I was asked this question this morning. The best time, of course, was 15 years ago, coming out of the recession of 1991-92, when interest rates took a sharp turn downwards. As interest rates spiraled down, so did cap rates, and the majority of returns from apartment buildings came from increases in capital values as cap rates compressed. If the era of cap rate compression is over, does that mean that it is no longer time to purchase apartment buildings? For some, I would say yes. For those that rely on the market to increase the value of their property, it is clearly a riskier environment. For those that see apartment building investing as a business, the time has never been better. There is, and will continue to be, more inventory coming available from those that have no idea what it means to actively manage this type of investment. I call them dumb landlords. With cap rates creeping up, the majority of the return on properties will come from income as opposed to capital growth, or at the very least it will become balanced. We are underwriting our purchases with the assumption that prevailing cap rates will increase at least 175 basis points and that interest rates will increase by about the same amount. We are also lowering our LTV expectations to 2/3 to 75% on stabilized properties. Given these parameters, and prudent choices in purchasing, we can achieve cap rates of 10% within 3 years, which provides for excellent cash-on-cash returns. Let’s face it, why invest in property to simply make 60 or 70 basis points over treasuries? A 10 cap property should provide for a cash on cash return of at least 12%, and more than 30% upon re-financing. Increased inflation should place upward pressure on rents, helping to increase returns from buildings as well.