expenses
Liability insurance is essential, typically $3,000-$8,000 annually. Additional medial transportation and errors/omissions insurance can cost $1,500-$4,000 more per year.
Staffing Costs
For round-the-clock care, budget $250,000-$400,000+ in annual staffing costs. At $15/hr for 3 rotating staff, estimate:
- $90,000 annually for 1 shift
- $180,000 for 2 shifts
- $270,000 for 3 shifts
Save on labor by hiring less experienced Resident Assistants for lower hourly wages.
Administrative and Other Costs
Budget $15,000-$25,000 for administrative costs like accounting, legal, advertising, supplies, training, etc.
You’ll also need to cover utilities, food, activities, transportation and other ongoing operational expenses.
Federal and State Funding Options
Take advantage of Medicaid reimbursements, disability insurance, and housing vouchers to offset care costs.seek grants from government and nonprofit sources.
Total Typical Costs
Overall, expect around $400,000 in total upfront costs, and $350,000+ in ongoing annual operating costs for a 6-bed group home. While not insignificant, the rewards of providing safe housing and care are immeasurable. With proper planning and use of available funding sources, you can make your group home dream happen.
