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What to check before you buy an adult family home
You are buying two things at once. A house, and a licensed care business. A home inspector checks the house. Nobody checks the business unless you do. That is where the money is, and that is where the surprises are.
Two purchases, one price#
When you buy an operating adult family home, you are buying a building and a business in the same deal.
The building part is familiar. You hire an inspector. You read the report. You ask for repairs or a price change.
The business part has no inspector. There is no report. If you do not ask the questions, nobody asks them for you.
Most of the value is in the business. A licensed home with six residents paying private rates is worth much more than the same house empty. So the business is the part to check hardest.
What to check, in order#
Do these in this order. The early ones are free. They can end a deal before you spend money on an inspection.
- Look up the license recordWashington's Department of Social and Health Services keeps a public record of every licensed adult family home in the state. There are 6,212 of them. Find the one you are buying. Check the license is current. Check what it is licensed for.
- Ask for the inspection historyDSHS inspects licensed homes and writes down what it finds. Ask the seller for the last two years. A home with repeat findings is not always a bad buy. But it is a different buy, and you should know before you offer.
- Get the resident count in writingHow many residents live there today. How many beds the license allows. An empty bed is lost income every month. A home running four of six beds is a different business than a full one.
- Ask who pays for each residentThis is the question that decides your income. Private pay and Medicaid pay very different rates for the same bed. A home that looks full can still earn much less than you expect. Ask for the payer mix, not just the headcount.
- Ask how many residents have given noticeResidents and families sometimes leave when a home changes hands. Ask straight out whether anyone has said they are moving. Ask the seller to tell you if that changes before closing.
- Find out who actually gives the careIf the owner is also the main caregiver, the business may not survive the sale. The residents stay because of a person, and that person is leaving. Ask who the staff are, how long they have worked there, and whether they plan to stay.
- Check the beds against the roomsWalk the house with the license in your hand. Count the rooms. A license for six beds means little if the house cannot hold six under current rules.
- Check what the license allowsSome homes are approved for specialty care such as dementia or mental health. That approval affects who you can accept and what you can charge. Confirm what this home is approved for, and what it would take to add more.
Rules, programs and costs change, and they differ between Seattle and each surrounding city. Figures on this page are dated where they appear. Confirm anything specific with the relevant city or agency before you rely on it.
Have an address in mind already?
Book a call and I'll tell you what I'd doThe license does not come with the house#
This surprises people, so it is worth saying plainly. You do not inherit the seller's license. You apply for your own.
The process is called a change of ownership. You have to qualify. The home has to pass. It takes time.
Plan for a gap. There may be a period when you own the house and cannot yet operate it. Ask early how long that is likely to take. Work out what you can carry while you wait.
Your closing date is not your opening date. Those are two different clocks.
Why a full house can still be a weak business#
Six residents sounds like a full home. That is not the whole story.
What matters is what each bed earns, and whether that income holds. A home with four private-pay residents can earn more than a home with six on Medicaid.
Ask for twelve months of income, not one month. One good month is easy to show. A year is harder to dress up.
Ask what the rates are. Ask when they last went up. Ask whether any resident is still paying a rate the seller agreed years ago and never changed.
What I would walk away from#
A seller who will not show inspection history. The records exist. Not sharing them tells you something.
A resident count nobody can explain. If beds are empty, there is a reason. Hear it from the seller rather than finding it yourself later.
A home where the owner is the only caregiver and no staff are staying. Then you are buying a house and a license, not a business.
None of these are automatic no answers. They are price conversations. But have them before the inspection period ends, not after.
Common questions#
Do I get the seller's license when I buy the home?
No. You apply for your own license through a change of ownership. You have to qualify yourself. Allow time for it, because you may own the house before you can operate it.
Can I see the home's inspection history before I buy?
Yes. DSHS keeps records for licensed homes. Ask the seller for the last two years, and look up the license record yourself as well. A seller who will not share them has told you something.
What is payer mix and why does it matter?
It is how each resident pays. Private pay and Medicaid pay different rates for the same bed. Two homes with six residents each can earn very different amounts. Always ask for the mix, not just the number of residents.
What happens to the residents when the home is sold?
They do not have to stay. Some families move a resident when the owner changes. Ask whether anyone has given notice, and ask the seller to tell you if that changes before closing.
Should I buy a licensed home or buy a house and convert it?
It depends on whether you want income from day one or a lower price. A licensed operating home costs more and starts earning sooner. A house you convert costs less and takes longer. They are different purchases with different risks.
Related guides
- Buying an adult family home in Washington: the buyer's guide
- Is an adult family home profitable?
- Buy a licensed adult family home, or convert a house?
