Assisted Living Facility Running Costs
Expect monthly running costs for an Assisted Living Facility to average near $197,000 in 2026, driven primarily by fixed overhead and payroll Your largest fixed expense is the facility lease/mortgage at $75,000 per month, plus $55,000 in average monthly wages for 13 staff Full-Time Equivalents (FTEs) This high fixed cost base means you must hit breakeven quickly, which is projected for January 2027 (Month 13) You need sufficient working capital, as the model forecasts a minimum cash requirement of -$117,000 before profitability stabilizes
7 Operational Expenses to Run Assisted Living Facility
| # | Operating Expense | Expense Category | Description | Min Monthly Amount | Max Monthly Amount |
|---|---|---|---|---|---|
| 1 | Staff Wages and Benefits | Payroll/Labor | Payroll is the largest operational expense outside of facility costs, totaling $55,000 monthly for 13 FTEs. | $55,000 | $55,000 |
| 2 | Real Estate Overhead | Fixed Facility Cost | The Facility Lease or Mortgage is the single largest fixed cost at $75,000 per month. | $75,000 | $75,000 |
| 3 | Resident Supplies and Food | COGS (Cost of Goods Sold) | COGS includes Food Ingredients (70% of revenue) and Direct Care Supplies (30%), totaling $20,250 monthly based on 2026 projections. | $20,250 | $20,250 |
| 4 | Mandatory Property Costs | Fixed Compliance | Mandatory fixed costs like Property Taxes ($10,000/month) and Property Insurance ($5,000/month) total $15,000 monthly. | $15,000 | $15,000 |
| 5 | Facility Operations | Utilities & Maintenance | Utilities ($8,000/month) and General Maintenance ($4,000/month) are essential fixed expenses totaling $12,000 monthly. | $12,000 | $12,000 |
| 6 | Sales and Marketing | Variable Growth Cost | Variable Sales Commissions (40% of revenue) and Marketing Advertising (30% of revenue) cost $14,175 monthly in 2026. | $14,175 | $14,175 |
| 7 | G&A Overhead | Administrative Fixed | General and Administrative (G&A) fixed costs, including Professional Services ($2,500/month) and Software Licenses ($2,000/month), total $4,500 monthly. | $4,500 | $4,500 |
| Total | All Operating Expenses | $195,925 | $195,925 |
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What is the total monthly operating budget required to cover all fixed and variable costs?
The Assisted Living Facility needs approximately $129,518 in monthly revenue to cover the projected 2026 fixed overhead and variable expenses, a key figure to know before you even think about scaling; understanding the initial setup costs is crucial, so review how How Can You Effectively Open And Launch Your Assisted Living Facility To Serve Seniors In Your Community? can inform your ramp-up timeline. This means your operating budget must hit this revenue threshold just to break even before making any profit, honestly.
Monthly Fixed Cost Coverage
- Fixed overhead is set at $107,500 monthly for 2026 projections.
- This covers non-negotiable costs like facility lease and core administrative salaries.
- You must generate revenue above this just to cover the base operating structure defintely.
- If revenue misses this mark, you are operating at a loss before variable costs are factored in.
Total Revenue Target
- Variable costs are projected at 17% of total monthly revenue.
- The break-even revenue target is calculated as Fixed Costs divided by (1 - Variable Rate).
- $107,500 divided by (1 - 0.17) equals $129,518 required revenue.
- If occupancy is low, variable costs might be lower, but fixed costs remain the primary threat.
Which recurring cost categories pose the greatest risk to profitability?
Your biggest recurring cost risks are the $55,000 monthly payroll and the $75,000 facility overhead, which together demand $130,000 in monthly revenue just to break even on operations. Before you even think about scaling, you need a tight grip on these fixed costs, which is why understanding the initial launch steps, like those detailed in How Can You Effectively Open And Launch Your Assisted Living Facility To Serve Seniors In Your Community?, is so critical. If onboarding takes 14+ days, churn risk rises.
Staffing Efficiency Levers
- Payroll is $55,000 monthly, demanding precise staffing models.
