At our December DIG Philly meeting, Fred Hubler said something that real estate agents might not want their clients to hear: "The one I'm personally in [the value-add DST], this is one benefit that you might not want to tell any of your investors because I don't want to take your business."
Then he explained why $100,000 in a DST gives you access to better properties and better tenants than $100,000 as a down payment ever could.
The Quality Ceiling on $100K Down Payments
Let's be blunt about the math: "If someone has $100,000 and they're accredited, they have $100,000 to do real estate. There's a cap to the quality of property they're gonna buy if the $100,000 is your down payment."
What $100K buys as a down payment (20-25% down):
- A $400,000-$500,000 property
- Likely a small multifamily (duplex to 4-plex)
- Maybe a small commercial building
- Or a single rental house in a good area
There's nothing wrong with these properties. Millions of people have built wealth exactly this way. But let's be honest about what you're buying—and more importantly, who you're renting to.
The Tenant Quality Problem Nobody Talks About
Here's where Hubler gets uncomfortably honest: "There's a cap to the quality of tenant that will be in that quality of property. Like that's just the way the world works. Rich people aren't in Section 8."
This isn't about being elitist. It's about acknowledging reality:
$400K-$500K properties typically attract:
- Working-class tenants (nothing wrong with that)
- First-time renters
- People with limited rental history
- Tenants sensitive to every $50 rent increase
- Higher turnover as tenants save to buy their own homes
Institutional-grade properties attract:
- Corporate tenants with long-term leases
- National retailers with strong credit
- Medical facilities (dialysis centers, urgent care)
- Distribution centers for Fortune 500 companies
- Tenants who sign 10-15 year leases
The difference isn't just tenant quality—it's tenant stability, creditworthiness, and professional relationship to the property.
What $100K Actually Buys in a DST
"That same $100,000 can be a partial owner of an $80 million Cantor Fitzgerald [investment property]. Like it's..."
Hubler trails off because the comparison is almost absurd. With the same $100,000:
Option 1: Direct Ownership
- $400K-$500K property
- You manage everything
- Limited tenant quality
- Single property risk
- Your time and expertise required
Option 2: DST Fractional Ownership
- Partial ownership of $80 million institutional property
- Professional management by Cantor Fitzgerald or similar
- Amazon, Walgreens, medical facilities as tenants
- Diversification across multiple properties possible
- Zero time required from you
You're not buying a different amount of real estate. You're buying a different class of real estate.
The Doctor's Dilemma (And Why It Matters for Everyone)
Hubler then pivots to perhaps his most important point: "All of our doctors who have the $900,000 a year salary—they're the ones you want to go to if you have cancer or brain surgery—they have no time and they have no patience and they have no skill to be a landlord."
Let's break down this doctor profile:
- Income: $900,000 annually
- Expertise: Literally saving lives
- Time: 60-80 hour work weeks
- Patience for tenant calls at 2 AM: Zero
- Skill at property management: None
- Interest in becoming a landlord: Negative
Now here's the key insight: This doesn't just apply to doctors.
Who This Really Applies To
The "doctor example" is just the extreme case. But the principle applies to anyone who:
Values their time highly:
- Executives earning $250K+
- Tech professionals with demanding jobs
- Lawyers billing $300+ per hour
- Entrepreneurs running businesses
- Anyone whose professional hour is worth more than landlord hour
Recognizes their limitations:
- No real estate experience
- No interest in learning property management
- No time to handle tenant issues
- No desire to coordinate contractors
- No patience for the landlord business
Has better uses for their expertise:
- Their actual profession pays better
- Their time is more valuable elsewhere
- They'd rather pay professionals than DIY
The Honest Admission
"You guys that are landlording, God bless you. I outsource my landlording to him."
This is Fred Hubler—a real estate professional who specializes in DSTs—admitting he doesn't even want to be a direct landlord himself.
If someone who understands real estate inside and out chooses to outsource landlording, what does that tell you about whether high-earning professionals should be managing their own properties?
The Three-Part Value Proposition
DSTs offer something unique by combining three benefits:
1. Access to Institutional Quality
Your $100K gets you into properties and tenant relationships you could never access directly.
2. Professional Management
Cantor Fitzgerald, Inland, and other institutional operators manage these properties with teams of professionals—not you juggling contractor calls while trying to do your actual job.
3. Time Back to You
The doctor with a $900K salary who spends 20 hours monthly managing a rental property isn't saving money—they're losing $15,000+ monthly in opportunity cost.
Why Real Estate Agents Might Not Tell You This
Hubler's opening confession is telling: "I'm personally in, and this is one benefit that you might not want to tell any of your investors because I don't want to take your business."
Traditional real estate agents earn commissions on property sales. If you invest $100K in a DST instead of using it as a down payment on a $500K property, that agent loses a commission.
The incentive structure encourages agents to promote direct ownership even when it might not be optimal for the client.
This isn't malicious—it's just how the business works. But it means investors need to think independently about what actually serves their goals.
The Landlord Skill Set Question
Let's be honest about what successful landlording requires:
Essential Skills:
- Tenant screening and selection
- Lease negotiation and enforcement
- Maintenance coordination
- Contractor management
- Financial record-keeping
- Legal compliance (fair housing, safety codes, etc.)
- Conflict resolution
- Emergency response
Personal Qualities:
- Patience with difficult people
- Availability for problems
- Willingness to be "on call"
- Comfort with confrontation
- Detail orientation
- Time management
Do you have these skills? More importantly, do you want to develop them?
A brain surgeon doesn't become less competent at medicine because they're terrible at property management. They're just terrible at property management.
The Opportunity Cost Nobody Calculates
Here's the math that matters:
Doctor earning $900K annually:
- Hourly rate: ~$450 (if working 2,000 hours/year)
- Time spent landlording: 20 hours/month = 240 hours/year
- Opportunity cost: $108,000 annually
Even if that rental property nets $30K annually, the doctor is losing $78K in value by doing it themselves instead of seeing more patients.
But it's not just doctors:
Tech executive earning $300K:
- Hourly value: ~$150
- 20 hours monthly landlording: $36K opportunity cost
- Property nets $20K: Actually losing $16K annually
The calculation is simple: If your professional hour is worth more than landlord hour, you're going backwards financially by being a DIY landlord.
The "Rich People Aren't in Section 8" Reality
Hubler's comment cuts to something uncomfortable: Property quality determines tenant quality.
Lower-tier properties:
- Higher maintenance issues
- More tenant turnover
- More payment problems
- More management intensity
- Lower quality of life for landlord
Institutional-grade properties:
- Corporate tenants
- Long-term leases
- Professional relationships
- Minimal management required
- Triple-net leases (tenant pays everything)
With $100K as a down payment, you're in tier one by default. With $100K in a DST, you can access tier two.
When Direct Ownership Still Makes Sense
To be fair, direct ownership isn't always wrong:
Direct ownership works when you:
- Have real estate expertise and enjoy using it
- Have time to manage properties actively
- Value control over every decision
- Want to add value through improvements
- Are in the real estate business professionally
- Have lower opportunity cost on your time
DSTs work when you:
- Want real estate exposure without the work
- Value your time highly in other pursuits
- Lack property management skills/interest
- Want institutional-grade assets
- Prefer tax efficiency over maximum control
Neither is "better" universally. They serve different investor needs.
The Ultimate Question
Here's what it comes down to: What do you want from real estate investing?
If you want: Maximum hands-on control, potential for higher returns through your own efforts, full decision-making powerChoose: Direct ownership with your $100K as down payment
If you want: Access to institutional-grade properties, professional management, passive income, tax efficiency, time freedomChoose: DST with your $100K as direct investment
The $100K is the same. The outcomes are radically different.
The Bottom Line
Your $100,000 can buy you two very different real estate experiences:
Option A: Part-owner of a $400-500K property in an area like Coatesville, managing working-class tenants, handling maintenance calls, coordinating contractors, spending 20+ hours monthly on landlording
Option B: Part-owner of an $80 million institutional property, Amazon or Walgreens as tenant, Cantor Fitzgerald managing everything, zero hours monthly required
Same money. Different class of property. Different class of tenant. Different class of life.
As Hubler puts it: "God bless you" to the landlords who want to do the work themselves.
But for the doctor earning $900K who would rather save lives than fix toilets? There's a better way to own real estate.
And if a real estate professional who specializes in properties chooses to "outsource his landlording," maybe that's worth considering.
Delaware Statutory Trusts require accredited investor status with minimum investments typically starting at $100,000. Direct real estate ownership and DST investing serve different investor needs and goals. This article is for educational purposes only. Always consult with qualified tax, legal, and financial professionals before making investment decisions.
Image by Sebastian Wagner from Pixabay
