Do you want to start a nursing home business and you want to know the cost breakdown? If YES, here are 3 factors that affect the cost of building a nursing home. In this business, what really matters or will ultimately dictate your profits will be the location you choose.

You will be required to render your services in an area where seniors are willing to spend $8 to $10K a month for an L – shaped room with kitchenette and closet, maybe an extra room with a door for an extra bedroom. To generate enough profit in this business, you require at least 80 percent of the residents in your home to be willing to pay what you charge monthly.

How Much Do Nursing Homes Make?

Normally, nursing homes make money by charging residents a fee for staying in the facility. This cost is applied on a per – month or per – year basis. In the United States, nursing homes can charge between $2,000 and $4,000 per resident per month.

However, the precise cost depends on the location and the quality of the facility. The profit level of any nursing home will depend on the size of the facility as well as its amenities. If you have a large facility with top – notch amenities and maintain full capacity, profits have the potential to reach the six figure mark or higher.

In terms of profit margin for nursing homes, it is sometimes very minimal to comprehend, especially if the majority of the residents are there on Medicaid. A nursing home can go many months with no profit margin at all – they make just enough to pay wages and cover expenses.

Estimated Cost Breakdown for Building a Nursing Home

On the average, building a nursing home in the United States cost about $160 per square foot. If you have decided on the size of the facility you want, all you have to do is multiply the number of square feet by $160. Although this is just an average, it is advisable to look a little closer, you’ll see that the cost range goes anywhere from $120 to $215 per square foot.

However, there are a number of factors that affect the cost per square foot of building a nursing home, including:

1. Location

Note that where your facility will be located has an enormous effect on the cost of construction. If you choose to build in San Francisco, you should expect to pay a lot more than average; it’ll cost you almost $200 per square foot. For a nursing home in Houston or Dallas, expect to be at the lower end of the scale – around $140 per square foot.

However, the price per square foot varies for a number of reasons. For starters, the cost of land differs from city to city. Building in Kansas City tends to be less expensive than building in New York City because land costs less there.

Also note that location will also determine how much you’ll be spending on labour. For instance, construction workers in New York make an average of $43,311 per year but those in Alabama make just $28,580. The cost of materials also depends in part upon where you build.

2. Building Size

To properly estimate the cost of building a nursing home, you also have to take size into consideration. Constructing a 10 – story nursing home is a lot more complicated than building a structure that’s just one or two stories tall. That means the taller a building is, the higher the cost per square foot will be.

3. Type of Materials Used

One other crucial factor to consider when calculating the cost of nursing home construction is the type of materials you plan to use. Are you planning to build a high – end retirement facility with a brick exterior and hardwood floors? Or would you prefer to lower your building costs by using vinyl siding and laminate flooring?


In summary, if you’re in a large city with a high cost of living like Boston, San Diego, Seattle, or Washington D.C., then you’ll need to stick to the high end of the range, which is $215 per square foot.

If you’re building in a more affordable location like Indianapolis, Oklahoma City, Wichita, or Phoenix, then head toward the lower end of the scale at $120 per square foot. For people in the south eastern states (North Carolina, South Carolina, Georgia, and Virginia) the cost range might be on the lower end of the spectrum.

In addition, if your nursing home is going to be larger than 25,000 square feet and two floors tall, bump the number up a bit. And remember to account for the difference in materials; if you’re using high – end materials, then increase the average cost again. This will give you a general idea how much you’ll be spending.