Selling Your RCFE: Should You Keep the Property or Sell It With the Business?

Many assisted living owners dream of keeping their RCFE property as an income stream after selling the business. But with today’s financing and cash flow realities, is that a smart exit strategy?

If you’ve been thinking about getting out of the assisted living business, you’re not alone. Every year, RCFE and assisted living operators across California make the decision to sell their businesses. The reasons vary:

• Retirement after decades of building a successful business.

• Burnout after 10 years of ownership.

• Career shifts after only 2–3 years in the industry when the reality doesn’t align with expectations.

• Operational challenges, from attracting clients to managing partnerships that didn’t pan out.

Whatever the motivation, the path for many owners eventually leads to a sale.

The Common Dilemma: Selling the Business, Keeping the Property

One trend I’m seeing more often is owners who want to sell the RCFE business but hold onto the real estate—leasing it back to the new operator. On the surface, it sounds like a great strategy. After all, one of the attractions of getting into assisted living is not just running a meaningful business but also leveraging ownership into long-term real estate wealth.

And let’s be clear: I’m a strong believer that real estate is one of the best vehicles to build wealth during your peak earning years. Strategic acquisition and holding properties over time has proven to be a wealth-building cornerstone for countless entrepreneurs.

But here’s where the challenge comes in: cash flow reality.

Why It’s Harder Than It Looks

If you purchased your RCFE property in the past 3–4 years, chances are your financing looks very different from owners who bought 10+ years ago. Interest rates have climbed since 2022, property values have soared, and the cost of borrowing is much higher.

That creates a mismatch. The lease rate you need in order to cover your mortgage, taxes, and insurance often exceeds what a 6-bed RCFE buyer can afford. The economics simply don’t line up.

Our office receives calls every week from sellers hoping to lease their property to a business buyer. The deals that work best? Those where:

• The owner bought their property many years ago at a much lower price.

• They carry a smaller mortgage balance or enjoy a low fixed-rate loan.

• Their carrying costs allow them to offer a lease rate aligned with the buyer’s business cash flow.

On the other hand, for owners who purchased recently with high leverage, trying to lease the property while selling the business often becomes a roadblock instead of a solution.

The Bigger Picture

It’s tempting to present “what-if” scenarios to buyers: “If you were to purchase this property today with X down, your payments would look like Y.” Unfortunately, those arguments don’t move the needle. Buyers look at the business’s actual financial performance and whether the lease payment fits within its operating margins—not what the property might be worth on paper.

And that’s where the tension lies. Over the past decade, we’ve seen significant inflation, rising property values, and escalating rents. That’s good news for long-term property holders, but for RCFE operators trying to structure a lease deal tied to today’s costs, it often creates a barrier too high for buyers to overcome.

Takeaway for Owners

If you’re considering selling your RCFE business, be realistic about whether holding onto the property is truly feasible. For some, it can absolutely work and create a dual income stream. For others—especially those who purchased recently at higher prices—it may not be the smooth exit strategy you envision.

The best next step? Work with an experienced RCFE broker who can evaluate your property, your business, and your goals honestly. Sometimes, the best financial outcome is to sell both the business and the property together rather than forcing a lease structure that simply doesn’t pencil out for today’s buyers.