At our December DIG Philly meeting, Fred Hubler explained what he looks for in every investment: "Legal, ethical, moral unfair advantages. That's it. I don't care if it's real estate, I don't care what it is, as long as it's legal, ethical, moral."
Then he explained why institutional DST sponsors have unfair advantages that individual investors—no matter how smart or experienced—simply cannot replicate.
The Framework: Legal, Ethical, Moral Unfair Advantages
Before diving into DSTs specifically, Hubler's investment philosophy deserves attention:
Legal - It must comply with all laws and regulationsEthical - It must be honest and transparentMoral - It must not harm others or exploit vulnerable people
Within those boundaries? Find every unfair advantage you can.
This isn't about breaking rules. It's about understanding that in competitive markets, you need structural advantages to win consistently. The question is: what advantages are available, and who has access to them?
The Scale Advantage: 6,000 vs. 6 Apartments
Hubler illustrates the concept with a concrete example:
"[The buyers] have a much lower contracts than Toll Brothers did. Toll Brothers had maybe 6 or 600 apartments, but not 6,000."
Individual investor managing 6 apartments:
- Negotiates contracts individually
- Pays retail rates for services
- Limited leverage with vendors
- Can't afford specialized expertise
- Manual pricing and management
Local developer with 600 apartments:
- Some bulk purchasing power
- Better vendor relationships
- Can hire professional management
- Regional presence and knowledge
- Semi-sophisticated systems
Institutional operator with 6,000 apartments:
- National contracts at massive discounts
- Premier vendor relationships
- Top-tier talent across all functions
- Proprietary technology and data systems
- Institutional-grade everything
The difference isn't just magnitude—it's the quality and cost structure of every single operation.
The 94% Occupancy Standard
Hubler mentions "94% occupancy" as the standard these institutional operators maintain.
For individual landlords, 94% might seem aspirational. But for institutional operators with sophisticated systems, it's baseline performance.
How they maintain 94%+:
1. Data-Driven Pricing (The 6,000 Data Points)
"When someone says 'I am not buying multifamily in Phoenixville 'cause rents are too high,' you're 100% right unless you have an unfair advantage. When I buy this, I got 6,000 data points. They know what the rent is."
Individual landlord:
- Checks Craigslist and Zillow
- Asks other landlords informally
- Guesses based on intuition
- Sets same rent for all similar units
Institutional operator:
- Real-time data from 6,000+ units
- Algorithms tracking demand signals
- Predictive analytics for market trends
- Dynamic pricing by unit, by day
2. Dynamic Pricing in Action
"If Rob goes today to rent at that place and I go tomorrow and it's the same studio, we're gonna get different numbers."
The system knows:
- Current occupancy across all units
- Historical seasonal demand
- Upcoming lease expirations
- Market competition movements
- Individual unit characteristics
- Optimal pricing for maximum revenue
3. Professional Marketing and Leasing
6,000 units support:
- Full-time professional leasing teams
- Digital marketing specialists
- CRM systems tracking every lead
- Professional photography and virtual tours
- SEO and paid advertising at scale
- 24/7 response capabilities
Individual landlords post on Craigslist and hope their phone rings.
"We're Not at the Institutional Level, But the DST Is"
This is Hubler's critical point: "None of us, including me—we're not doing Inland or CB Richard Ellis... we are not at the institutional level. But the DST is."
What this means:
You, individually: Cannot access 6,000-unit scale advantages
Your local developer: Cannot compete with national institutional operators
Top regional players: Still lack the data, technology, and scale
But through DSTs: You get access to institutional-level operations as if you were a billion-dollar fund.
This isn't theoretical. When you invest in a DST operated by a company like Inland or Cantor Fitzgeral
You're getting:
- Their national vendor contracts
- Their proprietary technology
- Their data from thousands of units
- Their professional talent
- Their institutional advantages
For $100,000, you access advantages that would require billions to build yourself.
The Phoenixville Rent Question
Hubler addresses a common skepticism: "I am not buying multifamily in Phoenixville 'cause rents are too high."
The skeptic's logic (reasonable for individuals):
- Current market rents seem at ceiling
- Can't see how to push rents higher
- Risk of vacancy if market softens
- Better opportunities elsewhere
The institutional operator's reality:"You're 100% right unless you have an unfair advantage."
With 6,000 data points, the institutional operator knows:
- Exactly what rent optimization looks like
- Which amenities justify premium pricing
- How to reduce expenses by 25% immediately
- Dynamic pricing strategies for maximum revenue
- Where the real ceiling actually is (hint: higher than you think)
They buy properties that look fully valued to individual investors, then extract additional value through operational excellence that individuals can't replicate.
"When I Buy This, I Cut Expenses by 25%"
This is mentioned in the meeting notes but worth emphasizing. Institutional operators buying properties expect to cut expenses by roughly 25% through:
National contracts:
- Landscaping, snow removal, maintenance
- Insurance, utilities, internet
- Supplies, materials, equipment
Operational efficiency:
- Better property management systems
- Reduced staffing needs (technology)
- Preventive maintenance reducing emergency repairs
- Bulk purchasing everything
Scale advantages:
- Legal services
- Accounting and compliance
- Marketing and advertising
- Technology infrastructure
A 25% expense reduction on a property might mean the difference between 5% net operating income and 7% NOI—completely changing the investment profile.
These are real advantages! But they don't scale. And in multifamily specifically, scale wins.
The Data Advantage Explained
"They know when someone's opening up and there's new access capacity."
With 6,000 apartments in a market:
- You know when lease expirations cluster
- You see demand patterns in real-time
- You anticipate market movements
- You adjust pricing dynamically
- You optimize for portfolio-wide revenue, not single-property revenue
Example:If you see 200 units coming available across your portfolio next month, you can:
- Adjust pricing now to capture demand early
- Shift marketing spend to properties with higher capacity
- Offer promotions strategically where they'll drive revenue
- Coordinate lease expirations to smooth demand
Individual landlords react to vacancies after they happen. Institutional operators prevent vacancies before they occur.
But here's the opportunity: Through DSTs, you can invest AT the institutional level without needing to build institutional capabilities yourself
The Bottom Line
Fred Hubler looks for "legal, ethical, moral unfair advantages." Through DSTs operated by institutional sponsors, you gain access to advantages you could never build individually:
- National vendor contracts (25%+ cost reductions)
- 6,000+ data points for pricing optimization
- Dynamic rent pricing algorithms
- Professional teams across all functions
- Proprietary technology and systems
- Scale efficiencies in every operation
An individual with 6 apartments cannot compete with an operator managing 6,000. The math doesn't work. The systems don't exist. The advantages aren't available.
But through a $100,000 DST investment, you can partner with the institutional operators who do have those advantages.
You don't need to build a billion-dollar real estate empire to access billion-dollar advantages.
You just need to understand which game you're playing—and whether you should be playing a different game with better odds.
Sometimes the smartest move isn't working harder. It's finding legal, ethical, moral unfair advantages that others don't have access to.
And then using them.
Delaware Statutory Trusts require accredited investor status and have minimum investment thresholds. Institutional operators may not achieve expected cost savings or operational improvements. This article is for educational purposes only. Always consult with qualified tax, legal, and financial professionals before making investment decisions.
