How to Start a Retirement Community

Start a Retirement Community by following these 10 steps:

1. Plan your Retirement Community
2. Form your Retirement Community into a Legal Entity
3. Register your Retirement Community for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Retirement Community
6. Get the Necessary Permits & Licenses for your Retirement Community
7. Get Retirement Community Insurance
8. Define your Retirement Community Brand
9. Create your Retirement Community Website
10. Set up your Business Phone System

We have put together this simple guide to starting your Retirement Community. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a Retirement Community?

The base costs involve purchasing land, developer fees for residential building, staff salaries, and any required licenses or insurance. From there, the remaining costs will depend on the type of amenities that will be offered to residents.

What are the ongoing expenses for a Retirement Community?

Ongoing expenses include employee costs, recurring license fees, insurance, land maintenance, and utilities. Communities that offer on-site restaurants also need to account for food and cooking supplies in ongoing expenses.

Who is the target market?

The target market is anyone who is entering retirement or has retired. In addition, you’ll want to target the families of retirees as well.

How does a Retirement Community make money?

This business makes money by charging residents. More often than not, residents pay monthly. Without residents, the community will not make money. Some communities opt to have restaurants and entertainment venues on-site that the community can visit. This is an additional income source for the retirement community business.

How much can you charge customers?

The more a retirement community offers, the more residents can be charged. Upwards of $2,000 a month is average in the industry. This cost is expected to cover almost any and all of the residents’ needs.

How much profit can a Retirement Community make?

A retirement community can expect to make at least a third of its revenue as profit. Roughly another third of revenue will go to ongoing expenses, mortgage, and land maintenance. The other third will go toward staffing expenses.

How can you make your business more profitable?

The fastest way to make this business more profitable is to pay off long-term loans, like land and real estate development, as quickly as possible. Once these payments are finished, more profit will be available.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Retirement Community is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

This business is right for an individual or group of individuals who know how to have a good time. Just because someone is older than 60, it does not mean they want to sit around all day. The owners of this business need to be capable of being friends with many individuals from all walks of life. After all, these retirees have quite a few stories to tell about their heydays.

This business will not be right for an individual who prefers to work alone. The nature of this business requires you to interact with others and find ways to cultivate community.  Additionally, there are many logistics that must be promptly handled each day. Facilities must be maintained, employees must be held accountable for arriving on time, and new residents must be given tours when requested.

What happens during a typical day at a Retirement Community?

Since individuals at retirement communities are often able-bodied, the staff will not need to make wake-up calls. Some retirees will cook for themselves, while others will expect the on-site restaurant to have breakfast ready to go. The staff will need to make sure all facilities are clean and ready for use. Depending on the amenities the community offers, it may take many hours to get the facility ready for the next day. Regardless, rounds will need to be made throughout the day to ensure everyone’s needs are met.

On the administrative side, payments will need to be collected monthly in order to cover recurring costs. Any maintenance requests must be addressed in a timely manner. New residents will request information and expect calls or emails to be returned quickly. Providing performance reviews for employees will also be expected on a regular basis. Your day to day will likely vary, but your job will be to ensure all your guests’ needs are being met.

What are some skills and experiences that will help you build a successful Retirement Community?

It is crucial to have skills and experiences in hospitality and familiarity with selling and renting properties. Experience organizing community events and offering amenities could also be useful. 

What is the growth potential for a Retirement Community?

As more individuals reach retirement age, the need for retirement communities continues to grow. This business has large growth potential as more gen-x individuals retire.