I first started investing in real estate because I loved the idea of passive income.…
You probably have at least one early childhood education center in your community,
but who owns the building? Properties for early childhood education facilities are
often a solid, stable opportunity for passive real estate investors.
In particular, here are three key items to consider when investing in early childhood
1. Early Childhood Education is Consistently in High Demand
From a 2020 Study, more than 64% of children ages 3-5 are enrolled in all-day
preschool programs, so there’s consistent demand for properties to house those
preschools. Also 55% of American families spend more than $10,000 annually on
childcare, and this number is projected to continue increasing over the coming
Based on mystery shopping several providers, many local preschools have
significant waitlists as more and more families contain two working parents, which
tells us there’s a need for more locations, especially in urban areas.
With the growth that experts are projecting for this industry, and the steady growth
we’ve seen in preschool enrollment over the past few decades, this sector presents
robust and reliable investment opportunities for passive income generation.
2. Education Facilities Typically Have Favorable Lease Terms and Credit Enhancements
Unlike some more traditional commercial asset types, preschools tend to have
longer than average lease terms. At CMK Properties , LLC , we have historically
invested in locations with 15-year base lease terms that have 5-year extension
options and built-in 2% annual rent escalations.
We also typically structure our tenant agreements as a triple net lease, which
minimizes expense and obligation for the landlord. We also typically negotiate
corporate guarantees as well as owner’s personal guarantees. This lease structure
provides immediate, long-term, stable cash flow as well as a hedge against
As more and more brick and mortar businesses struggle to compete with online
giants like Amazon, service-based businesses like early childhood education are an
increasingly favorable investment option.
This industry has also been resilient. It continued to grow throughout the 2008
Even during the COVID-19 pandemic, many preschools and daycare providers in our
markets were deemed essential businesses and allowed to remain open. Since
2020, we’ve seen enrollment and demand for these facilities quickly rebound to pre-
A Stable Investment in a Period of Volatility
Many people are understandably hesitant to invest in real estate right now, as
interest rates have risen sharply, and the economy’s trajectory is still uncertain. In
this environment, early childhood education is a comparatively stable asset type
with predictable, consistent cash flow.
If you’re interested in learning more about CMK Properties, LLC please fill out this
contact form to get in touch with us.
Please note that CMK Properties Investment Offerings are only for Accredited Investors.
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