<PAGE>   1

                                                                    EXHIBIT 10.8



                                  DEED OF TRUST

                            With Assignment of Rents


         THIS DEED OF TRUST, Made as of the 29th day of January, 2001, by and
between ARV CHANDLER VILLAS, L.P., a California limited partnership, with
offices at 245 Fischer Avenue, Suite D-1, Costa Mesa, California 92626, herein
called Trustor, and FIDELITY NATIONAL TITLE INSURANCE COMPANY, an Arizona
corporation, whose address is One South Church Street, Suite 120, Tucson,
Arizona 85701, herein called Trustee(s), and RED MORTGAGE CAPITAL, INC., an Ohio
corporation, having an office and place of business at 150 East Gay Street, 22nd
Floor, Columbus, Ohio 43215 herein called Beneficiary.

         WITNESSETH: That Trustor grants, transfers, and assigns to Trustee in
trust, upon the trusts, covenants, conditions and agreements and for the uses
and purposes hereinafter contained, with power of sale, all that real property
situate, lying and being in Maricopa County, State of Arizona, described as
follows:


                         SEE EXHIBIT "A" ATTACHED HERETO
                             AND MADE A PART HEREOF.


         Together with the rents, issues, and profits thereof, SUBJECT, HOWEVER,
to the right, power, and authority hereinafter given to and conferred upon
Beneficiary to collect and apply such rents, issues, and profits; and together
with all buildings and improvements of every kind and description now or
hereafter erected or placed thereon, and all fixtures, including but not limited
to all gas and electric fixtures, engines and machinery, radiators, heaters,
furnaces, heating equipment, laundry equipment, steam and hot-water boilers,
stoves, ranges, elevators and motors, bath tubs, sinks, water closets, basins,
pipes, faucets and other plumbing and heating fixtures, mantels, cabinets,
refrigerating plant and refrigerators, whether mechanical or otherwise, cooking
apparatus and appurtenances, and all shades, awnings, screens, blinds and other
furnishings, it being hereby agreed that all such fixtures and furnishings shall
to the extent permitted by law be deemed to be permanently affixed to and a part
of the realty; and

         Together with all building materials and equipment now or hereafter
delivered to said premises and intended to be installed therein; and

         Together with all articles of personal property now or hereafter
attached to or used in and about the building or buildings now erected or
hereafter to be erected on the lands described which are necessary to the
complete and comfortable use and occupancy of such building or buildings for the
purposes for which they were or are to be erected, including all other goods and
chattels and personal property as are ever used or furnished in operating a
building, or the activities conducted therein, similar to the one herein
described and referred to, and all renewals or replacements thereof or articles
in substitution therefor, whether or not the same are, or shall be attached to
said building or buildings in any manner, and said Trustor agrees to execute a
chattel mortgage covering the aforesaid fixtures and articles of personal
property, at the time of

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placing such personal property or any part thereof in the building or buildings
to be erected on the lands herein described in the manner and form required by
law, at its expense and satisfactory to the Beneficiary.

         To have and to hold the property hereinbefore described together with
appurtenances to the Trustee, its or his successors and assigns forever.

         FOR THE PURPOSE of securing performance of each agreement of Trustor
herein and payment of a just indebtedness of the Trustor to the Beneficiary in
the principal sum of FIVE MILLION SEVEN HUNDRED EIGHTY-TWO THOUSAND NINE HUNDRED
AND NO/100THS DOLLARS ($5,782,900.00), evidenced by its Note of even date
herewith, bearing interest from date on outstanding balances at the rate of
Eight and six hundredths per centum (8.06 %) per annum, said principal and
interest being payable in monthly installments as provided in said Note with a
final maturity of February 1, 2036, which Note is identified as being secured
hereby by a certificate thereon. Said Note and all of its terms are incorporated
herein by reference and this conveyance shall secure any and all extensions
thereof, however evidenced.

AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:

     1. That it will pay the Note at the times and in the manner provided
therein;

     2. That it will not permit or suffer the use of any of the property for any
purpose other than the use for which the same was intended at the time this Deed
of Trust was executed;

     3. That the Regulatory Agreement, if any, executed by the Trustor and the
Secretary of Housing and Urban Development, acting by and through the Federal
Housing Commissioner, which is being recorded simultaneously herewith, is
incorporated in and made a part of this Deed of Trust. Upon default under the
Regulatory Agreement and upon the request of the Secretary of Housing and Urban
Development, acting by and through the Federal Housing Commissioner, the
Beneficiary, at its option, may declare the whole of the indebtedness secured
hereby to be due and payable;

