Buying a Daycare and What It Costs to Buy an Existing Daycare Center

An existing US day care center cost a median $395,000 to buy across 2021 to 2025, based on 425 closed BizBuySell sales, on median revenue of $584,126 and median owner earnings of $132,779. Financed with an SBA 7(a) loan at 10 percent down, the cash you bring to that purchase is about $47,499 for the equity injection and the SBA guaranty fee. The harder number is your salary: at the median price, the most a financed buyer can pay themselves and still pass the lender's coverage test is about $60,826 a year.

Most pages that answer this question price opening a daycare: a lease, a build-out, furniture, a license and months of empty rooms. Buying a daycare is a different purchase. You pay for families already enrolled, teachers the parents know, a building that already passed inspection and a tuition schedule the market has accepted. The price is set by earnings. Whether it is a good buy is set by the enrollment, the staff and whether you can get your own license in time to close.

How much does it cost to buy a daycare?

The median day care center sold for $395,000, which is 2.97 times its $132,779 of seller discretionary earnings and 0.68 times its revenue. The published median multiple is 2.72x earnings, and half of all sales landed between 1.94x and 4.03x. Those readings differ because the median price, the median earnings and the median multiple come from different centers; $132,779 at 2.72x gives $361,159, 8.6 percent below what the middle center actually sold for.

Seller discretionary earnings (SDE) is net profit plus the owner's pay, benefits, interest, depreciation and one-time costs, the cash one full-time owner takes out. In a day care, two adjustments matter most: payroll that does not match the roster (rooms run below the required ratio, or relatives paid off the books) and rent, if the seller owns the building and the center pays none. Read the price off the earnings of the center in front of you:

Which column applies depends mostly on size. BizBuySell states that a child care center with sales of $850k annually may sell for an earnings multiple near 4, while a smaller day care with sales below $400k may sell for an earnings multiple closer to 2 or less. The full distribution, the year by year prices, the financing table with and without real estate and the comparison with preschools and schools are on our daycare valuation page. If the seller has handed you a profit and loss statement rather than an SDE figure, start with how to calculate SDE.

How much money do you need to buy a daycare?

On a $395,000 day care financed with an SBA 7(a) loan, plan on about $47,499 at closing for the 10 percent injection and the guaranty fee, before working capital, licensing, legal costs and the valuation the lender orders. Here is the arithmetic at three sizes of center, each priced at the median 2.72x except the middle column, which is the actual median sale, at 10.5 percent on a 10 year business loan.

The small and large columns are illustrations built from the quartiles of owner earnings, not real centers. Now read the last row against the salary you need. On the median center, $75,216 is left before you are paid, so an $80,000 salary does not fit at all, and the lender's 1.25x coverage test after your draw caps the salary at about $60,826. On the small center you would live on about $52,000 before any cushion. Only the large center leaves room for an $80,000 owner salary with $55,476 to spare.

Plan for working capital on top of the cash to close. Tuition is often paid weekly or monthly in advance, but subsidy payments from the state can arrive later, and payroll runs every week or two from the first day. Keep at least two payroll cycles in the bank. Add the license application fee, background checks for you and any new hires, legal fees on the purchase agreement and the lease assignment, and insurance bound in your name from the closing date.

Can you get an SBA loan to buy a daycare?

Yes. Child care centers are eligible for SBA 7(a) loans, but on a 10 year business loan the median $132,779 of earnings supports about $289,740 if you draw $80,000 a year, 26.6 percent short of the median $395,000 sale. Three parts of SBA SOP 50 10 8.1, effective October 1, 2026, shape the deal.

First, the term. A change of ownership loan may not amortize over more than 10 years, except for real estate. If the purchase includes the building, the real estate portion may run up to 25 years, which lifts what the same earnings support to about $340,925 with half the price in real estate. Most day cares lease, so most buyers are on the 10 year math.

Second, the valuation. The lender may do its own valuation only when the purchase price is $350,000 or less and you are not closely related to the seller. The median $395,000 center is above that line, so the lender orders an independent business valuation, and anything you agree to pay above the value it supports has to come from your equity, not the loan.

