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Economics and emotions should never be mixed. But they are. One fantasy people nurture is a cottage in the mountains. The pandemic has worsened this affliction. Is a Himalayan second home a sound economic decision or a bad emotional one?

A house in the Himalayas is different things to different people. One could build an Antilla in Almora. Or 50 Lakhs will get you a flat in Solan or another so-called hill station. Most fantasies go beyond a flat and involve a Bungalow, a lawn and a setting sun. So let’s assume a budget of 1 crore.

Step one is buying land, which can be a land mine. Land titles are messy and deals are often challenged in court. Himalayan States like Uttarakhand and Himachal Pradesh are wary of outsiders buying land.

Building a house is even trickier. Many projects in the mountains lie half-finished, abandoned because they are too difficult to execute. Fickle contractors, the rural pace of things & the frequent travel required have made many a grown man cry. Reality kicks fantasy in the teeth again. Taylor Swift’s words “Baby I’m a nightmare dressed like a daydream" aptly describe such home-building projects.

Given this is a high-risk investment, returns should be high. Let’s say you do build / buy such a home. Your operational return on investment (ROI) now depends on how much time you spend there.

Our assumed cost of 1 crore will earn you a risk-free return of 6 lakh after tax from a fixed deposit. You will spend another 3 lakhs every year on your caretaker’s salary, water, electricity, maintenance, and so on. That is an annual opportunity cost / expense of 9 lakhs.

Around 10,000 gets you a good room for three in a respectable hotel. On a budget of 9 lakhs, you can stay 90 nights in any place of your choice through the year. And you won’t start each trip with deep cleaning, provisions, fixing that burst water pipe or finding a rehab for your caretaker.

Anything less than 3 months a year in your mountain home makes it a bad investment. The reality is, most people who own homes in the mountains spend less than two weeks a year there. Pinakini Nigam’s sister owns a home in Gagar, Uttarakhand. “My sister visits it ten days in a year. Even with visits of extended family the place is used 45 days in a year," she says.

Some folks expect to earn through Airbnb. They hire & train a caretaker, list on Airbnb and cross their fingers. The guests arrive, but your caretaker served bad food / didn’t change the sheets / got drunk / isn’t there / all of the above. Your first review was a one-star rebuke. Airbnb is littered with rarely visited homes with 2-3 bad reviews. It’s almost impossible to recover unless you delist, rename your place and list again – this time with your mother’s aadhaar card.

Most successful Airbnb hosts in the Himalayas are on-site. Achla, an Airbnb super host (Manzar in Satkhol) says “I rarely let my place out when I am not here." These are often budget places with low ROI. Pretty but basic, they are not your dream cottage with plush leather couches. There is a model where a professional manages high-end homes and you get a return as well. But for every good one like Naveen’s Glen (rate 5/5 stars) in Sattal, there are a dozen that overpromise and don’t deliver. The smart folks are those who rent such places, not the owners.

The last hope is selling at a good price. The return is a function of time, but it’s an illiquid, chancy market. Anywhere outside the Shimlas and Manalis, property markets are disorganized. Online doesn’t work. Land is available so most people won’t pay a premium for an already built house. Besides, wealthy folks want to build their own fantasy cottage. Few want to pay for someone else’s second-hand dream.

So if you’ve been dreaming of that Himalayan Cottage, go for it only if you’re willing to lose money and hair. A better bet would be to put money in an FD, go on a long vacation and explore a new place each time. You’ll also save on the hair transplant.

(The author is the co-founder of the Himalayan Writing Retreat (www.himalayanwritingretreat.com ). Views expressed are his own)

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