     4. That all rents, profits and income from the property covered by this
Deed of Trust are hereby assigned to the Beneficiary for the purpose of
discharging the debt hereby secured. Permission is hereby given to Trustor so
long as no default exists hereunder, to collect such rents profits and income
for use in accordance with the provisions of the Regulatory Agreement;

     5. That upon default hereunder Beneficiary shall be entitled to the
Appointment of a receiver by any court having jurisdiction, without notice, to
take possession and protect the property described herein and operate same and
collect the rents, profits and income therefrom;

     6. That at the option of the Trustor the principal balance secured hereby
may be reamortized on terms acceptable to the Secretary of Housing and Urban
Development, acting by and through the Federal Housing Commissioner if a partial
prepayment results from an award in condemnation in accordance with provisions
of Paragraph 8 herein, or from an insurance payment made in accordance with
provisions of Paragraph 7 herein, where there is a resulting loss of project
income;

     7. That the Trustor will keep the improvements now existing or hereafter
erected on the deeded property insured against loss by fire and such other
hazards, casualties, and

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contingencies, as may be stipulated by the Secretary of Housing and Urban
Development, acting by and through the Federal Housing Commissioner upon the
insurance of the Deed of Trust and other hazards as may be required from time to
time by the Beneficiary, and all such insurance shall be evidenced by standard
fire and extended coverage insurance policy or policies, in amounts not less
than necessary to comply with the applicable Coinsurance Clause percentage, but
in no event shall the amounts of coverage be less than 80 percent of the
Insurable Values or not less than the unpaid balance of the insured Deed of
Trust, whichever is the lesser, and in default thereof the Beneficiary shall
have the right to effect insurance. Such policies shall be endorsed with
standard Mortgagee clause with loss payable to the Beneficiary and the Secretary
of Housing and Urban Development as their interests may appear, and shall be
deposited with the Beneficiary; The insurance company providing such coverage
shall be selected by Mortgagor, subject to approval by Mortgagee.

         That if the premises covered hereby, or any part thereof, shall be
damaged by fire or other hazard against which insurance is held as hereinabove
provided, the amounts paid by any insurance company in pursuance of the contract
of insurance to the extent of the indebtedness then remaining unpaid, shall be
paid to the Beneficiary, and, at its option, may be applied to the debt or
released for the repairing or rebuilding of the premises or, with the consent of
the Secretary of Housing and Urban Development, applied to the debt or used for
other purposes. Any unexpired insurance shall inure to the benefit of, and pass
to, the purchaser of the property covered thereby at any Trustee's sale held
hereunder;

     8. That all awards of damages in connection with any condemnation for
public use of, or injury to, any of said property are hereby assigned and shall
be paid to Beneficiary, who may apply the same to payment of the installments
last due under said Note, and Beneficiary is hereby authorized, in the name of
Trustor, to execute and deliver valid acquittances thereof and to appeal from
any such award. No amount applied to the reduction of the principal amount due
shall be considered an optional prepayment as the term is used in the Deed of
Trust and the Note secured hereby, nor relieve the Trustor from making regular
monthly payments commencing on the first month following the date of receipt of
the award.

     9. Together with and in addition to the monthly payments of interest or of
principal and interest payable under the terms of said Note, to pay to
Beneficiary monthly until said Note is fully paid, beginning on the first day of
the first month after the date hereof, the following sums:

         (a)      An amount sufficient to provide the Beneficiary with funds to
                  pay the next mortgage insurance premium if this instrument and
                  the Note secured hereby are insured, or a monthly service
                  charge, if they are held by the Secretary of Housing and Urban
                  Development, as follows:

                    (I)       If and so long as said Note of even date and this
                              instrument are insured or are reinsured under the
                              provisions of the National Housing Act, an amount
                              sufficient to accumulate in the hands of the
                              Beneficiary one month prior to its due date the
                              annual mortgage insurance premium, in order to
                              provide such Beneficiary with funds to pay such
                              premium to the Secretary of Housing and Urban
                              Development, pursuant to the National Housing Act,
                              as amended, and applicable Regulations thereunder,
                              or

                   (II)       Beginning with the first day of the month
                              following an assignment of this instrument and the
                              Note secured hereby to the Secretary of

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                              Housing and Urban Development, a monthly service
                              charge which shall be an amount equal to
                              one-twelfth of one-half percent (1/12 of 1/2%) of
                              the average outstanding principal balance due on
                              the Note computed for each successive year
                              beginning with the first of the month following
                              such assignment, without taking into account
                              delinquencies or prepayments.

