RCFE Investments in California, A Step-by-Step Guide

With California’s population aging fast and senior housing in high demand, RCFE investing is becoming one of the most profitable and recession-resistant real estate plays in the state.
Whether you’re a real estate investor, developer, or someone looking to build long-term cash flow, this guide will walk you through everything you need to know about RCFE (Residential Care Facility for the Elderly) investments in California—including zoning, licensing, income potential, and real estate strategies.

What Is an RCFE?

An RCFE is a state-licensed assisted living home that typically houses 6 or more residents aged 60 and older. These facilities provide:

Room and board
Basic daily care
Medication management
Social and recreational activities

In California, most smaller RCFEs operate from converted single-family homes, offering investors a unique opportunity to repurpose residential properties into high-cash-flow assets.

Why Invest in RCFEs in California?

California’s demographics and regulations make it an ideal market for assisted living investments:

Exploding demand: The senior population (65+) in California will nearly double by 2030
High monthly rates: Rents per resident often range from $4,000–$10,000/month
Low inventory: There's a shortage of licensed, high-quality RCFEs in most markets
Recession-resistance: Assisted living is a needs-based service, not a luxury

Step-by-Step Guide to RCFE Investing

Step 1 - Understand the Licensing Requirements

RCFEs are regulated by the California Department of Social Services (CDSS), Community Care Licensing Division (CCLD).

For a 6-bed RCFE (the most common size):

You need a state license
The operator (administrator) must be certified (you don’t need to be the admin yourself)
Background checks, training hours, and care plans are required

Larger facilities (7+ beds) require additional local approvals, including zoning reviews and potentially a Conditional Use Permit (CUP).

Step 2 - Find the Right Property

The best RCFE conversions start with the right house. Look for:

2,500–4,000+ sq ft, ideally single-level
At least 5–7 bedrooms and 2+ bathrooms
Located in quiet, residential neighborhoods
Close proximity to hospitals, pharmacies, and parks
Zoning that allows for residential care facilities (typically R1 zones allow up to 6 beds by right)

CJ Hegney specializes in sourcing off-market and underutilized homes across San Luis Obispo County, including Paso Robles, Arroyo Grande, and Grover Beach, that are ideal for assisted living conversions.

Step 3 - Assess Renovation Needs

Most RCFE conversions will require:

ADA-compliant bathrooms and entryways
Fire safety upgrades (sprinklers, alarms, fire-rated doors)
Widened hallways and accessible bedrooms
Outdoor space for residents
Staff quarters or break area

CJ partners with local contractors who specialize in RCFE renovation compliance and can give accurate cost and permitting timelines.

Step 4 - Run the Numbers

Here’s a sample projection for a 6-bed RCFE in San Luis Obispo County:

Monthly revenue: $6,000 x 6 residents = $36,000
Operating costs: $18,000 (staff, food, insurance, utilities, etc.)
Net income: $18,000/month or $216,000/year

Even after debt service or partnering with an operator, the cash-on-cash returns can exceed 20%–30% annually.

Want help modeling a specific property? Reach out and we’ll build a custom pro forma.

Step 5 - Decide How You Want to Operate

You have options:

Own the real estate only: Lease the facility to a licensed operator for passive income
Partner with an administrator: You bring the capital, they run the care side
Own and operate: High reward, high involvement. You’ll need RCFE admin certification

RCFE Investment Models We’ve Helped With

Arroyo Grande: 3,200 sq ft ranch-style home converted to 6-bed RCFE with 0% seller financing
Paso Robles: Subject-to deal + seller carry. Converted into a fully licensed facility generating $15K/month net
Grover Beach: Duplex converted into side-by-side facilities, fully ADA-compliant

Why Work With CJ Hegney?

CJ Hegney is not just a real estate advisor—he’s an RCFE investment specialist with hands-on experience in structuring creative deals, identifying high-potential properties, and helping investors legally convert homes into thriving care homes.

Whether you’re looking to: