In successful cases – and in those that fail – the same beginner mistakes are always found. Here are the ones that cost the most.

Classic scenario: you open Excel, list the number of units, rents, price per door, a quick “cap rate”… and conclude that “it makes sense.”

Problem: an RPA is not primarily a building; it’s a business model.

Behind the rents, you find:

• services (meals, laundry, leisure activities, maintenance, 24/7 presence),
• a significant payroll,
• safety and certification standards,
• a vulnerable clientele, sensitive to stability and the quality of care.

In practice, transactions that go awry are often those where the buyer overpaid for a residence that “looks good” on paper, but whose cost structure and work organization were never truly dissected.

Professional reflex:
Start by analyzing the RPA as a lodging and service business, and only then as a building. The order of analysis completely changes the conclusions.

2. Being guided by aesthetics rather than the financial model

The biggest mistakes sometimes begin with a phrase like:

“We visited, and we fell in love with it.”

River view, picturesque village, cozy dining room… and yet, the financial setup doesn’t hold up.

In several cases, the same blind spots are observed:

• focus on revenue rather than EBITDA;
• chronic underestimation of recurring expenses;
• CAPEX postponed “until later” (roof, sprinklers, systems, compliance upgrades);
• growth scenarios built on optimistic, rarely validated assumptions.

Result: the offered price does not align with the actual financing capacity.
Banks withdraw, the required down payment increases, and the expected return evaporates.

Professional reflex:
Before projecting into “potential,” you must validate:

• performance history,
• the quality of the EBITDA,
• revenue stability (occupancy, client profile),
• structural work to be planned in the short and medium term.

3. Underestimating HR risk: the Achilles’ heel

Case after case, the same observation recurs: it’s not the bricks that sustain an RPA, it’s the team.

Yet, the HR dimension is too often treated as a mere “expense item” in the analysis.

In practice, the warning signs are clear:

• dependence on one or two key individuals (management, nurse, head chef);
• team fatigue, unstructured schedules, heavy reliance on agencies;
• historical difficulty in recruiting in the region.

When these elements are neglected, the consequences are not long in coming:

• departure of strategic resources in the months following the transaction,
• decline in quality perceived by residents and families,
• weakened reputation, gradual decrease in occupancy rate,
• direct pressure on profitability… and on resale value.

Professional reflex:
Address the HR dimension as a full-fledged due diligence axis:

• team structure,
• dependence on individuals,
• stability,
• attractiveness of the RPA as an employer.

4. Minimizing regulations and compliance upgrades

On paper, a “certified” RPA may seem compliant.
In reality, the picture is sometimes more nuanced.

In several analyzed transactions, we find:

• inspection reports with unaddressed recommendations;
• systems needing modernization;
• work to be done to maintain certification or comply with newer standards.

When these elements are neither anticipated nor quantified, the bill arrives after the acquisition… and it’s rarely pleasant.

Concrete risk:

• imposed work with tight deadlines,
• cash flow strain,
• additional pressure on management,
• and, in extreme cases, risk to certification.

Professional reflex:
Include a structured regulatory review in due diligence:

• inspection history,
• notices received,
• residual discrepancies,
• upgrade budget over 3 to 5 years.

5. Setting up “theoretical” financing disconnected from bankers

In practice, lenders do not analyze an RPA like a fourplex.
They view it as a business with operational, regulatory, and HR risks.

The main pitfalls seen in beginner cases:

• hoping for an overly aggressive loan-to-value (LTV) ratio;
• ignoring debt service coverage ratio (DSCR) requirements;
• building projections on unvalidated future revenues;
• modifying the transaction structure mid-way due to lack of preparation (assets vs. shares, partners, corporate vehicle).

Result:

• extended delays,
• partial approvals,
• purchase agreement falling apart,
• sellers losing patience.

Professional reflex:

• Early validation of the real parameters of institutions for an RPA asset.
• Arrive with a structured file: financial statements, realistic projections, risk analysis.
• Work with professionals who have already arranged RPA financing, not just classic multi-unit housing.

