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Inlet View Rest Home has closed, the second Dunedin rest-home to close in about three weeks.
Owner Beth Sizemore said the home was shutting because of low occupancy.
Of 23 beds, 13 were occupied.
Mrs Sizemore would not discuss in detail the reason for the Andersons Bay rest-home's closure.
"The time is right [to close]."
New places were found for the residents within days, and the rest-home closed its doors yesterday.
The residents looked forward to going to their new homes, she said.
The home's 13 workers, including a registered nurse, were "good staff", and would find new jobs, Mrs Sizemore said.
She and her husband, Ian, had owned and operated the home for six years.
She believed it had been a rest-home for about 25 years.
Aged Care Association Otago-Southland board member Malcolm Hendry said he was concerned that two rest-homes had closed in Dunedin in less than a month.
Mr Hendry, also chief executive of Mosgiel's Birchleigh Residential Care Centre, said he was asked if he could accommodate one of the affected residents, but had no spare beds.
It was difficult for small facilities such as Inlet View to make a profit, he said. Facilities ideally needed about 80 beds to be profitable, something highlighted in a major survey of residential care needs released last week.
The survey predicts a massive upswing in residential demand starting in 2012, and an urgent need for planning.
Southern District Health Board funding and finance general manager Robert Mackway-Jones said the health board was officially notified of the closure on Sunday.
Mr Mackway-Jones said there was spare capacity in Otago's residential care sector.
"There are around 14 rest-home level bed vacancies, 20 hospital level bed vacancies and a further nine dementia and psycho-geriatric beds available."