The global vacation rental industry is expected to grow 17% by 2030, reaching a value of over $112 billion. The demand for luxury rentals, which offer privacy, uniqueness and luxury design, is particularly on the rise among travellers.
Eastern capital of the chop is a private equity firm investing at the intersection of real estate, the travel recovery and the new normal of hybrid and remote working.
We caught up with founders Calvin L. Butts, Jr. and Carrington M. Carter, to get some insight into their company and its goals.
Tell us about founding East Chop Capital and what inspired you to start the company.
[Carrington]: Calvin and I started investing in vacation homes in 2014 when we built our first home in the Pocono Mountains of Pennsylvania, a 6 bedroom, 3 bath, 2800 m² mountain chalet, and launched the getaway company Mark.
The idea of entering this industry came after I took several ski trips with college friends (thanks to Hampton University). Our group of 15+ would be staying in large vacation rental homes. After the third trip, I ran the numbers and concluded that the industry has a lot of potential, especially with the growth of platforms like Vrbo and Airbnb.
We quickly expanded to Martha’s Vineyard and then to Hilton Head to develop our portfolio, buying about $3.5 million in real estate over five years. For Martha’s Vineyard, we both knew history as an enclave for African Americans, but after Calvin’s experience the magic of the Vineyard live following a Sigma Pi Phi Grand Boule conference in Boston, we quickly bought a property.
As people learned about our success and asked how to invest alongside us, we decided to create a separate private equity firm, Eastern capital of the chop, and launched a real estate fund focuses exclusively on luxury vacation rental homes. Through this process, we discovered just how much a vehicle like East Chop Capital is needed in our community.
For our first fund, we raised $4 million from 90 investors, 89% of whom are black, 11% white, and 18% women. We are on track to deliver exceptional returns of 27% net of fees performance for any fund manager, especially for a first fund.
Our business is named after the East Chop area in the town of Oak Bluffs on Martha’s Island Vineyard, where we own two houses.
Your business was able to raise more than double the amount of capital less time for its second real estate fund compared to the first. What do you attribute this too?
[Calvin]: We have owned, invested in and operated this space for nearly a decade. Our our track record is probably the main reason why we were able to raise capital more quickly for our second funds compared to our first. For Fund I, it took us three years to raise $4 million.
For Fund II, we raised $9 million in about six months. We sold four properties from our first fund, some to triple-digit return on investment, returned over $3 million to investors, and we’ve made it into this current economic environment. We are satisfied with our results, and our investors certainly are too.
In addition to our track record, we have spent considerable time building relationships and building trust over the past five years since the inception of East Chop Capital. We work hard, genuine, honest and truly dedicated to leading people on the journey of learning, networking together, and of course, creating wealth. The relationships and trust we have built, coupled with our communication, our transparency and our “reinforcement in public” on social networks, give people the possibility comfort and confidence in recommending us to others.
Unfortunately, we have not received any investment from institutions or family offices, which is essential to grow a business. We know the statistics on the lack of access to capital for minority-owned businesses and know of competitors who have received over $100 million in support, even if he has less experience. We hope that our track record and continue to tell our the story will lead to greater investment in our business.
Can you tell us about your focus on the intersection of real estate, the rebound of travel, and the future of hybrid work?
[Carrington]: The thesis of our second vacation rental fund has four key elements:
- Real estate as a sustainable cash-generating asset: Real estate has a well-documented history to generate income and appreciate over time, especially luxury real estate in the Locations.
- The post-COVID travel rebound: COVID is definitely not over, but we are adapting to to live with as best we can, including while travelling. There is still significant pent-up demand for traveling and connecting with family and friends – birthdays, weddings, new babies, promotions…many reasons why people want to celebrate and celebrate together. We feel that experiences will remain a priority over material things.
- The demand for motorable leisure destinations: Our strategy includes creating a geographically diverse portfolio of luxury vacation rental homes, within a six-hour drive of major cities of the country. Walkable leisure destinations will continue to be a viable option for families and large groups who want to enjoy a vacation and save money by driving instead of flying.
- The future of work where hybrid is the new normal: You see the headlines every day on companies trying to force workers back to the office. Although company policies vary, for office workers, it looks like the new normal will be 2-4 days in the office, often with one (some) additional week(s) of telework offered. We are in the first rounds of employees discover and above all acting on, this flexibility to live, work and travel in ways never before possible. Vacation rentals will play an increasing role in this new life flexibility as weekends turn into a full week, or a vacation week can turn into Several weeks.
What is your strategy for identifying and acquiring a luxury vacation rental? properties in desirable locations across the United States and abroad?
[Carrington]: It’s part art, part science. First, it starts with us. The places we visited and popular or places we have heard of as enjoyable vacation destinations. Apart personal ideas, often this information comes from family, friends, investors and others in our network. In other words, we listen to customers of luxury vacation homes.
Then we analyze travel reports and other “top destination” lists from companies like Vrbo, Airbnb, Vacasa, Evolve, AirDNA and media like Travel + Leisure, Conde’ Nast, National Geographic, Travel Noire, CNN Travel, TripAdvisor, Lonely Planet, Skift and others.
We also track growing metropolises and research surrounding areas to which people will escape for weekend getaways and extended trips. When given the choice, travelers tend to have a strong affinity for beach, lake, mountain and entertainment destinations.
What are your future plans for growth and expansion in the vacation rental market and in the private equity sector in general?
[Calvin]: With our Getaway Society brand, powered by East Chop Capital, our goal is to own a boutique portfolio of 100-150 luxury vacation homes around the world. Buy, build, rent and sell opportunistically over time to generate returns and build wealth while delighting customers around the world.
Currently we have homes in Martha’s Vineyard, Hilton Head, Orlando, Gatlinburg, Pocono Mountains, Virginia Beach and Broken Bow (Oklahoma). We are building two large homes in Orlando: a 12-bedroom, 13,000 square foot home and a 10-bedroom, 6,000 square foot home, which we call stand-alone resorts.
They are built with amenities such as a resort-style swimming pool, bowling alley, indoor basketball court, movie theater, game/arcade room, and fitness center.
We are also building four beach homes along the Texas Gulf Coast in Port Aransas and two luxury mountain homes in Banner Elk, North Carolina, located two hours from Charlotte and near Beech Mountain, Sugar Mountain and Grandfather Mountain.
Carrington and I also have a fascination with yachts, and we hope to turn that fascination into a side business that gives guests a new experience on the water in places where we have homes. I grew up in Savannah around water. We went to Hampton University, which is three quarters surrounded by water, and loved watching the yachts in the harbour. Getaway Yacht Charters had a soft launch last year, with the acquisition of a 54ft Azimut Flybridge. This company is still in its infancy, but we are excited about its future.
On the private equity front, Carrington mentioned earlier how much a vehicle like East Chop Capital is needed in our community. It was an “Aha moment” for us. Real estate will continue to be our foundation, but as part of the overall goal of wealth creation, we have discovered a unique way to engage our community of over 150 LPs. [limited partners/investors] make significant investments ($100,000 to over $1 million) in other transactions.
We are also excited about this vertical within East Chop Capital as it aligns perfectly with our commitment to providing the best combined financial, educational and social returns through organized and controlled investments in various sectors.
We would love to have your support as we continue to evolve and we welcome the opportunity to host you for a holiday! Please follow us @GetawaySociety and @EastChopCapital on Instagram,
Facebook and LinkedIn, and join our mailing lists to stay in touch with our growing portfolio of luxury vacation rental homes and other East Chop Capital investments.
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