Free guide
The Group Home Profit Calculator
Every group-home deal looks profitable if you leave things out. This is the full input list — including the costs that show up in month four and the capacity you cannot legally count.
General education only, not accounting, tax or investment advice. Every assumption must be verified against the actual property, market and funding source.
The full input list
What actually goes into the number.
Most operators underwrite three or four lines. The deals that hold up underwrite all of them — and then stress-test the result.
Revenue side
- Legal resident capacity — not listing bedrooms
- Realistic sustained occupancy, tested at 70% as well as 85%
- Monthly payment per resident at your actual market
- Vacancy loss — the months between residents you will actually have
- Any non-resident revenue the house can legitimately produce
Property cost
- Monthly rent or PITI for the property itself
- Rent escalation across the term, not just year one
- Security deposit and any option or entry fees amortised over the term
- Property taxes and any HOA dues if not included
Operating costs
- Utilities — and the fact that shared housing uses far more than a family
- Insurance at the intended occupancy and use, not a standard homeowner policy
- House manager or on-site staffing compensation
- Food, if provided, at realistic per-person cost
- Transportation, where the population requires it
- Maintenance and repairs — including turnover costs between residents
- Admin, software, accounting and licensing or registration fees
- Marketing and referral relationship costs
- Reserves — the fund that exists so one bad month is not a crisis
The outputs that matter
Monthly gross revenue at underwritten occupancy
Total monthly cost, including reserves
Net operating income and operating margin
Break-even occupancy — in percent and in positions filled
Revenue per bed
Maximum sustainable property payment
The six ways deals fail
Mistakes that make a losing house look profitable.
Every one of these is avoidable. None of them is obvious on a first pass through the numbers.
Counting listing bedrooms
A non-conforming room or a basement that does not meet egress requirements cannot hold a resident. Underwriting capacity you cannot legally use is the single most common way a deal looks profitable on paper and is not.
Underwriting at 95% occupancy
Real houses have turnover. Running the numbers at 95% means every month below that is a surprise, and you never build the reserve that would have absorbed it. Test at 70% and see whether it still works.
Using a family's utility bill
Six adults showering, doing laundry and running appliances consume dramatically more than a family of four. Get actual utility costs for a comparable occupancy, or budget high.
Insuring it as a normal rental
Standard landlord policies frequently exclude or restrict the commercial use. Confirm coverage and cost at your actual occupancy and use before the numbers close.
Forgetting turnover
Every resident transition costs money — cleaning, repairs, lost days, screening time. A house with 40% annual turnover absorbs a real cost that never appears in a simple rent-minus-costs calculation.
No reserves line
A roof, a sewer line, or an HVAC failure in month three does not care about your projections. If the deal only works without reserves, it does not work.
The stress test
If it only works at full occupancy, it does not work.
Take your completed calculation and change three things. If the deal survives, you have something. If it does not, you found that out for free instead of for a lease term.
- Set occupancy to 70% and look at net operating income
- Add 20% to utilities and see whether the margin holds
- Double the maintenance line for one year and check the break-even
- Remove the highest-paying position entirely — can the house still cover costs?
- Assume two months of full vacancy in year one
- Add a $6,000 capital repair in month four and see what happens to reserves
What a calculator cannot tell you
It cannot tell you whether the permitted use is allowed, whether the funding is real, whether the referral pipeline will actually produce residents, or whether the resident payment you assumed is sustainable in your market. A profitable calculation on an unlawful or unfillable house is still a losing deal.
Sequence it correctly
Choose the population, verify demand, identify who pays, build the referral relationship — then underwrite the house. Running the calculator before you know who is paying and who is referring is arithmetic without a business underneath it.
Free download
Get the full Profit Calculator guide
The complete input worksheet, the stress-test scenarios, and the break-even calculation walkthrough.
Go deeper
A worksheet is a start. The business is the rest.
Group Home Secrets™ covers house economics alongside population selection, licensing, referrals, intake, screening, staffing and the real-estate side of the business.
Related reading
- Group Home Deal Analyzer™ — run the numbers
- Group Home Property Analyzer — score the house
- Deal Control Finder™
- The Deal Control™ Cheat Sheet
- 100 Questions to Ask Before Leasing
Important disclaimer
Acquire Group Homes™ provides education, consulting, business systems and real-estate strategy. It does not provide legal advice, medical advice, clinical treatment, licensing determinations, tax advice or Medicaid eligibility determinations. Requirements vary by property, population, services, city, county and state — nothing on this page states or implies that any model is automatically legal in any jurisdiction.
Operators must verify zoning, licensing, occupancy, building/fire code, fair-housing obligations, insurance, resident-rights requirements and other applicable laws with qualified professionals before acquiring or operating a property. We do not promise "no license required," guaranteed Medicaid payment, guaranteed government contracts, guaranteed occupancy, "eviction-proof" agreements, or that any structure avoids zoning or lender requirements.
Full disclaimers