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How Do You Avoid Getting Screwed Investing in the Hub?

Ask an Investor... is part of Curbed University's attempts to give you the best non-boring advice on buying, selling and renting in the Hub. Our expert answerer is a principal at a Boston-based real estate investment firm. Send your questions today! Anonymity guaranteed.

A reader wrote in:
How do you really know that you are paying the right price for an investment property given the very low cap rates that properties are selling for? If interest rates rise, you can get clobbered? So how does one protect oneself?

The answer from the principal at a Boston investment firm:
To determine whether you are paying the right price or not, you should get familiar with comps in the area and make a decision based on prior sales. Prices are going up, so you should factor that in as well.

If interest rates rise and you have locked in to a low rate, then you don't have anything to worry about. Try to avoid floating rates or adjustable-rate mortgage (ARM) products. Lock in a 30-year fixed and you will know that your mortgage payment can never change.
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