Here is how to make it 99% safer and easier. You can thank me later :)
Gross floor area or BTA (bruttoarea in Swedish) is the total floor area inside the building envelope, including the external walls, and excluding the roof. The GFA is one of the most accurate and easiest ways to determine if you are on to a good investment or not. Here is how:
By finding out the price per m2 of GFA you can compare that to properties sold in the nearby area. That should help you see if you are on to a good investment or not. This way of calculating can be used in different ways and for most kinds of investments. I’ll list a few examples below.
1. Let’s say you want to buy a multi family house to get a cash flow. You could easily find out how good the potential investment is by comparing it’s GFA with similar objects in the area. How much are you paying per m2 GFA. Is that more or less than the others? How much rent are you getting per m2 GFA? Is that more or less than the neighbours? To get this information look at what’s being sold in the area. Call the owners of surrounding buildings and ask what they charge in rent. Ask around. With this you can always be sure to make a good deal.
2. Let’s say you want to buy some land and develop it. Look at how much GFA is allowed to be built on that land and see how much you pay per m2 of potential GFA. This gives you a number that you can use to compare with other pieces of land that is for sale. If you want to take these calculations further than call a builder or housing company and ask how much it will cost to build the kind of house you want in m2 per GFA. Call a construction company and ask how much it will cost to get roads, water, drainage, electricity and a garden set up. Divide this number per buildable GFA. By now you should have a price per m2 GFA of buildable land, a price per m2 GFA of actual construction and a price per m2 GFA of infrastructure. Add that all up and you have a price per m2 GFA of the finished product. Compare this number to the price per m2 GFA the neighbouring places sell for and you will easily be able to see how big your potential profits are.
3. Read what I wrote above once more, because I have it in my head, but it was hard to write it down in a way that was simple to understand. Just know that this can help you enormously in the future. It also works better the bigger your deals get and even better when you start investing in areas that are more expensive and popular. But! No harm in working like the professionals even if we start small. Makes our business very scalable!
4. Have a nice day my friend :)
I really like your more serious posts on real estate. Thanks! Please translate your biggest document to English! /Ryan