May 1, 2024
East Chop’s latest fund raising comes as the global vacation rental market is expected to exceed $130 billion by 2033.
Hoping to build generational wealth for Black Americans, East Chop Capital has closed its second fund at $11 million.
A Black-owned private equity firm, the business plans to use the recently raised funding to continue its investment in luxury vacation rental homes. The firm closed its first fund at $4 million in late 2020.
Co-founder and General Partner Carrington Carter says East Chop’s investment strategy will center on the $75 billion global vacation rental market, which is projected to surpass $130 billion by 2033. The second fund opened in 2021.
“Fund II is about scale and pattern recognition as we invest in undiscovered, overlooked/undervalued, or value-add vacation rental homes and developments across the United States,” he says. “We’re pleased to already put this capital to work in Florida and Texas.”
More specifically, Carter told BLACK ENTERPRISE that his firm invests in 5- to 12-bedroom homes, new construction, turnkey, or value-added properties. These properties are typically located near lakes, beaches, mountains, and entertainment destinations.
He says the firm’s flagship property in Orlando, Florida, near Disney World, will open this October. It will feature 12 bedrooms, 14,000 square feet, an indoor basketball court, a two-lane bowling feature, multiple game rooms, and a 1,200-square-foot resort-style pool. “This is an example of a custom-built and thoughtfully designed property that will create an amazing experience for guests.”
He says his firm’s target return for investors is 15% over the life of the investment, which includes an 8% preferred dividend.
Carter and Co-founder Calvin Butts, Jr. started the firm in 2018. Carrington stated that they named their business after East Chop, a residential area in Oak Bluffs, Massachusetts, on Martha’s Vineyard.
Carter and Butts serve as the firm’s general partners, building upon a 10-year track record of investing in the luxury vacation rental home market. He added the firm started by investing in its first property in the Pocono Mountains in Pennsylvania and then expanded to Martha’s Vineyard and Hilton Head in South Carolina.
He says the company’s footprint spans seven states, with planned expansion to North Carolina and Texas next year. He says under the general partner’s management, its portfolio generates seven-figure revenue. He says East Chop’s homes host thousands of guests each year.
With assets under management of $30 million, Carter noted that East Chop is focused on making private equity and venture capital accessible to a larger group of Black investors who historically have been excluded from high-return avenues of wealth generation. The second fund comprises 93 investors, including Liberty Financial Services, of whom 90% are Black and 23% are women.
“These investors will benefit from the dividends and price appreciation of the portfolio,” Carter says. “They also will benefit from the ability to use the homes at cost or at a significant discount when the homes are unoccupied in the shoulder and off-peak season.”
Carter shared that the firm also invests in technology, financial services, media, and professional sports and is the largest minority-led investor group in the whiskey brand Uncle Nearest Inc.
“Whether real estate funds, VC funds, tech startups, and other growing businesses, we are providing access to high-quality deal flow for our investors and educating them along the way.”
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