         (b)      A sum equal to the ground rents, if any, next due, plus the
                  premiums that will next become due and payable on policies of
                  fire and other property insurance covering the premises
                  covered hereby, plus water rates, taxes and assessments next
                  due on the premises covered hereby (all as estimated by the
                  Beneficiary) less all sums already paid therefor divided by
                  the number of months to elapse before one month prior to the
                  date when such ground rents, premiums, water rates, taxes and
                  assessments will become delinquent, such sums to be held by
                  Beneficiary in trust to pay said ground rents, premiums, water
                  rates, taxes, and special assessments.

         (c)      All payments mentioned in the two preceding subsections of
                  this paragraph and all payments to be made under the Note
                  secured hereby shall be added together and the aggregate
                  amount thereof shall be paid each month in a single payment to
                  be applied by Beneficiary to the following items in the order
                  set forth:

                  (I)         premium charges under the Contract of Insurance
                              with the Secretary of Housing and Urban
                              Development, acting by and through the Federal
                              Housing Commissioner or service charge;

                  (II)        ground rents, taxes, special assessments, water
                              rates, fire and other property insurance premiums;

                  (III)       interest on the Note secured hereby;

                  (IV)        amortization of the principal of said Note.

     10. Any excess funds accumulated under paragraph (b) above remaining after
payment of the items therein mentioned, shall be credited to subsequent monthly
payments of the same nature required thereunder; but if any such item shall
exceed the estimate therefor, the Trustor shall without demand forthwith make
good the deficiency. Failure to do so before the due date of such item shall be
a default hereunder. In case of termination of the Contract of Mortgage
Insurance by prepayment of the mortgage in full, or otherwise (except as
hereinafter provided) accumulations under paragraph (a) above not required to
meet payments due under the Contract of Mortgage Insurance, shall be credited to
the Trustor. If the property is sold under foreclosure or is otherwise acquired
by the Beneficiary after default any remaining balance of the accumulations
under paragraph (b) above shall be credited to the principal of the debt as of
the date of commencement of foreclosure proceedings or as of the date the
property is otherwise acquired; and accumulations under paragraph (a) above
shall be similarly applied unless required to pay sums due to the Secretary of
Housing and Urban Development, acting by and through the Federal Housing
Commissioner under the Contract of Mortgage Insurance;

     11. To keep said property in good condition and repair, not to remove or
demolish any buildings thereon; to complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged, or destroyed
thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting

<PAGE>   5
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said property or requiring any alterations or improvements to be made thereon;
not to commit or permit waste thereof; not to commit, suffer or permit any act
upon said property in violation of law and/or covenants, conditions and/or
restrictions affecting said property; not to permit or suffer any alterations of
or addition to the buildings or improvements hereafter constructed in or upon
said property without the consent of the Beneficiary.

     12. To appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of Beneficiary or Trustee, and to
pay all costs and expenses, including cost of evidence of title and attorney's
fees in a reasonable sum, in any such action or proceeding in which Beneficiary
or Trustee may appear;

     13. Should Trustor fail to make any payment or do any act as herein
provided, then Beneficiary or Trustee, but without obligation so to do and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon said property for such purposes; may commence,
appear in and/or defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; may pay,
purchase, contest, or compromise any encumbrance, charge, or lien which in the
judgment of either appears to be prior or superior hereto; and, in exercising
any such powers, may pay necessary expenses, employ counsel and pay his
reasonable fees;

     14. The Beneficiary shall have the right to pay mortgage insurance premiums
or fire and other property insurance premiums when due to the extent that
monthly payments made hereunder for the purpose of meeting same are
insufficient. All such payments made by the Beneficiary shall be added to the
principal sum secured hereby;

     15. To pay immediately and without demand all sums so expended by
Beneficiary or Trustee, under permission given under this Deed of Trust, with
interest from date of expenditure at the rate specified in said Note;

     16. That the funds to be advanced hereunder are to be used in the
construction of certain improvements on the lands herein described in accordance
with a certain building loan agreement made by and between the Trustor and the
Beneficiary dated as of _________, which said building loan agreement (except
such part or parts thereof as may be inconsistent herewith) is incorporated
herein by reference to the same extent and effect as if fully set forth herein,
and made a part of this Deed of Trust; and on the failure of the Trustor to keep
and perform all the covenants, conditions, and agreements of said building loan
agreement, thereupon, the principal sum and all arrears of interest, and other
charges provided for herein shall at the option of the Beneficiary of this Deed
of Trust become due and payable, anything contained herein to the contrary
notwithstanding. This covenant shall be terminated upon the completion of the
building or buildings to the satisfaction of the Beneficiary and the making of
the final advance as provided in said building loan agreement;

