Have you ever thought about what it takes to open a group home? Local and state agencies oversee the establishment of group homes and for good reason. The establishment of a safe, affordable group home that provides an engaging, motivating atmosphere requires compassion and planning.

Individuals with developmental disabilities (IDD), until half a century ago were routinely placed in institutions. This happened even when their disabilities were not considered severe. Today, the options have certainly expanded, but the availability of those options varies.

  • Living with Parents or Family Members
  • Group Homes/Supportive Housing
  • Section 8 Housing
  • Assisted Living Facilities
  • Skilled Nursing Facilities
  • Special Needs Trusts (Trust for ownership of a home or a trust for payment of rent)

According to a survey conducted by The University of Minnesota’s Institute on Community Integration in collaboration with The Arc, 80% of individuals with IDD live with a caregiver who is their family member. Alternatively, access to affordable and accessible housing outside a family home, in a setting with adequate supports, remains a challenge for people with IDD.

Group homes with supportive services can prove to be a wonderful alternative for developmentally disabled adults. Yet, due to the affordable housing crisis, they are often hard to find. Which is why the idea to start a group home is worth exploring.

According to one online source, statistics show that there are about 7,629 group homes (group homes for adults with disabilities inclusive) in the United States in 2023, an increase of 1 percent from 2020. The states with the largest number of group homes for adults with disabilities are California with 754, Florida with 296 and New York with 284. If these figures are anywhere near accurate, those homes can’t hope to accommodate the estimated 7.3 million people with IDD living in the United States.

All this brings us back to the question of what opening a group home can take.

These are a few basic documents you could need to open a group home in the US.

  • Federal Employer Identification Number
  • Business Licens
  • Certificate of Incorporation
  • State Permit and Building Approval
  • Business License
  • Business and Professional Liability Insurance

What license do I need to start a group home in California?

The group home needs to comply with any local ordinances or restrictions in place in whatever geographic municipality the structure is located within. The Fair Housing Act and the Americans with Disabilities Act eliminated many of the barriers that existing community and homeowner’s associations would use to restrict diversity. Many of the legal hurdles that still exist are aimed at protecting the lives of those vulnerable individuals in the care of group home providers.

Before you dive into finding a building that meets licensing and inspection requirements, you’ll want to know what those requirements are. To start a group home for adults with developmental disabilities will be different than for an assisted living facility. The client needs are not the same. The rules and proper licensing requirements are not the same, either.

Contact A Regional Center in Your Geographic Area

A number of different agencies (federal/state/local) oversee the establishment and oversite of group homes in California. Homes for adults with developmental disabilities are overseen by the Department of Developmental Services. According to their site, vendors and providers go through one of California’s network of 21 community-based non-profit regional centers.

As an example, the Golden Gate Regional Center serves the counties of Marin, San Francisco, and San Mateo. There is a rigorous approval and contracting course of action that must be followed, in coordination with your local regional center.

On the Golden Gate Regional Center website, they mention the federal regulations implemented in 2014, known as the “Final Rule,” and released by the Centers for Medicare & Medicaid Services (CMS), requiring homes and programs that deliver HCBS to meet certain criteria. Facilitating individual choice, ensuring the right to privacy, and equity in service provision are some of the main elements of the Final Rule benefiting clients.

Your good intentions may be driving your impulse to establish a group home. However, just as with any venture, do your homework first.

What group homes already exist in your local market?

Conducting a needs assessment will give you a clear understanding of the existing group home operators. Are they at capacity or do they experience frequent vacancies? Chances are, another group home will be very much needed, but you’ll want to be strategic.

What will you be offering that will set you apart from the already established care homes?

A well-constructed business plan can go a long way in establishing credibility prior to seeking business permits and licensing through government agencies.

Business Planning

A needs assessment will go a long way in helping you flesh out a detailed business plan. You can develop a plan that contains the following elements:

  • A description of your organization – Mission, Vision with an Overview of why you exist, who you plan to serve and what services you will provide. In other words, it is a general company description.
  • Detail of Services and Identified Need
  • Operational Plan – Facility staffing and oversight, 24 hour operation, day-to-day basics.
  • Financial Plan – Fiscal management, systems, personnel qualifications, etc.
  • Marketing Plan – To effectively reach and serve target audience.
  • Executive Summary – While the executive summary section will be placed at the beginning of your business plan (after the table of content), it pays to wait until you’ve fleshed out other elements of your plan before you create this section.If you need help or ideas, contact your local US Small Business Administration and/or check out the national organization’s website (https://www.sba.gov/). They are a great resource for all things business. They also offer information on financing and available small start-up grants for special circumstances.


This is the term the regional centers use for the whole approval process you need to complete before any services can be provided for offer to IDD adults.

To become a vendor, you need to fill out an application form, with a disclosure statement and enclose the documentation specified in Title 17, Section 54310. Once this process is completed it can take up to 45 days for the center to respond.

The building you choose will need to meet all the requirements of your local zoning department, including safety code requirements. Inspections of the property are meant to evaluate the home for issues like accessibility, adequate space for the number of residents proposed, safety, proper equipment, and sanitation.

Is a group home profitable?

In California, the vendorization process is handled by the Regional Centers, but the Department of Developmental Services sets the rates for the group home services. The Regional Centers can provide you with the reimbursement rates for their region. This isn’t a process for the faint of heart. It takes research, diligence, attention to detail, ongoing oversight and let’s not leave out the need for funding, both to go through the process and then to run a group home. While it provides a valuable service the process takes capital. Whether a group home is profitable will depend on a range of issues including location, the initial significant investment (home purchase or rental fee), staff salaries, occupancy rate, etc.