The global demand for luxury rentals is increasing, giving meaning to the figures behind the industry. According to data, the vacation rental industry is worth more than $112 billion. And that is enough to entice entrepreneurs Calvin L. Butts, Jr. and Carrington M. Carter to take a bite.
This prompted them to establish East Chop Capital, a private equity firm focused on real estate and travel recovery. Carter founded the firm after going on ski trips with Hampton University friends. They stayed in large vacation rental homes during their trip.
“After the third trip, I ran the numbers and concluded that the industry had lots of potentials, especially with the growth of platforms like Vrbo and Airbnb,” Carter told Shoppe Black.
Carter and Butts made an investment in vacation rental homes, building their first home in Pennsylvania’s Pocono Mountains. They then launched the Getaway Society brand, which is a luxury rental home company. They quickly expanded their portfolio to Martha’s Vineyard and then to Hilton Head, acquiring approximately $3.5 million in real estate in five years.
“For Martha’s Vineyard, we both knew about the history as an enclave for African Americans, but after Calvin experienced the magic of the Vineyard firsthand following a Sigma Pi Phi Grand Boule’ conference in Boston, we quickly bought some property,” said Carter.
He explained that as word spread about their success and people inquired about how to invest alongside them, they decided to establish a separate private equity firm, East Chop Capital, and launch a real estate fund focused solely on luxury vacation rental homes.
“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 27% returns, net of fees, which is an outstanding performance for any fund manager, especially for a first fund,” he noted.
Butts claims that it took him and his co-founder three years to raise $4 million and six months to raise $9 million. They sold four properties from their first fund and returned more than $3 million to investors.
Carter described their strategy for identifying and acquiring luxury vacation rental properties in desirable locations across the United States and internationally as part art, part science.
“First, it starts with us. Places that we have visited and enjoyed, or places that we have heard about as enjoyable vacation destinations,” he told Shoppe Black. “Aside from personal insights, often this intel comes from family, friends, investors, and others in our network. Put another way, we listen to customers of luxury vacation rental homes.”
Butts stated that the company’s long-term goal is to amass a boutique portfolio of 100-150 luxury vacation rental homes around the world. He went on to say that the plan is to keep buying, building, renting, and opportunistically selling over time in order to generate returns and wealth while delighting guests all over the world.