How to Start an Adult Family Home (Complete Guide)

Step-by-Step Instructions for Entrepreneurs & Care Providers

Adult Family Homes (AFHs) provide a vital service, offering safe and personalized residential care for elderly adults, individuals with disabilities, or those requiring supportive living environments. If you’re considering starting an AFH, this guide will walk you through every key step from planning to ongoing operations.

Table of Contents

1. What Is an Adult Family Home?
2. Benefits of Owning an AFH
3. Market Research & Business Planning
4. Licensing & Regulatory Requirements
   • Wisconsin Example (WAC  DHS)
   • Other State Variations
5. Facility Selection & Preparation
6. Staffing & Hiring
7. Policies, Procedures, and Compliance Tools
8. Marketing & Resident Attraction
9. Financial Planning & Insurance
10. Launch & Operations
11. Best Practices for Long-Term Success
12. Conclusion

1. What Is an Adult Family Home?

An Adult Family Home (AFH) is a small, residential setting licensed to provide housing, personal care, and support services to individuals who cannot live independently. Unlike larger institutional facilities, AFHs typically serve fewer residents (often 1–5), creating a home-like environment with personalized attention.

AFHs may serve populations such as:

• Seniors with daily living needs
• Individuals with developmental disabilities
• People living with cognitive impairments like dementia

2. Benefits of Owning an AFH

Owning an AFH offers both personal satisfaction and business opportunity:

✔ Community impact: Improve quality of life for residents

✔ High demand: Increasing need due to aging populations

✔ Lower barriers to entry: Compared to larger care facilities

✔ Flexible models: Respite, permanent care, specialized care

But success requires careful planning, regulatory compliance, and operational excellence.

3. Market Research & Business Planning

Before you start, conduct thorough research:

A. Understand Local Demand

• Assess population demographics (e.g., seniors, disabled adults)
• Identify existing AFHs and waitlist trends
• Talk to local hospitals, discharge planners, and social services

Tip: Tools like the U.S. Census Bureau and state health databases help estimate local senior populations.

B. Competitive Analysis

List:

• Nearby AFHs
• Their services
• Typical rates
• Occupancy levels

This helps shape your unique value proposition.

C. Create a Business Plan

Your business plan should include:

• Executive summary
• Market analysis
• Services offered
• Pricing strategy
• Operations plan
• Revenue & financial projections
• Funding requirements

This document is essential for financing and licensing.

4. Licensing & Regulatory Requirements

Every state has unique licensing requirements for AFHs.

Below is a general framework followed by an example from Wisconsin:

A. General Licensing Steps

1. Contact your state’s health or aging services department
2. Submit an AFH application
3. Pass a pre-licensing inspection
4. Provide staff background checks
5. Submit policies, procedures, and compliance documentation
6. Pay licensing fees

You must demonstrate that the home is safe, staff are trained, and documentation is complete.

B. Example: Wisconsin AFH Licensing

For Wisconsin, Adult Family Homes are regulated under Department of Health Services (DHS) Administrative Rules, primarily in Wis. Admin. Code DHS 83 (AFHs) and other related statutes. The state requires:

✔ Proof of safe and sanitary environment

✔ Background checks for owners and staff

✔ Policies & procedures meeting code requirements

✔ Training plans for caregivers

Reference: Wisconsin DHS AFH rules (search “Wis. Admin. Code DHS 83 AFH”) for official requirements.

Each state’s licensing body (e.g., Washington Department of Social and Health Services in WA) will have its own rules/code sections.

5. Facility Selection & Preparation

A. Choosing the Right Location

Consider:

• Accessibility to medical services
• Residential zoning compliance
• Parking and public transport
• Community environment

B. Preparing the Building

Ensure the property meets:

• Safety & fire codes
• ADA or accessibility standards
• Comfortable residential layout

Typical improvements include:

• Grab bars & handrails
• Emergency call systems
• Safe flooring & lighting

C. Furnishings & Compliance

Prepare:

• Bedrooms with adequate space per resident
• Common areas for dining and living
• Kitchen compliant with safety regulations

Documentation of these upgrades is often part of the licensing inspection.

6. Staffing & Hiring

Your staff is the heart of your AFH.

A. Core Roles

• Owner/Administrator
• Caregivers (CNAs/PCWs)
• Support staff (cook, housekeeper) – depending on size

B. Screening & Background Checks

Required in most states, including:

✔ Criminal background checks

✔ Abuse registry clearances

✔ Reference verification

C. Training & Certification

Even if medical care isn’t provided, staff should be trained in:

• Personal care skills
• Communication & resident dignity
• Documentation practices
• Safety & emergency response

Many states (like Wisconsin) require specific training hours for AFH staff.

7. Policies, Procedures, and Compliance Tools

A. Key Policy Areas

• Admission & discharge policies
• Care planning documentation
• Medication support procedures (non-medical)
• Safety and emergency response plans
• Record-keeping systems

Strong policies protect residents and ensure compliance during inspection.

B. Inspection Readiness

Maintain:

✔ Organized records

✔ Updated policies

✔ Staff training logs

✔ Safety checklists

These help reduce inspection stress and citations.

8. Marketing & Resident Attraction

Once you’re licensed and operational:

A. Build a Professional Presence

• Website with photos and services
• Listings in AFH directories
• Google Business Profile

B. Network Locally

• Hospitals & discharge planners
• Case managers & social workers
• Senior communities & organizations

Referral partnerships can significantly increase occupancy.

9. Financial Planning & Insurance

A. Budget Considerations

Expect costs for:

• Property modifications
• Licensing fees
• Staffing & payroll
• Insurance
• Marketing

B. Insurance Needs

Consult an insurance agent on:

✔ General liability

✔ Property insurance

✔ Workers’ compensation

✔ Umbrella policies

10. Launch & Operations

A. Open House & Tours

Invite local professionals and families for tours.

B. Resident Intake

Create forms for:

• Resident information
• Emergency contact
• Care needs assessment
• Consent forms

C. Daily Operations

Standardize daily workflows:

Scheduling

Documentation

Family communication

Billing & payments

11. Best Practices for Long-Term Success

✔ Prioritize resident quality of life

✔ Continuously train staff

✔ Stay updated with regulations

✔ Foster family communication

✔ Track operational KPIs (occupancy, retention, satisfaction)

12. Common Questions & Pitfalls

Q: Do I need clinical licensure?

A: Not for non-medical AFHs. Clinical services require appropriate medical licensing.

Q: How long does licensing take?

A: Varies by state; typically weeks to months.

Q: What if I serve complex needs?

A: Document policies and staff training appropriate to needs, and ensure safety plans are robust.

Conclusion

Starting an Adult Family Home is both a meaningful calling and a strategic business opportunity. With solid planning, regulatory compliance, quality staff, and thoughtful operations, you can build a care environment that supports individuals and families in a deeply impactful way.

Resources & References

📌 Wisconsin AFH Licensing: Search Wis. Admin. Code DHS 83

📌 State Health & Aging Departments: Licensing pages by state

📌 U.S. Census Data: Local population stats for planning