Saturday, March 26, 2011

Matthew Lien - Music and Liner Notes
from a Canadian Musician in Taiwan

Story By Stephen A. Nelson 
(from The Maple Leaf)

His name is Matthew Lien, a Canadian guy with English first name and what sounds like a Chinese family name.  He's a big star in Taiwan, but when hanging out with Canadians, he’s just a regular guy... I feel like we should be talking about hockey and Taiwanese girls.

Tuesday, March 15, 2011

Get Smart: Build your house on the rock
Don't buy real estate in an earthquake zone

By Stephen A. Nelson

After I made my first post (in 2005) about Why I Never Invested in Taiwan Real Estate, I got this rebuttal: 

"I'm not sure whether your main reason for not buying is valid, or at least for me it isn't. There are many risks that we all take on a daily basis... The chances of the next big earthquake occurring with the epicentre located where you live and your apartment falling down, all in your life-time, are very slight indeed."

So here I re-present my reply, even as the Japanese calculate the odds against a triple disaster - earthquake, tsunami and nuclear meltdown - all happening at the same place at the same time:
With all due respect, ["very slight indeed"] is what the people in Puli and Taichung [cities closest to the epicentre] said right before the 921 Earthquake in 1999.

But, as I noted, earthquakes are not your only worry. Typhoons and floods happen every year.

The city of Taipei is built on a mud basin.

And as Typhoon Nari showed, anywhere - including the entire city - can be a flood zone.

As for the non-tangible reasons for buying a house (sense of accomplishment, pride of ownership, et cetera): Been there, done that, bought the T-shirt.

A lot of those non-tangible reasons are not really sound investment principles but things that agents and others tell you to make you feel better about something that is not always a sound financial move.

Yes it feels great to "own your own home." A man's home is his castle. But it is not always a wise investment.

It's like buying life insurance: If you are doing it for someone else, that's great and there are many non-logical reasons you may wish to do so - looking after your family, protecting yourself in case of severe injury, et cetera.

But if you are buying life insurance as a financial investment, there are better ways to get a safe investment and a good return on your money.

In short, I'll continue to rent, claim my income tax deduction, and store up my treasure somewhere else.

Taipei has it's own triple risks - besides being a flood zone.
  • Taipei 101 (formerly world's tallest skyscaper) is built right on an active fault - and building the tower likely destabilized it.
  • The volcanoes of Yangmingshan (mountains at the northern edge of Taipei) are dormant but not dead.
  • There are two nuclear plants near Taipei, just on the far side of Yangmingshan.

Monday, March 14, 2011

Buying property in an Earthquake zone:
Why I never invested in Taiwan Real Estate

By Stephen A. Nelson

In light of the recent earthquakes and tsunami in Japan, I am re-presenting something I wrote in Forumosa about the wisdom of  buying a house or apartment in Taiwan - apart from the legal barriers and technical difficulties.  At the time, people disagreed with me and provided all the formulaic reasons for buying - "pride of ownership" et cetera. But I think this still stands - unlike the apartments in central Taiwan's earthquake zone.

1. First rule of investment:
If it appreciates, buy it. If it depreciates, lease it.

2. First rule of building houses:
"No man builds a house unless he first counts the cost."

As some have noted, When you buy a house/apartment, there are costs besides the mortgage, including, but not limited to: taxes, maintenance fees, legal fees, and (esp. if you plan to rent it out) agent's fees.

Oh, and insurance, which brings us to the next item...

3. Ancient wisdom about building in a flood zone. 
The wise man built his house upon the rock.
The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. 

The foolish man built his house upon the sand. The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash." 

4. Did you feel that?
Earthquakes happen every day in Taiwan. 
The last "big one", September 21, 1999, was a magnitude 7.3.

The strongest aftershock, three days later, was 6.8. That's like calling Nagasaki an aftershock of Hiroshima
And you know what? Seismologist say that the 921 Earthquake WASN'T "the big one."

Oh, and most of the buildings that were destroyed were new buildings.

5. Rule of thumb for would-be home owners
Never buy a house/apartment in an earthquake zone. 

6. Ancient wisdom from 60s British television
"Anything can happen in the next half-hour!" 

The Last word in edgewise
If you want an investment, buy mutual funds, RSPs or life insurance.
If you want a place to live, rent a house or apartment.