- Focus on the staff-to-resident ratio; too high drives costs up fast.
- Measure caregiver time spent on non-billable tasks, defintely.
- High fixed payroll means every vacant bed hits contribution hard.
Controlling Facility Footprint
- Facility costs are fixed at $75,000 per month.
- This cost must be covered regardless of occupancy levels.
- If you have 30 units, covering $75k requires an average revenue of $2,500 per unit monthly.
- Seek energy efficiency upgrades to lower utility components within this overhead.
How much working capital is required to sustain operations until breakeven is achieved?
You need working capital to cover the $117,000 minimum cash deficit projected for December 2026, plus a realistic safety buffer to ensure smooth operations until stabilization. This means you'll defintely need to secure funding that exceeds that low point by at least 30% to account for operational lag.
Cover the Peak Cash Hole
- Target the $117,000 projected cash low point occurring in December 2026.
- Add a 30% safety margin to that deficit, setting your minimum raise target above $152,000.
- Calculate your average monthly cash burn rate leading up to that point.
- Ensure the secured capital covers six months of operating expenses past the projected breakeven month.
Managing the Runway Gap
- Understand that securing capital before operations start is critical for this type of facility.
- If you're still figuring out startup costs, review benchmarks like How Much Does It Cost To Open And Launch An Assisted Living Facility?
- Focus on reducing pre-opening burn rate by delaying non-essential tech implementation.
- Ensure vendor contracts allow for flexible payment terms until occupancy hits 75%.
If occupancy rates are lower than the 360 Residency Unit Months forecasted, how will we cover fixed expenses?
If occupancy rates are lower than the 360 Residency Unit Months forecasted, how will we cover fixed expenses? Understanding the margin impact is key, which you can explore further in Is The Assisted Living Facility Profitable? The immediate contingency plan centers on aggressively reducing the 70% combined variable spend allocated to sales commissions (40%) and marketing (30%) until stabilized intake covers the $107,500 monthly overhead.
Contingency Levers Under Low Occupancy
- Immediately pause all non-essential digital advertising spend.
- Focus resources on resident experience to boost retention rates.
- Review the $107,500 fixed expense baseline for immediate cuts.
- Renegotiate supply chain contracts related to dining services.
Cost Structure Risk Assessment
- Fixed overhead stands at $107,500 per month, period.
- Acquisition costs (commissions plus marketing) total 70% of gross revenue.
- This high variable load means margin shrinks fast with low volume.
- We defintely need to model break-even based on net revenue after these fees.
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Key Takeaways
- The average monthly running cost for an Assisted Living Facility is projected to reach $197,000 in 2026, heavily influenced by fixed overhead.
- Facility lease ($75,000) and staff payroll ($55,000) constitute the largest fixed expenses, totaling $107,500 monthly.
- The high fixed cost structure necessitates achieving breakeven quickly, which is forecasted for Month 13 (January 2027).
- Sufficient working capital of at least -$117,000 is required to cover the projected minimum cash deficit until operations stabilize.
Running Cost 1 : Staff Wages and Benefits
Payroll Exposure
Payroll is your second biggest operational drain after the building lease. In 2026, expect $55,000 monthly payroll supporting 13 FTEs. This cost scales directly with how many residents you support. You need tight control here.
Staffing Inputs
Staff wages cover direct care providers, admin support, and dining staff. To model this, you need target resident volume, the required staff-to-resident ratio, and the blended average loaded wage rate per FTE. For 2026, 13 FTEs drive the $55,000 baseline cost. If resident volume jumps, staffing must follow.
Cost Control Tactics
Managing this cost means optimizing scheduling software to prevent overtime creep. Avoid hiring too early; wait until occupancy hits defined thresholds before adding headcount. A common mistake is overstaffing early on, which kills early margins. Keep benefit packages competitive but standardized. This is defintely where early cash flow gets eaten.
Staffing Triggers
Because payroll is variable based on resident need, map staffing levels to occupancy milestones, not calendar dates. If your target occupancy is 85%, define the exact FTE increase needed at 70% occupancy to maintain service quality. This prevents surprise payroll spikes.