     17. The Trustor further covenants that it will not voluntarily create,
suffer, or permit to be created against the property subject to this Deed of
Trust any lien or liens inferior or superior to the lien of this Deed of Trust
and further that it will keep and maintain the same free from the claim of all
persons supplying labor or materials which will enter into the construction of
any and all buildings now being erected or to be erected on said premises;

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     18. That the improvements about to be made upon the premises, covered by
the Deed of Trust, and all plans and specifications comply with all municipal
ordinances and regulations and all of other regulations made or promulgated, now
or hereafter, by lawful authority, and that the same will upon completion comply
with all such municipal ordinances and regulations and with the rules of the
applicable fire rating or inspection organization, bureau, association or
office;

     19. That so long as this Deed of Trust and the said Note secured hereby are
insured under the provisions of the National Housing Act, or held by the
Secretary of Housing and Urban Development, it will not execute or file for
record any instrument which imposes a restriction upon the sale or occupancy of
the mortgaged property on the basis of race, color, or creed.

IT IS MUTUALLY AGREED THAT:

     20. That if the construction of the improvements herein referred to shall
not be carried on with reasonable diligence, or shall be discontinued at any
time for any reason other than strikes or lockouts, the Beneficiary, after due
notice to the Trustor or any subsequent owner, is hereby invested with full and
complete authority to enter upon the said premises, employ watchmen to protect
such improvements from depredation or injury and to preserve and protect the
personal property therein, and to continue any and all outstanding contracts for
the erection and completion of said building or buildings, to make and enter
into any contracts and obligations wherever necessary, either in its own name or
in the name of the Trustor, and to pay and discharge all debts, obligations and
liabilities incurred thereby. All such sums so advanced by the Beneficiary
(exclusive of advances of the principal of the indebtedness secured hereby)
shall be added to the principal of the indebtedness secured hereby and shall be
secured by this Deed of Trust and shall be due and payable on demand with
interest at the rate specified in said Note, but no such advances shall be
insured unless same are specifically approved by the Secretary of Housing and
Urban Development, acting by and through the Federal Housing Commissioner prior
to the making thereof;

     21. Upon default by Trustor in making any monthly payment provided for
herein or in the Note secured hereby, and if such default is not made good prior
to the due date of the next such installment, or if Trustor shall fail to
perform any covenant or agreement in this Deed of Trust, the Beneficiary may
declare all sums secured hereby immediately due and payable by delivery to
Trustee of written declaration of default and demand for sale, and of written
notice of default and of election to cause the property to be sold, which notice
Trustee shall cause to be duly filed for record and the Beneficiary may
foreclose this Deed of Trust. Beneficiary shall also deposit with Trustee this
Deed, the Note and all documents evidencing expenditures secured hereby;

     22. After Trustee shall have published, posted, recorded and mailed Notice
of Sale as then required by law, Trustee, without demand on Trustor, shall sell
said property at the time and place fixed by it in said notice of sale, either
as a whole or in separate parcels, and in such order as it may determine at
public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion
of said property by public announcement at the time and place of sale, and from
time to time thereafter may postpone the sale by public announcement at the time
fixed by the preceding postponement. Trustee shall deliver to the purchaser its
Deed conveying the property so sold, but without any covenant or warranty,
express or implied. Any person, including Trustor, Trustee, or Beneficiary, may
purchase at the sale. The Trustee shall apply the proceeds of sale to payment of
(1) the expenses of such sale, together with the reasonable expenses of this
trust including therein reasonable Trustee's fees or attorney's fees for
conducting the sale, and the actual cost of publishing, recording, mailing and
posting notice of the sale; (2) the cost of any search and/or

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other evidence of title procured in connection with such sale and revenue stamps
on Trustees' Deed; (3) all sums expended under the terms hereof, not then
repaid, with accrued interest at the rate specified in said Note; (4) all other
sums then secured hereby; and (5) the remainder, if any, to the person or
persons legally entitled thereto;

     23. Beneficiary may from time to time substitute a successor or successors
to any Trustee named herein or acting hereunder to execute this Trust. Upon such
appointment, and without conveyance to the successor trustee, the latter shall
be vested with all title, powers, and duties conferred upon any Trustee herein
named or acting hereunder. Each said appointment and substitution shall be made
by written notice thereof executed by Beneficiary, containing reference to this
Deed, the original parties thereto, the pertinent recording information, and its
place of record. Such substitution shall become effective upon the mailing of
copies of said notice by registered or certified mail, postage prepaid, to the
Trustor, the Trustee and successor Trustee, and upon the recordation of said
notice in the office of the county recorder of the county in which the trust
property is situated.

