Many day care investors place their primary focus on investing in the real estate that houses the day care center rather than in owning and operating the day care business.

Day care is a business which is extremely sensitive to placement. It must be placed very carefully and, once it is established, it is very difficult to move. Because of this, day care centers tend to seek longer leases from their landlord's. For startup projects I generally negotiate a ten year lease with at least two additional five year options.

I've seen two ways in which investors take advantage of this characteristic of the day care industry.

First, many investors simply seek out day care real estate and enter into negotiations for its purchase. They are comfortable with the long term security and profit provided by a day care as a tenant.

Second, I've helped several investors who specialize in building new day care centers and taking the business through its startup phase. Once the business is stable, usually in the middle of its second year, they recoup their investment capital and make a profit by selling the business. The real estate they built remains as a long term investment fully supported by the day care it houses. With their investment capital returned, they design and build their next center and follow the same pattern.