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.
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?
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:
Local developer with 600 apartments:
Institutional operator with 6,000 apartments:
The difference isn't just magnitude—it's the quality and cost structure of every single operation.
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%+:
"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:
Institutional operator:
"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:
6,000 units support:
Individual landlords post on Craigslist and hope their phone rings.
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:
For $100,000, you access advantages that would require billions to build yourself.
Hubler addresses a common skepticism: "I am not buying multifamily in Phoenixville 'cause rents are too high."
The skeptic's logic (reasonable for individuals):
The institutional operator's reality:"You're 100% right unless you have an unfair advantage."
With 6,000 data points, the institutional operator knows:
They buy properties that look fully valued to individual investors, then extract additional value through operational excellence that individuals can't replicate.
This is mentioned in the meeting notes but worth emphasizing. Institutional operators buying properties expect to cut expenses by roughly 25% through:
National contracts:
Operational efficiency:
Scale advantages:
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.
"They know when someone's opening up and there's new access capacity."
With 6,000 apartments in a market:
Example:If you see 200 units coming available across your portfolio next month, you can:
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
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:
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.