What it costs to start an adult family home in Washington

4 min read · 6 sections

Most answers online quote licensing and training fees, which are the smallest number in the exercise. The figure that actually decides whether this works is how many months you carry a property producing no revenue while it is converted, permitted and licensed. For my parents, that was two years.

The four buckets, smallest to largest#

Search this question and you will be handed a list of application and training costs totalling a few thousand dollars. That is accurate and it is close to irrelevant, because it is the cheapest quarter of what you are about to spend.

Licensing and training is the first bucket, and the one everyone quotes. Orientation, caregiving hours, administrator training, background checks, the application itself.

Property conversion is the second. Bathrooms, door widths, entry, egress, fire safety — driven almost entirely by which house you bought.

Operating setup is the third. Furnishing, equipment, insurance, initial staffing, the systems you need before anyone moves in.

Carrying cost is the fourth, and it is usually the largest of the four combined. Mortgage, taxes, insurance and utilities on a property earning nothing, for however long the conversion and licensing take.

The number nobody publishes#

My parents converted the garage and back yard of the house I grew up in. From breaking ground to holding a licence took two years — construction, inspections, training and the state application, stacked end to end.

Then they had their first resident within a month of opening.

Those two facts point in opposite directions, and both are load-bearing. Demand was not the hard part. Carrying a property that produced nothing for two years was.

Every projection you will read assumes a home that is already open. Occupancy rates, monthly rates, revenue per bed — all of it starts at day one of operation. If you are converting rather than buying an operating home, your model has to start considerably earlier than that, and the honest version begins with how many months of mortgage, taxes and insurance you can absorb before a dollar comes in.

Why an operating home costs more#

Homes already licensed and running sell at a premium over comparable houses, and buyers often find that premium irritating.

It is not arbitrary. You are buying past the conversion, past the permit review, past the licensing wait, and past the carrying period — with residents already in place and revenue from the first month. The premium is the price of those two years.

Whether it is worth paying depends on which you have more of, capital or time. If you have capital and need income soon, buying operating is frequently the cheaper path once the carrying cost is counted honestly. If you have time and want to build equity through the conversion, the other way round.

What does not work is comparing an operating home's asking price against a plain house's asking price, as though the difference were pure markup.

Where I can help, and where I cannot#

I am a real estate broker, not an accountant, a business broker, or a licensing consultant. I am not going to hand you a projected return, and anyone doing that without seeing your numbers is guessing.

What I can tell you is the property side, which is where most of the money is: what a candidate house is worth, what it will cost to carry while you convert it, how the conversion budget changes between two houses on the same street, and what an operating home is genuinely worth relative to a plain one.

For the licensing track, DSHS is the authority and the place to start.

Sources

• Information for adult family home providers — Washington State DSHS
• Adult family home rules — Chapter 388-76 WAC — Washington State Legislature

How I would build the budget#

Start at the end and work backwards. Decide how many months you can carry the property with no income, honestly, including the months where something goes slower than planned. That number caps everything else.

Then scope the conversion on the specific house before you write the offer, so the property cost and the conversion cost are one figure rather than two guesses.

Then add licensing, training and setup, which are comparatively predictable.

If the total exceeds what you can carry, the answer is usually a different house rather than a smaller budget — because the house is what set the conversion cost and the timeline in the first place.

Common questions#