5. BUY AN EXISTING CHILDCARE CENTRE OR BUILD A NEW ONE?
Some people choose to become childcare center developers by sourcing an appropriate piece of land and building the center with the aid of an architect, engineer, town planner, etc. This is a much longer and riskier procedure and requires a certain amount of property development experience.
Your initial step will be to acquire a piece of land which somebody has already obtained development approval (DA), also known as Planning Permit from a local authority to construct a childcare center. The other alternative is you buy or place under contract a suitable piece of land and go through the process to obtain a DA/Planning Permit.
If you choose the option of building a childcare center, you should undertake the feasibility of the local occupancy, fees, and income and expenses after the childcare center is build. Assuming you are borrowing for the venture, your bank will want this early in the process, and if you do not have this, the bank will have little respect for your abilities.
Once you select an architect, they usually will be able to recommend other consultants and give you an estimate of building and consultants costs for the job.
The architect can guide you through the approval process. As part of the approval application, you will be required to employ other consultants such as town planner, noise engineer, traffic engineer, and others.
As an indicative guide at the time of writing this, March 2018, the building cost for a single level on ground childcare center is approximately $25,000 per licensed place. That amount would cover fixed equipment, fixed playground equipment, and a car park. A multilevel building or one with a basement car park cost suitably more.
You need to weigh up whether it is within your experience, time availability, and financial capability to build your childcare center. Buying an existing childcare business means you will generally have a positive cash flow from the day you take over the company.
If you decide to build a childcare center for investment to rent out to a tenant, we strongly recommend you obtain a tenant before committing to construction as a risk mitigation strategy.
