Carter Court manager Chris Clarke said funds from the sale of the villas would allow the not-for-profit organisation to build another four units.
"It provides us with an alternative to be viable and therefore retain our ability to provide low costs."
Any profits from the sale of the four further units would be reinvested back into the rest home, Mr Clarke said.
"Anything we earn goes straight back into our services and facilities."
The new owners would have access to the rest home's registered on-call nurses and would be able to choose whether to participate in the recreational programmes.
"They are part of a community of people and they have access to various supports if they need it - and it's nice and central. It's a hop, skip and a jump away from town.
"One of the biggest things that elderly face in their home is loneliness and being here provides them with the opportunity to mix and meet people."
A bequest from Carterton woman Dulcie Routhan made building the units possible, Mr Clarke said.
There was strong demand for housing for the elderly in Carterton and there had already been interest in the villas, he said.
The rental units are all leased, with the rest home running a waiting list.
The villas have internal access garages, heat pumps and emergency alarms connected to the rest home's nurses.
Carter Court is owned by the community and operated by Carterton Society Incorporated.
The society is run by a board of eight community representatives.
Other new improvements at the rest home include a concrete path leading to the orchard, which was built by the Carterton Rotary Club.
The rest home is holding an open day on May 2 where the villas will be available for viewing.