     24. The pleading of any statute of limitations as a defense to any and all
obligations secured by this Deed is hereby waived to the full extent permissible
by law;

     25. Upon written request of Beneficiary stating that all sums secured
hereby have been paid, and upon surrender of this Deed of Trust and said Note to
Trustee for cancellation and retention and upon payment of its fees, Trustee
shall reconvey, without warranty, the property then held hereunder. The recitals
in such reconveyance of any matters or fact shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto;"

     26. The trust created hereby is irrevocable by Trustor;

     27. This Deed of Trust applies to, inures to the benefit of, and binds all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors, and assigns. The term "Beneficiary" shall include not only the
original Beneficiary hereunder but also any future owner and holder including
pledgees, of the Note secured hereby in this Deed, whenever the context so
requires, the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural. All obligations of each Trustor hereunder
are joint and several;

     28. Trustee accepts this Trust when this Deed of Trust, duly executed and
acknowledged, is made public record as provided by law. Except as otherwise
provided by law the Trustee is not obligated to notify any party hereto of
pending sale under this Deed of Trust or of any action of proceeding in which
Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee;

     29. Notwithstanding any other provision contained herein or in the Note, it
is agreed that the execution of the Note shall impose no personal liability upon
the Trustor (or any of its present or future limited or general partners) for
payment of the indebtedness evidenced thereby and in the event of a default, the
holder of the Note shall look solely to the property subject to this Deed of
Trust and to the rents, issues and profits thereof in satisfaction of the
indebtedness evidenced by the Note and will not seek or obtain any deficiency or
personal judgment against the Trustor (or any of its present or future limited
or general partners) except such judgment or decree as may be necessary to
foreclose or bar its interest in the property subject to this Deed of Trust and
all other property mortgaged, pledged, conveyed or assigned to secure payment of
the Note; provided, that nothing in this condition and no action so taken shall
operate to impair any obligation of the maker under the Regulatory Agreement
herein referred to and made a part hereof.

<PAGE>   8
                                    -- 8 --


     30. The Undersigned TRUSTOR REQUESTS that a copy of any notice of sale
hereunder be mailed to him at the mailing address opposite his name hereto.



                           Mailing Address for Notices
                           ---------------------------

                          245 Fischer Avenue, Suite D-1
                          Costa Mesa, California 92626


         IN WITNESS WHEREOF the Trustor has caused its name to be hereunto
subscribed by its duly authorized Partner as of the day and year herein first
above written.



<TABLE>
<S>                         <C>
                            ARV CHANDLER VILLAS, L.P.
                            a California limited partnership

                                            By:      American Retirement Villas Properties III, L.P.
                                                     a California limited partnership
                                                     General Partner

                                                     By:      ARV Assisted Living, Inc.
                                                              a Delaware corporation
                                                              General Partner


                                                     By:
                                                              -------------------------------------
                                                              Douglas Armstrong
                                                              Vice President
</TABLE>

<PAGE>   9
                                    -- 9 --


                                 ACKNOWLEDGMENT



State of Arizona             ]
                             ]:  ss
County of Maricopa           ]

         Before me, ______________________________, of the State and County
aforementioned, personally appeared Douglas Armstrong, known to me (or
satisfactorily proven to me) to be the person who executed the foregoing
instrument and who, upon oath, acknowledged himself to be the Vice President of
ARV ASSISTED LIVING, INC., a Delaware corporation, General Partner of AMERICAN
RETIREMENT VILLAS PROPERTIES III, L.P., a California limited partnership,
General Partner of ARV CHANDLER VILLAS, L.P., a California limited partnership,
and that he as such Vice President, executed the foregoing instrument for the
purpose therein contained, by signing his name on behalf of the said limited
partnership.

         WITNESS my hand and seal, this ____ day of January, 2001.

                                           _____________________________________
                                                        Notary Public

My Commission Expires:  ______________________

<PAGE>   10
                                    -- 10 --


                                  DEED OF TRUST


                                     Between

                            ARV CHANDLER VILLAS, L.P.
                        a California limited partnership
                                    Trustor,

                                       and

                    FIDELITY NATIONAL TITLE INSURANCE COMPANY
                             an Arizona corporation
                                    Trustee,

                                       and

                           RED MORTGAGE CAPITAL, INC.
                               an Ohio corporation
                                  Beneficiary.

================================================================================


Dated           January 29, 2001


Recorded        January __, 2001

at              minutes past

in Liber             at page

records of Maricopa

County, Arizona.



RECORDER'S INSTRUCTIONS

Index this document as
a Deed of Trust and as
an Assignment of Rents.

Escrow No.

Order No.