Daycare Property via Single Family Home Investment

[Tom Chick]

I am currently exploring an investment strategy of acquiring a single family home for the dedicated purpose of converting to a daycare center.  For consideration, I think I would be able to find a modest ~800-1,200 sq. ft. home in decent shape in my area for ~$300k (20% down, 30-year mortgage).  I might assume ~$5-10k of upfront capital improvements needed that would be primarily for upgrades to meet regulatory requirements for a daycare, plus about the same for cash reserves before the cash flows begin.  I do not intend to manage the center, so I would be seeking to hire out the day-to-day management.  I know I will need to understand the specific regulations in my area as well, but I don't think this would be the deal-breaker. 

So I am 100% certain the demand for daycare services is there, but for now I am trying to get my head around the cash flows and how they compare to standard rental property of the same size.  Plus, I figure if it ends up not being worth the headache, I can always convert to a standard rental property.  

I am seeking advice from anyone that has direct experience, or even have considered this approach before.  Any advice or encouragement would be helpful!