Foreclosed Childcare Center with 250 Capacity and 150 Enrolled – Atlanta area – Clayton County

Price: $719,000 (This Childcare center was acquired by the previous owner for $1,700,000 in 2004.)
Gross Revenue: $598,000
Cash Flow/Adjusted Profits: $150,000
Real Estate: $1,500,000 – Included in the Asking Price
Furniture, Fixtures & Equipment: $50,000

This childcare center is being operated by a court appointed receiver and has 150 children currently enrolled!
Reason for Sale: The previous owner acquired the center in 2004 and was supposed to be paying over $11k in monthly mortgage payments. It was difficult for the previous owner to pay such a high mortgage.

A new financially qualified Buyer will likely have a lower monthly mortgage payment which will be the very manageable considering the current adjusted profits of the business.

Who should buy this center?

  • Real estate investor – The receiver has engaged a third party as on-site Manager/Director. The Director would like to lease the center from the Buyer.
  • Existing Childcare Centers Owner – If leasing the center is not an option, the Director would like to continue as the Director for the Buyer.
  • Owner Operator – If you ever wanted to own a large profitable childcare center, but you cannot afford the $1.5 million to $2.5 million price which many large profitable childcare centers sell for, this is your opportunity to buy a low cost center.

This Center is located near the intersection of several Georgia highways with high traffic count and the center has good access. It is located adjacent to a shopping center and near several elementary schools.

Licensed Capacity: 250, Total Enrolled: 150 (including private-pay (29 to 45 kids), GA Pre-K (88 kids) and after-school (48 kids)). The Center’s weekly prices are $140 for infants and $110 for the three’s room. The Center receives about $6k per month from the food program.

Square feet of facility: 10,120, eight large classrooms plus a rec center/gym, 1.66 acres of land with 25 parking spaces, and two buses. The Center’s buildings were built over time and was first used as a childcare center in 1985. The initial building was built in 1961. The Center is two stories. Center has 17 employees plus owners.

The center uses the Creative Curriculum and is NAEYC accredited. It has a very good reputation. The average household income is $33k within one mile and $50k within three miles. Within one mile, there are 920 children age five and under. Within three miles, there are 7,119 children age five and under. The clientele is mostly Category 1 low income. With only 29 to 45 young children enrolled (younger than the GA Pre-K); there is lots of opportunity to grow!

The center’s Tuition revenue (i.e. not counting GA Pre-K and food program revenue) dropped by $150k when Clayton county schools lost their accreditation and parents who were concerned with education moved out of the county. Since then, Clayton County has regained their accreditation, but, there is a concern that it may lose it again. The previous owner believes that over time, the problem with accreditation will be solved, but, how long this will take is unknown.

This center appears to have some deferred maintenance and needs paintings and needs to replace some of the playground equipment. This business has excellent potential. This is an extremely low cost entrance into a LARGE existing childcare center.

Income tax returns were not prepared since 2007. The Receiver does have 2006 and 2007 income tax returns. Internally generated Income Statements were prepared by the Previous Owner and are available for 2002 to 2006, 2008 and 2009, and 2011. The court appointed receiver has prepared monthly projections for Oct 2012 to Sept 2013. Therefore, the lack of available Accounting and Financial Reports may be an issue with some lenders.

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