We demonstrate that the average size of the coated ferromagnetic Fe2O3 nanoparticles is controlled by the surfactant concentration in the coating solution. Magnetization as a function of this ratio first increases and then decreases exhibiting a peak. Surface area of the coated material shows inverse behavior, i.e. first decreases and then increases. Both curves have extrema at the same ratio of surfactant/substrate. We explain these features in terms of competition between surface and volume contribution to the total energy, when surface contribution is determined by the bonding energy between the surfactant SH-group and Fe2O3. We support our conclusions by employing transmission electron microscopy and elemental analysis.