Overview of the Sale
Combining a 40+ year established child care business with a 4,795 sq ft property on a 0.37-acre lot. This turnkey operation, with a licensed capacity of 83 children, currently enrolls 28-30, presenting significant value-add potential. The debt-free property, zoned PD 4-83 for child care, ensures continued use and adds a premium to its value, making this a rare opportunity in a family-friendly market.
Value-Add Opportunities
Buyers can unlock significant value through: (1) Enrollment growth to 83 children, adding $974K/year in revenue; (2) Securing $180K-$335K/year in California subsidies (e.g., CCDBG, California Preschool Program); (3) Expanding the property to increase capacity; (4) Optimizing expenses, saving $12,969/year (e.g., maintenance, utilities); and (5) Raising rates 5%, adding $59,760/year at full capacity. Total value-add potential is $1.92M-$2.25M over 5 years, with long-term appreciation adding $769K by Year 10.
Exit Strategies
A 3-year hold with $860K EBITDA yields $5.46M (3.5x multiple + $2.45M property), netting $3.51M after loan payoff (138% return). A 5-year hold with $1.01M EBITDA yields $7.06M (4x multiple + $3.02M property), netting $5.41M (213% return). A 10-year hold with $1M EBITDA yields $8.01M (5x multiple + $3.01M property), netting $8.01M (315% return). Buyers include local operators, regional chains, or institutional investors.
Market and Location
Davis’s young demographic (median age 25.1), affluent Exurbanites (9.3%), and bike/pedestrian-friendly area make it ideal for child care. Traffic counts (5,272-5,918 daily on Lake Blvd) ensure accessibility, supporting strong demand in this family-oriented market.
Investment Highlights
Turnkey operation offers immediate cash flow, significant growth potential, and a prime location, making it an attractive investment for buyers seeking a high-return opportunity in the child care sector.