Third, the equity. The SBA expects a 10 percent injection on a complete change of ownership. A seller note can count toward part of it only on the terms the SOP allows, usually on full standby, so ask the lender how it treats a seller note before you build one into your offer.

Do you need a license to buy a daycare?

You need your own license to operate it, and in many states the seller's license ends when the center changes hands. Texas is explicit: a child care license "is not transferable and applies only to the operator stated in the license application," and "a change in ownership automatically revokes a license" (Texas Human Resources Code 42.048). Other states set their own process, but the practical rule is the same everywhere: apply to your state licensing agency as soon as the letter of intent is signed, and make the new license a condition of closing.

The license is also about people. Most states require a director who meets education and experience rules, and every adult who works with the children has to clear background checks. If you do not qualify as director yourself, the person who does is part of what you are buying, so their willingness to stay matters as much as the financials.

Is buying a daycare a good investment?

It is a good purchase for an owner who will run it, and a hard one for an investor who will not. BizBuySell calls day care one of the more consistently profitable sectors in its data, and day care centers carry the highest average earnings multiple in its education and child care group, 3.27x. The median owner margin is 22.7 percent, and it slipped to 20.3 percent in 2025 as revenue rose and earnings did not.

The owner's role decides it. Hire a director at the BLS median wage for preschool and daycare administrators, $59,300 a year in May 2025, plus payroll tax, and the median center's earnings fall to $68,943. The $395,000 price becomes 5.73 times earnings, far above the upper quartile, and even with no draw at all the loan reaches only about $378,472. Absentee owners make the numbers work on larger centers, or several at once, where one director's pay is spread over more children.

What to check before you make an offer

• Enrollment by room and month for three years. Revenue is enrolled children times tuition. Compare paid enrollment with licensed capacity, look for the months families leave, and ask for the waitlist with dates.
• Tuition and subsidy. Get the rate schedule by age, the last two increases and how many families pay through state subsidy. Subsidy fills seats, but the state sets the rate and the payment timing.
• Staff, ratios and tenure. The staff list with hire dates and pay, who holds the director qualification, and whether the rooms are staffed to the state ratio every hour the center is open. Earnings that rely on short-staffed rooms are earnings you cannot keep.
• The inspection history. Pull the last three years of state inspection reports yourself. Repeated violations affect enrollment, insurance and your own license application.
• Insurance and incidents. Ask for the liability policy and the insurer's loss history, and the center's incident log. Claims history shapes what you will pay to insure the center in your name.
• The lease. A lease that runs past the loan term, a landlord-approved assignment, and no clause that resets rent on a sale. In a building put up before 1978, renovations that disturb paint in rooms young children use regularly must follow the EPA lead renovation rule for child-occupied facilities.
• The transition. How long the seller stays, how families and staff will be told, and who answers the phone during the handover. Parents call before they visit, and the center that calls back first usually gets the enrollment, so plan how you will answer parent inquiries and book tours without the seller in the office.

How do you know if the asking price is fair?

Divide the asking price by the normalized owner earnings and compare it with the sold range: about 1.94x at the lower quartile, 2.72x at the median and 4.03x at the upper quartile. A $450,000 asking price on $125,000 of earnings is 3.6x, which needs a center near $850,000 of revenue with full rooms to hold up. On a center with $500,000 of revenue it is too high, and the lender's valuation is likely to say so.

Be careful with listing data. Centers on the market now report median owner earnings of $182,856 and ask a median 3.42x, but the centers that actually sold earned less and closed at 2.72x. The sold centers did close near their own asking price, an average sale to ask of 0.95, so a fair ask is usually close to the final price. An inflated one tends to sit on the market rather than get negotiated down. BizBuySell reports a median 214 days on market for the centers that sold.

Before you pay for a formal appraisal or sign a letter of intent, run the center's revenue and owner earnings through the estimator on our daycare valuation page. It returns a value range against what day care centers actually sold for and shows how much of it an SBA loan will cover. For the loan side, our guide to using an SBA loan to buy a business walks through the full application, and business valuation cost shows what the lender's report will cost you.