6. Using a “standard” purchase agreement for a non-standard reality

Another recurring point: the purchase agreement used is simply not tailored for an RPA.

“For a first purchase, you shouldn’t serve as an experience for a real estate broker, but rather leverage a real estate broker’s experience.”

In several cases, we find:

• due diligence clauses that are too general;
• little to no specific mention of employment contracts, salary structure, or benefits;
• no framework for operational transition (seller support, management retention, communication to employees and residents);
• insufficient due diligence periods for an asset of this complexity.

The result is predictable:

• surprises along the way,
• heavy renegotiations,
• and sometimes, a deadlock.

Professional reflex:
Adapt the purchase agreement to the business + building reality:

• dedicated due diligence blocks (finance, HR, compliance, contracts),
• realistic timelines,
• clarified transition parameters.

7. Entering the market in “exploration” mode rather than as a structured buyer

From the sellers’ and brokers’ perspective, buyer profiles are quickly distinguished.

At one end, those who arrive with:

• a clear positioning (operator, investor, partnership),
• a defined financial capacity,
• a minimal understanding of the RPA reality.

At the other, profiles who present themselves “just to see”:

• no defined strategy,
• uncertainty about available down payment,
• limited operational availability to manage a 24/7 business,
• still a very “theoretical” view of the situation.

The former move forward.
The latter accumulate meetings, files, PDFs… but few transactions.

Professional reflex:
Before looking at opportunities, clarify:

• your role (operational player, passive investor, hybrid),
• your horizon (growth, transition, long-term),
• your actual capacities (capital, time, skills, network).

In a market where good opportunities are quickly seized, this preparation quickly becomes a competitive advantage.

8. Relying on a broker who doesn’t master the RPA market

In several aborted transactions, a recurring theme emerges:
the broker assisting the buyer is highly competent in multi-unit housing… but poorly equipped for an RPA.

In practice, this translates into:

• Partial analysis:
  focus on price per door, overlooking EBITDA issues, HR structure, regulatory risks, client profile.
• Incomplete negotiation:
  discussions focused on price, but little on the transaction’s structure (shares vs. assets, vendor take-back mortgage, adjustments, transition terms).
• Inadequate documentation:
  use of standard forms that poorly cover the “operating business” dimension,
  information requests that omit entire aspects of the reality (service contracts, reputation, HR history, etc.).
• Limited banking dialogue:
  files presented from too much of a real estate angle, without contextualizing the specific levers and risks of RPAs.

For the buyer, the impact is very concrete:

• risk of overpaying for a poorly understood asset;
• underestimation of operational or regulatory risks;
• wasting time on transactions that will not materialize;
• damaged credibility with serious sellers and lenders.

Professional reflex:
Surround yourself with a broker who:

• is familiar with the valuation parameters specific to RPAs;
• understands the balance between building, business, HR, and compliance;
• has already assisted buyers in this type of transaction;
• knows how to challenge the file in the buyer’s interest, not just “close the deal.”

Conclusion: Respecting Complexity, Securing Investment

Through various cases, one observation is confirmed:
buyers who successfully enter the RPA market for the long term are not necessarily those with the largest initial real estate portfolio.
They are those who respect the complexity of the model.

They have in common:

• a business perspective, not just a building perspective;
• a financial setup aligned with banking reality;
• an awareness of HR and regulatory issues;
• a network of professionals who already know the RPA game.

In a market where each residence impacts the quality of life of dozens of seniors, it’s not just about “making a good deal.”
It’s about taking over a living environment. And the market sees this… and finances it differently.

• Why Enlist a Specialized Real Estate Broker to Sell Your RPA?
• Quebec’s Aging Population: Challenges and Opportunities for Private Seniors’ Residences
• The New Rules of the Game for RPAs: Strategies to Navigate a Transforming Market
• The Economic Impacts of Population Aging: A Major Challenge
• When Rate Cuts Revive the RPA Real Estate Market

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Alain St-Jean
Licensed Real Estate Broker, DA – Residential and Commercial
Équipe Alain St-Jean inc.
📞 450-634-4774
📧 Alain@RPAaVendre.com