Buying or selling a childcare centre is easier than ABC…

Childcare buying and selling made easy.

Here is a collection of TOP TIPS from Childcare Sales Australia to make the process a little less daunting for those thinking of buying or selling a childcare centre.

A

Auction is a common method of selling houses but is rarely used for the sale of businesses such as childcare centres. The exception to this rule is Mortgagee or Receiver sales when the Mortgagee and Receiver need to be seen to maximize the price.

B

Buyers Agents work on behalf of a buyer, and take commission from the buyer instead of the seller. Buyers Agents are relatively rare in childcare selection and tend to be buoyed by experienced buyers, corporate or institutional buyers.

C

Conveyancing is the process by which business and/or property ownership is legally transferred from one person to another. It involves gathering information concerning a property and/or business and preparing the documents for the transfer of the property and business.

D

Deposit is normally required at exchange of Contracts. It should be noted that according to the Act, the principal has no obligation to sell the business, or the purchaser to buy the business, and the deposit is refundable, if a contract for the sale of the business is not entered into. The Agent must promptly inform you when they become aware of any subsequent offers to purchase the business are received from any other person. An Agent must also advise you that you have the right to make further offers up until exchange of contracts has taken place.

E

Equity in your home will ensure you can build your commercial investment portfolio when the time comes. Put simply, equity is the difference between the market value of a property and the claims held against it.

F

Finance and the acquiring of it is an essential part of the centre buying process. A finance broker has access to a range of lenders and will source the best loan for your individual situation.

G

Genuine Profits are demonstrated where supporting records in the name of the business confirm the business has traded successfully and profitably by way of progressive and regular profit and loss statements over a period of not less than 12 months prior to the time of sale. Since the credit crunch, banks have become stricter in the requirement in childcare and as such, are often willing to borrow far less than the residential market.

H

House conversions, purpose built or land to build on, there are a number of different options to choose from when deciding upon a childcare investment. Most depend on your requirements and budget but there are a great number of places to research each of them – from specialist brokers, general real estate agents and online commercial property websites. A good agent will have access to details on the processes on all of them, and more, to save you the running around! Don’t be afraid to ask questions.

I

Inspections are an important way of educating yourself about what is currently available on the market and what the asking prices are relative to what is on offer. Under most circumstances staff are unaware that the centre is for sale so it is important you never attend a property without making appropriate arrangements with your Agent.

J

Journey as opposed to the destination. The process of buying a centre, whether it is your first or thirty-first, should indeed be considered a journey, and an enjoyable one at that. Make sure you take time to focus on the outcomes to ensure you don’t rush into a purchase.

K

Keep Perspective – get used to tuning out to the (well meaning) advice of the “industry experts” including your neighbours, current affairs media, the taxi driver and your in-laws. Rather consult with, and trust, a true professional who is familiar with your individual situation and has their finger on the pulse of the local and national markets.

L

Listing Types – including open listings, online, silent, tenders and auctions – can become confusing and confronting for buyers, as each needs its own strategy to ensure you receive the best price for the property. Agents have experience in all buying conditions and with each listing type, so ask questions and ensure you get some independent advice.

M

Mortgage Brokers can source the best finance solutions for you, due to independent access to a range of lenders. At Childcare Sales Australia we have forged relationships with one of ’s leading childcare specialist finance brokerages. For more information, visit the Finance page on our website.

N

Negotiation is key to achieving the best price, and a real estate agent’s job is to achieve the best price for the seller, leaving the buyer to negotiate on their own behalf in unfamiliar territory. Buyers who are not used to regular property negotiations are best advised to work with an specialist industry consultant. You can find details of professionals in your area by visiting the Links page on our website.

O

Orientation refers to the way the centre is facing and the impact of the sun on play and other key areas. Check whether the orientation of the property would best make use of the winter sun and minimise the impact of the heat of the summer sun if you are building a centre.

P

Price is often what makes the ultimate decision between whether or not you will buy a particular centre. However, how do you know if what you have offered, or the asking price, is indeed true market value? A market professional will be able to provide all the facts and figures to ensure you make the right decision. Further, there are industry standards for Returns on Investment in childcare so speak to your professional about what the industry standard is at the time of purchase.

Q

Qualifying Buyers for finance is often a very individual process, depending on the lending institution in question. While one lender may not qualify a buyer due to one particularity, another may well differ, making it all the more important to consult with a finance broker, who can source a lender right for you. We have specialist childcare brokers available at Childcare Sales Australia. Visit our website for further information.

R

Return on Investment. In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction.

S

Sales contract is an agreement by which the buyer and seller agree to the terms and conditions of a sale. A buyer should always seek independent legal advice before signing a contract, especially when dealing with the sale of a business.

T

Title is the term used whereby one has just and full possession of real property – in other words, it’s yours and you can take over straight away!

U

Under Contract is the term describing when a property or business for which a purchase offer has been accepted by the seller..Often a buyer will have specific conditions that allow them specific time to obtain finance approval, arrange due diligence and conduct other investigations. During that time, the seller cannot accept offers from other buyers.

V

Valuation is the estimated worth of a property or business, and is carried out by a qualified property valuer. If you are buying, remortgaging, or considering purchasing an investment, your home may also be valued along with the centre.

W

Wants versus needs – sometimes you will need to weigh them both up when determining the right centre or investment for you. And consider your future needs as well, such as expansion possibilities.

X

Xclusive opportunities are properties or businesses that are being exclusively marketed through an agency.

Y

Yield is a measure of investment performance of an investment property, gauging the percentage return on each dollar invested. It is also known as a rate of return.

Z

Zoning is a method of regulating use of real estate by dividing a city or other area into zones and designating which uses may be permitted for land in each zone.