I was chatting with a landlord who questioned why I calculate the £ per square foot of a property when analysing my ‘buy-to-let deals of the week’. I explained that £ per square foot is one of the metrics I always use when analysing a potential property purchase (property price divided by total square footage of the property) as it gives an idea of the value for money you’re getting.
It can be a good gauge as to how much you should be paying for a particular property too, as well as being a good comparison of different areas. For example, I often say I like Fishbourne, Tangmere and Westhampnett as they are popular amongst renters and offer a little more ‘bricks for your buck’ than more central Chichester.
This is shown in the average £ per square foot paid for a house in each area: Chichester costs £345 per square foot, Fishbourne £326, Tangmere £309 and Westhampnett £299.
Pound per square foot can be especially useful when comparing properties near to one another. For example, a few years ago I was tasked with finding a modern three-bedroom house in Fishbourne. There were three available at the time, all within 200 yards of one another and each of a similar age and specification. They were priced at £289,950, £315,000 and £325,000.
Seems pretty obvious which one to plump for right? This is where my trusty £ per square foot calculation came in handy.
The ‘cheapest’ three-bedroom house at £289,950 was set over two storeys and had a footprint of 887 square feet, meaning it cost £327 per square foot.
The three-bedroom house priced at £315,000 was also the traditional two storeys high, but had a far greater footprint of 1,125 square feet, meaning it cost just £280 per square foot.
Even better value was found from the most expensive three bed house though. Set over three storeys it had an impressive 1,315 square feet; meaning you were paying just £247 per square foot.
Whilst the rental figure may only have been around £150 a month more for the extra 433 square feet of space (meaning the gross rental yield was comparable) I was confident as to which property would be the more appealing to prospective tenants and thus let quicker.
If you are thinking of buying a rental property and would like me to crunch the numbers on it to ensure you are maximising your investment, please get in touch.
A special mention should be made for Brandy Hole Lane though, as it could be argued that it is actually the most expensive street of these top three Chichester streets. That’s because there are more properties here than the other heavy hitters, so as a whole it is actually the most valuable (there are 42 homes in Brandy Hole Lane compared to 20 in North Pallant and 32 in Pine Grove). Looking at it like this would give Brandy Hole Lane a total value of £39.4m, Pine Grove £30.8m and North Pallant £20.3m.