May 1st 2024.
In a bold move to create lasting wealth for the Black community, East Chop Capital has successfully closed its second fund at a staggering $11 million. As a Black-owned private equity firm, their mission is to invest in luxury vacation rental homes, and this recent funding will allow them to continue doing just that. This comes after the firm's first fund, totaling $4 million, closed in late 2020.
According to co-founder and General Partner Carrington Carter, East Chop's investment strategy revolves around the booming global vacation rental market, which is expected to reach $130 billion by 2033. The firm's second fund was opened in 2021 with a focus on expanding their reach and making a significant impact in this industry.
"Our goal for Fund II is to increase our scale and recognition as we invest in undiscovered, overlooked, or undervalued vacation rental homes and developments across the United States," Carter explains. "We're thrilled to have already put this capital to work in Florida and Texas."
The firm's investment portfolio primarily consists of 5 to 12-bedroom homes, including new constructions, turnkey properties, and value-added investments. These properties are strategically located near popular vacation destinations such as lakes, beaches, mountains, and entertainment venues.
One of East Chop's flagship properties, a 12-bedroom, 14,000-square-foot estate near Disney World in Orlando, Florida, is set to open this October. This luxurious home boasts an indoor basketball court, a two-lane bowling feature, multiple game rooms, and a stunning 1,200-square-foot resort-style pool. "This property is a prime example of our investment approach - creating a unique and unforgettable experience for our guests," Carter says proudly.
The firm's target return for investors is an impressive 15% over the life of the investment, which includes an 8% preferred dividend. This means that investors not only receive a significant return on their investment but also benefit from the perks of owning a luxury vacation home.
East Chop Capital was founded in 2018 by Carrington Carter and co-founder Calvin Butts, Jr. who both have a strong track record in the luxury vacation rental market. They named their firm after the residential area of East Chop in Oak Bluffs, Massachusetts, on Martha's Vineyard.
As general partners, Carter and Butts have built a diverse portfolio over the years, starting with their first investment property in the Pocono Mountains of Pennsylvania. They have since expanded to other popular vacation destinations such as Martha's Vineyard and Hilton Head in South Carolina. The firm currently operates in seven states, with plans to expand to North Carolina and Texas next year.
With impressive assets under management of $30 million, East Chop Capital is dedicated to making private equity and venture capital accessible to a larger group of Black investors. Historically, this community has been excluded from high-return avenues of wealth generation, and the firm aims to change that narrative.
The second fund, which comprises 93 investors, including Liberty Financial Services, has a significant representation of the Black community, with 90% of investors being Black and 23% being women. "Our investors will not only benefit from the dividends and price appreciation of our portfolio, but they will also have the opportunity to use the homes at a discounted rate during the shoulder and off-peak season," Carter explains.
Aside from their investments in vacation rental properties, East Chop Capital also ventures into other industries such as technology, financial services, media, and professional sports. They are also the largest minority-led investor group in the renowned whiskey brand, Uncle Nearest Inc. "Whether it's real estate funds, VC funds, tech startups, or other growing businesses, we strive to provide our investors with access to high-quality deals and educate them along the way," Carter shares.
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