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dizposition

Sell your early education center

Purpose-built or converted, operating or dark. The licensing and the playground are worth more than the building.

Early Education Center at a glance

Typical deal size
$1M – $6M
Lease structure
Absolute NNN
Typical term
10–15 years
Escalations
2–3% annually
KinderCareGoddard SchoolPrimrose SchoolsThe Learning ExperienceRegional and independent operators

Overview

What early education centers are really worth

Our read

Early education is a real estate business governed by a licensing regime, and the license is most of what you own. State authorities set capacity against square footage, staffing ratios, and outdoor playground area, and that number caps revenue no matter how strong demand is. A center licensed for eighty children cannot serve a hundred because the waitlist is long.

That licensing is also the scarcity. Child care demand exceeds licensed supply across most metro markets, and the binding constraint on the industry is staffing rather than buildings. Getting a new center zoned, built, and licensed is slow and frequently contested at the neighborhood level, which makes an existing licensed facility with an approved playground genuinely difficult to replicate.

The corollary is that these are neighborhood businesses in a way most net lease assets are not. The trade area is measured in minutes from home, and the demographic that matters is households with young children. A center in an aging trade area faces a demand problem that no operator can fix.

Valuation

How we underwrite it

The method

We underwrite licensed capacity first and enrollment second, because capacity is the ceiling and enrollment is the current position against it. A center running well below capacity may be an underperforming operation with real upside or a building in a trade area that no longer supports it, and distinguishing those is most of the work.

The playground, fencing, and outdoor area get treated as licensing infrastructure rather than amenity, because that is what they are. Deficiencies there reduce capacity directly.

Where the operating business conveys, we look at staffing and turnover alongside enrollment, since staffing is what actually caps utilization in this sector more often than demand does.

For dark centers, the zoning permission and licensing status carry more weight than the building. A conditional use permission that has lapsed is much harder to recover than a building is to clean up, and we would rather establish that early than assume it.

What moves the number

  1. 01State licensed capacity, which caps revenue regardless of demand and is tied to the building and playground
  2. 02Enrollment and waitlist where the business conveys, since utilization against licensed capacity is the real revenue driver
  3. 03Franchise brand versus independent operator, which drives both credit and enrollment durability
  4. 04Playground area and fencing, which are licensing requirements rather than amenities
  5. 05Rooftops and household income within the immediate trade area, since these are neighborhood businesses
  6. 06Purpose-built versus converted building, as converted space frequently cannot expand licensed capacity

Capital markets today

10-yr Treasury
5.24%
4.12% a year ago
SOFR
3.87%
4.2% a year ago
30-yr mortgage
7.28%
6.3% a year ago
CRE loan delinquency
1.53%
1.57% a year ago
CRE prices, YoY
6.58%
-2.7% a year ago

Sources: FRED DGS10, 2026-10-01 · FRED SOFR, 2026-10-01 · FRED MORTGAGE30US, 2026-10-01 · FRED DRCRELEXFACBS, 2026-04-01 · FRED COMREPUSQ159N, 2026-01-01

Diligence

What a buyer actually looks at in a early education center

  1. Check 01

    State license and licensed capacity

    Capacity is set by the state against square footage, staffing, and playground area. It caps revenue permanently and does not transfer automatically on a sale.

  2. Check 02

    Playground area, fencing, and surfacing compliance

    Outdoor space is a licensing requirement with specific area-per-child standards. A deficiency can reduce licensed capacity.

  3. Check 03

    Enrollment against licensed capacity

    Utilization is the revenue driver. A center licensed for 120 and enrolled at 70 has either a demand problem or a staffing problem, and they are very different.

  4. Check 04

    Staffing ratios and turnover

    Staffing constraints cap enrollment more often than demand does in this sector, and turnover is chronic.

  5. Check 05

    Environmental and lead or asbestos in converted buildings

    Child care carries heightened scrutiny on building materials, particularly in converted older structures.

  6. Check 06

    Zoning permission for child care use

    Child care is frequently a conditional use rather than by-right, and permissions do not always survive a lapse in operation.

Backfill risk

What happens if the tenant leaves

The tenant-goes-dark scenario

A purpose-built early education center is one of the more specialized small commercial buildings, and its backfill profile reflects that. The layout — many small rooms, child-height fixtures, a commercial kitchen in some formats, and a fenced playground — suits another child care operator very well and most other users poorly.

The good news is that another operator is often available. Child care demand consistently exceeds licensed supply in most metro markets, and the binding constraint on the industry is staffing rather than facilities. A licensed, purpose-built building with an approved playground in a neighborhood with young families is genuinely scarce, because getting a new center licensed and zoned is slow and often contested.

That scarcity cuts the other way when it fails. If the trade area has aged out — fewer young households, declining birth rates in the immediate radius — the building's specialization becomes a liability, and conversion to medical, office, or church use means gutting the interior and losing the licensing that made it valuable.

The zoning permission matters as much as the building. Child care is frequently a conditional use, and a permission that lapses during a long vacancy may not be reissued.

Why this matters to you

Every buyer prices the tenant-goes-dark scenario, whether or not they say so out loud. It is the largest hidden input into the cap rate you get offered.

Understanding it before you go to market is the difference between negotiating and being negotiated with.

