private schools

After having many conversations on the topic, i came to the conclusion that montessori schools with significant RE component is not the best route for SMB acquisition. You end up paying for RE that in and of itself does not generate any cash flows.

With NNN lease, the lease payments would be almost equal to the mortgage cost with less of an upside and significantly eat into your cash flow. With a mortgage, you need a commercial lending downpayment of at least 20% putting pressure on the equity check and then still, there is no cash flow from that piece of the price that you pay.

If you compare other businesses that can be operated out of an industrial park via a lease or if the RE is a small component of the purchase price, you are buying cash flow with each dollar of equity. So my takeaway is to maximize cash flow per $ of equity. Thank you, all!

My son is in a Montessori school and from the outside I see two growth levers - 1) tuition increases. Our school recently executed one because they were (and still are) below market rates and while some parents complained about the comms around it no one we know pulled their kids out, partly because of limited supply in our neighborhood + once your kid is established in a school it’s hard to think about moving them 2) additional services. For example at our school they offer early drop off (before 8am) for an extra $150 per month and I could imagine adding things like food, milk, supplies (eg diapers, wipes, etc), and even babysitting.