Running Cost 2 : Real Estate Overhead
Lease Commitment
The facility lease or mortgage locks in your largest fixed expense at $75,000 monthly, meaning operational runway depends heavily on securing consistent, high-tier occupancy fast. This commitment dictates your minimum viable revenue target before you even hire staff.
Facility Cost Basis
This $75,000 covers the physical space for the assisted living community, dwarfing other fixed expenses like property taxes ($10,000/month) and insurance ($5,000/month). You need firm lease terms or mortgage amortization schedules to finalize your capital structure. This cost must be covered by residency fees alone.
Managing the Lease
Since this is a long-term liability, avoid short-term thinking. Negotiate tenant improvement allowances upfront to shift capital burden onto the landlord. If you own, ensure your debt service coverage ratio accounts for variable care needs. A lease default here kills the business defintely.
Capital Planning
Compare this $75,000 against staff wages ($55,000) to see that real estate consumes 58% more cash flow than payroll monthly. Long-term planning means stress-testing 3-year lease renewal scenarios against projected occupancy rates, not just next quarter's cash flow.
Running Cost 3 : Resident Supplies and Food
COGS Projection
Monthly Cost of Goods Sold for supplies and food is projected at $20,250 in 2026. This figure splits into 70% for food ingredients and 30% for direct care supplies needed for residents.
Estimating Supply Costs
This $20,250 monthly COGS estimate relies on projected revenue for 2026. Food ingredients make up the largest portion at 70% of revenue, while direct care supplies are 30%. You need accurate resident census data and projected average daily spend per resident for both categories to validate this initial figure.
- Track resident acuity levels closely.
- Model food cost inflation quarterly.
- Verify supply usage against care plans.
Controlling Supply Spend
Managing these variable costs means negotiating bulk pricing for both food and medical supplies. Since food is 70% of COGS, focus on menu planning to minimize waste and leverage farm-to-table sourcing efficiency. Quality can't suffer here, so avoid substituting necessary direct care items just to save a few dollars.
- Negotiate vendor contracts aggressively.
- Track food waste daily.
- Standardize care supply kits.
Revenue Link Risk
Because COGS is directly tied to revenue percentage, occupancy drives this cost immediately. If revenue drops due to lower occupancy or pricing pressure, the $20,250 projection shrinks proportionally, but fixed overheads like wages and lease payments remain high. This means contribution margin tightens fast if revenue targets aren't met.
Running Cost 4 : Mandatory Property Costs
Fixed Property Burden
Your facility carries $15,000 in mandatory monthly property costs before the first resident moves in. These expenses, Property Taxes and Insurance, are fixed commitments that hit your bottom line regardless of current occupancy levels.
Cost Breakdown Inputs
These costs are determined externally and are not operational levers you control day-to-day. Property Taxes are set by local government assessment, running $10,000 per month. Property Insurance, covering the physical asset and liability, adds another $5,000 monthly. You need the official tax assessment and current insurance quotes to model this accurately for 2026.
- Taxes: $10,000 monthly based on assessment.
- Insurance: $5,000 for liability coverage.
- Total fixed base: $15,000 due every month.
Managing Fixed Property Risk
You can’t easily cut taxes, but you can manage the insurance component effectively. Review your coverage limits annually against current replacement costs to avoid over-insuring the physical structure unnecessarily. Also, ensure you qualify for any local property tax abatements available for senior living developments; that’s offten overlooked by new operators.
- Benchmark insurance rates yearly.
- Verify tax assessment accuracy.
- Check eligibility for property tax breaks.
The Occupancy Hurdle
Because these $15,000 costs are fixed, they must be covered before you make a dime of profit. High occupancy is not optional; it’s the mechanism that dilutes this fixed cost base across more paying residents.
Running Cost 5 : Facility Operations
Fixed Ops Baseline
Facility Operations, covering utilities and maintenance, are fixed costs totaling $12,000 monthly. This spend is non-negotiable for maintaining resident safety and comfort standards. Missing this payment directly impacts operational continuity and regulatory standing.
