Weekend Review on Uhaul Investors Club

I thought I would take a little time to review the alternate bond type investment offered by the Uhaul Investors Club. For those of us that have been around a while we are probably already aware of this opportunity, but we have thousands of readers each week and many likely are not aware.

IMPORTANT NOTE–once you invest in these securities THERE IS NO SECONDARY MARKET so you will be holding these issues to maturity–although we note that the company will transfer them to another individual if you know of someone who would like the purchase. So do not invest the weekly grocery fund in these securities or you will be going on a diet in the weeks ahead.

The Uhaul Investors Club is an investment vehicle offered by Amerco (NASDAQ:UHAL) which is the parent company of Uhaul. In the simplest terms investors are able to set up an account with Uhaul directly and once your funding arrives you are able to make direct investment in a variety of debt issues offered by Uhaul–we show the currently available offerings below. The account can be a standard cash account, or as in our case (wife and I), they can be IRA accounts.

As you can see just like any debt instrument you buy the longer the maturity date the higher the ‘coupon’.

Investments must be in $100 increments and $100 is the minimum purchase. An account can be started with almost any initial deposit and with a couple clicks of the mouse you can add or withdraw available cash funds as you desire.

These ‘bonds’ are secured by the equipment shown above and Amerco files prospectuses for the securities with the SEC, just like any stock or bond offering.

Now these are not typical bonds. A typical bond would have a maturity date at which point you would receive the bond principal. During the time of ownership of the bond you would have received interest each month, quarter or likely semi-annually. The Uhaul bonds pay you quarterly and the payment includes a portion of the principal and a portion is interest–thus at maturity you will have received most of your principal and interest already so you only receive the typical part principal and part interest payment at maturity.

Your quarterly payment looks something like this (an actual payment on 1 investment we have with Uhaul)–

So when you receive your quarterly principal and interest payment, assuming it leaves with you with at least $100 in your account you can go right ahead and reinvest. It is important to realize that the principal can come back quite quickly, in particular on 2 year issues, and to maintain your maximum return you need to reinvest quite quickly.

I started our accounts mid 2018 and funded both accounts with a portion of our annual IRA contributions (which I believe was around $7,000) for the year. We have now started funding the accounts with 2019 contributions and have around $11,000 in the accounts. If one desires they are able to move other IRA money into the account with a transfer. While we have just a tiny amount in the account we plan to continue funding with new IRA money–this is just 1 tiny part of the over all plan.

Like any investment one needs to review the issuer–Amerco, to make sure they are performing as expected without obvious financial problems ahead. Amerco had filed for Chapter 11 way back in 2002–so like every corporation these things can happen and they need to be reviewed. We will let each potential investor decide for themselves what they believe the quality of the parent company is at this time, but we will point out a few basics.

For the 1st 9 months of the last fiscal year (ending 12/31/2018)

–Amerco had $2.1 Billion of marketable securities on hand (corporate bonds and treasury securities).

–Amerco had $1 billion of cash on hand.

–Cash generation (net income plus depreciation) of $770 million generated in the 1st 9 months on revenue of about $3 billion.

–The company pays about $35 million in interest each quarter–$105 million during the 1st 9 months.

The company will be reporting their financials for the last 12 months in the next 10 days or so and we will be reviewing them closely.

I believe there is very little risk in holding their bonds at this time and as long as the general economy remains decent–and likely even in a weakening economy.

The 10-Q for the 1st 9 months can be seen here.

Here is a link to the uhaulinvestorsclub website.

As always we don’t recommend investments, but we personally find these securities provide us with some added diversification that we are always looking for in the big scheme of the portfolio.

We can’t complete this article without giving a tip of the hat to kaptain lou for pointing this opportunity out for all to see on this site as well as on Seeking Alpha last year.

6 thoughts on “Weekend Review on Uhaul Investors Club”

  1. I emailed Uhaul Investment Club over the weekend to ask just why there was not a real estate property to invest in (there use to be almost every couple of weeks) and only equipment. This is what they emailed me back:
    emailed Uhaul Investment Club and ask just why they have not added any properties to invest in and only equipment. I currently have an account at UHIC and have funds committed to some of their properties that I am very happy with. This is what they sent me:

    Nomad,
    Thank you for reaching out to us about this. We do not have information about future offerings but shall take your suggestion into consideration.
    Sincerely,
    U-Haul Investors Club®
    Account Management Team
    info@uhaulinvestorsclub.com
    http://www.uhaulinvestorsclub.com/

    AMERCO has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offerings to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the applicable prospectus supplement(s), and other documents AMERCO has filed with the SEC for more complete information about AMERCO and this offering. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov, or under the “SEC filings” page of the U-Haul Investors Club website. Securities issued through the U-Haul Investors Club are not FDIC insured. Neither AMERCO nor U-Haul Investors Club provides investment advice.

  2. Thanks for pointing out this interesting opportunity, Tim. If I set up an account to purchase one of the offerings in a traditional IRA account, wouldn’t I need to withdraw the funds and so be subject to taxes on the withdrawal?
    Thanks

  3. Tim, thanks for mentioning this investment opportunity again. At the present time, I won’t be putting any more funds into U-Haul unless they re-open the notes on their properties. At the present time, they only have offerings on equipment and not real estate.

    Overall, I have over $100k invested with them, but most of the funds are with their properties in Carlisle, PA (7.25% for 25 years) and Gettysburg, PA (7.75% for 30) years and then a smaller amount in Ravenna, OH (4.93% for 8 years). When looking at the real estate holdings, I always check out the values of the properties and all three of these holdings have a much greater real estate value than the mortgage on the properties – which gives me a decent margin of safety. It’s actually pretty easy to pull up this information, but at times I do call the property assessor’s office to confirm some of the values on the properties.

  4. Thanks for the write up Tim. I know you and I had briefly discussed the Uhaul notes some months ago. I have been following their website for a year or so but have not yet created an account. It does look interesting. I very much like the idea of stable fixed returns even at a nominal rate.

    I am in the process of letting my Lending Club account run off. I have been an investor in LC for 10 years back when they were new to the peer to peer lending game. There have been so many changes during that time that I no longer view LC as a viable investment at least for me.

    One of the things I like most about the Lending Club and Uhaul concepts is the idea of being able to park a certain amount of funds in an account that is not a bank or brokerage account.

    Have a great weekend,
    Gary

    1. Thanks Gary–yes I think my Prosper account is down to $39 bucks–I had written before that I was closing out that experiment. Uhaul is an equal return with a lot less stress.

      1. I am winding down my experiment with Lending Club as well. Tim, this is totally off topic, but do any of your reports show whether or not the dividends are QDI? I can see it for individual issues, but not in your reports

Leave a Reply

Your email address will not be published. Required fields are marked *