Who sells to us

Situations we see most often

  • Developer selling after a build-to-suit stabilizes
  • Independent operator retiring after decades running a single center
  • Franchisee exiting the brand and monetizing the real estate
  • Owner of a center that closed and is struggling to backfill a licensed layout
  • Operator wanting capital out of the building to fund additional centers

Buy box

What we buy

  1. 01Purpose-built and converted centers, $1M to $6M
  2. 02Franchised and independent operators
  3. 03Dark centers with licensing intact
  4. 04Sale-leasebacks with operators funding expansion

Process

How selling to Dizposition works

The full process
  1. Day 0

    01

    Send us the property

    Address, asset type, and the lease if there is one. That is enough for us to start.

  2. 02

    We underwrite it

    Our underwriting runs the income against current market pricing and the cost of capital. No lowball anchor.

  3. 10 minutes

    03

    You get a firm offer

    In 10 minutes, with the math shown. You will know exactly how we got there.

  4. As fast as 30 days

    04

    Close on your timeline

    As fast as 30 days, or as slow as you need. We are the principal, so the date is yours.

FAQ

Selling an early education center

My center is licensed for more children than we currently enroll. Does that help the value?

Yes. Licensed capacity is difficult and slow to obtain, so unused capacity is real embedded value — provided the gap is a staffing or marketing issue rather than a demand issue. Those two look identical on a P&L and are worth very different amounts, so we look at the trade area to tell them apart.

The center closed. Is the building worth anything?

Often yes, and more than owners expect, because licensed purpose-built child care space with an approved playground is scarce. What matters most is whether the zoning permission and licensing survive the vacancy — those are the assets, more than the building.

I run the center and own the building. Can I sell just the real estate?

Yes, and it is a common way operators fund a second or third location. A sale-leaseback takes the capital out of the building while you keep operating on a long-term lease.

My building was converted from something else. Does that matter?

It affects licensed capacity, which is calculated against square footage, staffing, and playground area. Converted buildings frequently cannot expand capacity the way purpose-built ones can. It also raises the diligence bar on lead and asbestos, given the population.

How long does it take to sell a commercial property to Dizposition?

You get a firm written offer within 10 minutes of sending us the property. If you accept, you can close in as little as 30 days — most of that is title work and your own timeline. There is no listing period, no marketing, and no waiting on a buyer's financing contingency.

Can I sell my property as-is?

Yes. We are the buyer, so there is no lender requiring repairs and no inspection contingency to renegotiate against you. Deferred maintenance, a failing roof, an aging tank system — we price it into the offer rather than asking you to fix it first.

Can I sell with a tenant in place?

Yes, and in most cases a tenant makes the property more valuable to us, not less. We will ask for the lease, a rent roll, and any estoppel certificates. You do not need to deliver the property vacant.

What if my lease is short-term or about to expire?

Short remaining term is one of the main reasons owners come to us. A conventional buyer needs lease term to get financing, which is why short-dated assets sit on the market. We underwrite the real estate and the backfill prospects rather than the remaining term alone.

Do I need a broker to sell to you?

No. We buy directly, and there is no commission because there is nothing to market. If you already have a broker, we will pay them. Selling without one saves the commission, but you should understand you are also giving up price discovery — a broker's job is to find out whether someone will pay more than we will.

What documents do I need to get an offer?

The address and the lease are enough to start. To finalize, we will want the rent roll, the last two years of operating statements, the title commitment, any existing survey, and any environmental reports you already have. You do not need an appraisal or a broker package.

How do you determine your offer?

We underwrite in-place income against what the space would re-lease for, adjust for capital needs and any environmental tail, and apply a cap rate supported by comparable transactions. We show you the inputs. If you disagree with an assumption, we would rather argue about the assumption than about the number.

What are typical seller closing costs?

Title and escrow fees, any transfer or recording tax owed in your state, prorated property taxes, and payoff of any existing debt. Because we are the buyer, there is no commission and no marketing cost. Transfer tax varies significantly by state and is often the largest single line.

Will I owe capital gains tax when I sell?

Usually yes, on the gain above your adjusted basis, and depreciation recapture is taxed separately from appreciation. State treatment varies. This is a question for your CPA before you sign, not after — the structure of the sale can change the answer.

Can I do a 1031 exchange?

Yes. A 1031 exchange lets you defer federal capital gains by reinvesting in like-kind property, subject to a 45-day identification window and a 180-day closing window from the date you sell. You must have a qualified intermediary in place before closing — it cannot be arranged afterward. Most states conform to federal treatment, but a few do not.

Can I sell if I am behind on payments or facing foreclosure?

Yes, and speed is the reason to move early rather than late. We can close on a defined date, which is what a lender or a receiver generally needs to see. Send us the payoff figure and any notices you have received.

Can I sell a property I inherited or that is in probate?

Yes. Probate sales take longer because the court timeline governs, not ours, and multiple heirs need to agree on the price before anything can close. We are used to working around both. Inherited property also generally receives a stepped-up basis, which can change the tax math substantially.

What if there is environmental contamination?

Send it anyway. Environmental history is one of the most common reasons a conventional sale falls apart, and it is one of the reasons owners call us. We price the remediation and the residual liability into the offer rather than walking away at the Phase II.

Is there any cost or obligation to get an offer?

None. There is no fee, no listing agreement, and no obligation to accept. If our number does not work for you, you keep the underwriting we showed you and we part ways.

Markets

Top markets we buy early education centers in

10-minute offer

Ready to sell your early education center?

Send us the property and the lease. You'll have a firm offer, with the math shown, in 10 minutes.