Cost Breakdown
This $12,000 figure bundles two essential fixed costs for the facility. Utilities run about $8,000 per month, covering power, water, and gas needed year-round for climate control. General Maintenance is budgeted at $4,000 monthly for routine upkeep, not major capital repairs. You need firm quotes for initial utility setup projections.
- Utilities: $8,000 monthly
- Maintenance: $4,000 monthly
- Total fixed operational spend: $12,000
Managing Utility Spend
Managing these fixed costs means focusing on efficiency, not just cutting them outright. For utilities, invest in smart thermostats or energy-efficient HVAC systems now; this shifts cost from fixed to controlled variable spend. Preventative maintenance, rather than reactive repairs, saves money long term. You should defintely track kWh usage against occupancy rates.
- Implement preventative maintenance schedules
- Benchmark utility usage against similar square footage
- Avoid reactive, emergency repair premiums
Fixed Cost Context
While $12,000 seems substantial, compare it to the $75,000 real estate overhead. Facility operations are a smaller, yet mandatory, fixed layer. If occupancy drops, this $12,000 must be covered by your gross margin before you cover staff wages or property taxes.
Running Cost 6 : Sales and Marketing
Growth Cost Structure
Sales and Marketing are highly variable drivers, costing 70% of revenue combined. In 2026, this spend hits $14,175 monthly, demanding tight control over acquisition efficiency to protect margins. Sales commissions alone chew up 40% of incoming revenue.
Variable Spend Breakdown
This $14,175 expense is split between paying sales agents 40% of revenue generated and allocating 30% of revenue toward advertising efforts. This cost scales directly with new resident intake. You need accurate monthly revenue projections to forecast this spend precisely. Here’s the quick math: If revenue hits $30,000, these costs are $21,000.
- Commissions: 40% of intake revenue.
- Advertising: 30% of intake revenue.
- Total variable cost: 70% of sales.
Controlling Acquisition Cost
High commissions mean sales effectiveness is paramount; focus on shortening the sales cycle for residency contracts. Marketing spend should shift toward high-intent digital channels rather than broad awareness campaigns. If onboarding takes 14+ days, churn risk rises, wasting that initial 70% spend. Defintely review your Cost Per Acquisition (CPA).
- Tie commissions to retention, not just signing.
- Audit advertising channels monthly for ROI.
- Negotiate lower base commission rates if possible.
Margin Impact
Since this category consumes 70% of revenue before fixed costs, every dollar spent here must generate predictable, long-term residency fees to cover the massive $75,000 real estate overhead.
Running Cost 7 : G&A Overhead
Fixed Admin Cost
Your fixed General and Administrative (G&A) overhead runs $4,500 monthly. This cost base is relatively low compared to facility lease ($75k) or staffing ($55k). Managing these administrative necessities keeps your runway longer. This overhead must be covered before you see operational profit.
Admin Cost Breakdown
This $4,500 covers essential back-office functions. Professional Services, budgeted at $2,500 monthly, includes legal compliance and accounting support. Software Licenses cost $2,000 monthly for resident management systems and operational software. This is a necessary fixed cost baseline for compliance.
- Professional Services: $2,500/month
- Software Licenses: $2,000/month
Controlling Admin Spend
Keep G&A lean by auditing software subscriptions annually; often, unused seats inflate this budget. For Professional Services, negotiate fixed retainers instead of hourly billing for predictable budgeting. You must avoid scope creep on legal reviews, which can quickly erode margins.
- Audit software seats every six months
- Seek fixed monthly retainers
- Benchmark legal fees against industry peers
G&A Leverage
Since G&A is fixed at $4,500, every new resident significantly improves your margin coverage against this base. If you achieve 80% occupancy, this fixed cost is easily absorbed. Defintely watch subscription creep, though, as that happens silently.
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Frequently Asked Questions
Running costs average $197,000 per month in 2026, covering $107,500 in fixed overhead and $55,000 in payroll Breakeven is projected for Month 13 (January 2027);