Assisted Living Facility Valuation Explained

How is an assisted living facility valued?

A credible number uses all three approaches and reconciles them. Most owners fixate on the earnings multiple and forget the rest. The multiple sets the anchor. The per-bed comp catches an anchor that's drifted. The real-estate line keeps the building from getting buried in the business price.

SDE vs EBITDA: which earnings figure sets your value

Value starts with earnings, and which earnings figure depends on size.

Smaller, owner-run facilities value on SDE, seller's discretionary earnings. That's net income with your salary, perks, and one-time costs added back.

Larger facilities value on EBITDA, earnings before interest, taxes, depreciation, and amortization. The line: once SDE clears $1M or the facility runs 80 beds or more, buyers price on EBITDA. Below both, it's SDE. Facilities of six beds or fewer stay on SDE regardless.

The switch matters because the two carry different multiples. To move from SDE to EBITDA, subtract a market administrator's salary, about $115,000, from SDE. A large facility needs a paid administrator whether you sell or not, so that cost is real and comes out.

Add-backs run both ways. You add back an above-market owner salary and personal expenses. But if you pay yourself below market, or nothing, a buyer normalizes your salary up to what a manager would cost, which lowers SDE. Clean books that survive a buyer's review are worth more than aggressive ones that don't.

Assisted living facility valuation multiples by type

Multiples are ranges. Each facility type trades inside a band, and where you land is set by performance. Here's where assisted living sits today by earnings method and type.

Read these as level ranges. Where you land inside one is set by the value drivers below. Marketplace data backs the low end: BizBuySell's closed assisted-living and nursing-home comps show a median SDE multiple near 3.9x, softening to about 3.18x in 2025 on a median sale around $610K, which skews to small residential homes. And these are estimates. A formal appraisal or a buyer's quality-of-earnings review sets the number you take to market.

The per-bed cross-check

Run a second number to check the first. Multiply your licensed beds by a per-bed range and see if it lands near your earnings value.

Per-bed ranges by type: assisted living $25,000 to $75,000, memory care $50,000 to $100,000, combined $40,000 to $90,000. Times your licensed beds.

Show it alongside the earnings value. Never add the two together, since that double-counts the same business. When they diverge, the gap tells you something. A thin earner anchors toward the per-bed floor, because the real estate and license carry value the earnings don't yet reflect. A strong earner runs above it, because the business throws off more than the beds alone would suggest.

Valuing the real estate separately

If you own the building, it gets its own number. Value the operating business on earnings, then value the real estate on what it earns as property. Keep them on separate lines so a buyer can't fold the building into the business price and pay you once for two assets.

The formula is income over a cap rate: value equals net operating income divided by the cap rate. For assisted living the cap range runs 7% to 9%, memory care 8.5% to 10%, combined 7.5% to 9.5%. Institutional Class A property runs lower, around 6.8%.

Two things decide where in that band you sit. First, normalize the NOI before you cap it. Strip out a market management fee, roughly 5% of revenue, and a replacement reserve for big-ticket repairs. A raw profit number that skips these overstates NOI and inflates the value. Deferred capex works the same way: a roof or HVAC a buyer has to replace widens the cap and lowers the number.

Second, position the cap by size, age, and location. Large, newer, core-metro buildings sit at the low end of the range, where buyers pay up. Small, older, or rural buildings sit at the high end, which means a lower value. CBRE and Newmark put core Class A assisted living near 6.5% to 7%, non-core higher, and small homes higher still.

What moves your number within the range

Four things move you inside the multiple range. None of them change the multiple itself. They position you within it.

Occupancy. The assisted living benchmark sits near 88%. Run above 90% and you're near the top of the range. Sit in the low 80s or below and you're near the bottom.

Payer mix. Private-pay revenue is worth more than Medicaid, since it's higher-margin and not exposed to state rate cuts. A mostly private-pay census pushes you up. A Medicaid-heavy one pulls you down.

Owner dependency. A facility that runs without you is worth more than one that needs you day to day. Buyers pay for a business that runs itself.

Service-line breadth. Memory care, respite, and adult day add revenue lines and carry their own multiples. More of them, higher in the range.

Worked example: valuing a 24-bed facility

Put it together. A 24-bed assisted living facility, owner-run, 90% occupancy, mostly private pay, and the owner owns the building.

Earnings. SDE is $350,000, net income with the owner's pay and perks added back. Twenty-four beds and under $1M in SDE, so it's the SDE method.

Operating value. $350,000 times the assisted living range of 3.0x to 4.3x gives $1.05M to $1.5M. Strong occupancy, a private-pay census, and light owner dependency push it to the upper half, call it $1.3M to $1.5M.

Per-bed check. 24 beds times $25,000 to $75,000 is $600K to $1.8M. The operating value lands in the upper-middle of that band, which fits a strong earner. The two agree, so the number holds.

Real estate. The owner owns the building and its normalized NOI is $150,000. At a 7% to 9% cap that's $1.7M to $2.1M, on its own line.

The full picture. Sell the business and the building together and the enterprise value is roughly $3.0M to $3.6M.

That range is enterprise value. Your proceeds come out lower, since debt payoff, a working-capital adjustment, and sale fees all come off the top. A formal valuation refines every line here.

Want your own number? Run your facility through the assisted living facility valuation calculator. When you're ready to move, see how a confidential sale works, or read the full how to sell an assisted living facility guide.