A halfway house—more appropriately called a transitional home—serves as a temporary housing facility for individuals going through a major transition in their lives. Transitional homes can service people in a variety of situations, and usually target individuals in similar predicaments. Transitional housing programs are a growing need in communities plagued with substance abuse, crime and homelessness. Starting a halfway house in California is a fairly safe investment, thanks to the state's large population.

Things You Will Need
  • Business plan

  • Facility

Identify your resident audience. Troubled teens, young mothers, former penitentiary inmates, the homeless, abused women, veterans and substance abuse victims are the common groups addressed when forming a transitional home. If you would like some knowledge about the particular need in your area, California has local social service departments statewide that can inform you of the needs in your community. Research the specifics of the demographic you wish to serve.

Draft a business plan that provides details about the full scope of your venture. This will cover your purpose, mission, operational plans, and financial projections. The Small Business Administration (SBA) and the California Small Business Development Centers (CSBDC) are government entities designated to assist small businesses with planning and structuring assistance.

Assemble a group of professionals to consult with. This group may include an attorney, a realtor and members of your local social services department. There are many hidden aspects of starting a transitional home that need a professional's perspective to fully grasp. They can provide you with details about legalities, zoning requirements, and proper execution of your program.

Locate an appropriate facility. Besides requiring a building of adequate size, you want to make sure your location is near public transportation, potential places of employment, community colleges/high schools and health care facilities.

Register your business, and meet licensing requirements. Most transitional homes are registered as non-profit organizations (NPO). NPO structure organizations can receive government grants and assistance from various sources to aid with operation costs, in addition to being exempt from taxes. You must register with the IRS for non-profit tax exempt status, and meet California state and local licensing requirements.

Secure funding for your operation. Non-profit organizations normally obtain funding from government grants, businesses, philanthropists, faith-based groups and other non-profit organizations. Government surplus is also often available for transitional housing facilities. The government has initiated a grant location site for non-profits, that you can use to search for government grants available.


It is common for halfway houses to face opposition from potential neighbors. Speak with area residents and businesses to explain how your program will be beneficial to the community.