How to Start an ATM Side Hustle That Brings in Millions

^{This article originally appeared on Business Insider.}

Paul Alex entered the police force as a trainee with the plan to build a career in law enforcement in the San Francisco Bay Area.

Alex, 35, hit the ground running, eventually becoming a detective in the narcotics task force before being assigned to the special victims unit. By 2020, he had scaled his way up to a salary of $133,000, with benefits bringing him up to an annual salary of over $272,000, according to California state archives viewed by Insider.

While his career set him up for financial stability, his weekly working hours could range from 60 to 100 hours.

“I didn’t have any personal freedom,” Alex said. “I was neglecting my personal life. I wasn’t hanging around my family who I love. I’m a big family guy. And at the end of the day, I realized, this can’t be life.”

The deeper realization that a salaried career wasn’t going to be his future was during periods when overtime was paused, which would cut his pay drastically, he said. Some months, his biweekly paycheck would be $2,000 after deductions. This meant he always had to save for those low months to cover his bills, which could range from $5,000 to $6,000 a month, he said.

“What really was a morale killer was the fact that you want to move ahead in life. And I feel it kept you static when that happened,” Alex said.

He decided that investing in cash-flowing assets would be a way out of the paycheck volatility. He could then use his salary for discretionary purchases such as vacations, cars, and additional investments.

He initially considered real estate but felt that it would require a lot of cash and a mortgage that would create more debt. Plus, he believed that the overhead expenses of maintaining a property would add to his stress. He’d have to hold any rental income in cash in case he had to cover the mortgage due to missed rent or repairs.

In 2017, Alex came across the idea of investing in ATMs through a colleague who had been researching the business. He began joining social media groups about it, watching YouTube videos from others who had done it, and reading any material he could.

It was a business model that was out of his comfort zone because he knew nothing about it. But the draw of it was that it had a low-cost barrier to start; relative to buying real estate, an ATM could cost less than $3,000. It also had lower risk because if the ATM wasn’t generating a return, he could relocate the machine, which he refers to as a floating asset. And finally, it was a quick way of starting a side hustle because once a machine was placed on location, it could start generating a profit almost immediately.

Alex decided to pursue it as a side hustle in 2018. By March 2021, he had left the police force and made it his full-time job where he provides the ATMs for those who also want to embark on this business.

From January 2021 to April 2023, Alex’s profit and loss statements viewed by Insider show a total sales of $12 million and a net profit of about $3.5 million for his company ATMTogether, a provider of ATM machines and services. His company Merchant Task Force, which provides credit-card terminals, shows an income of $844,000 and a net profit of $742,000 for the same period.

Scouting locations

In 2018, Alex took two weeks off from work and used that time to scout the city for ideal locations.

He looked for high-traffic areas that had an incentive to have an ATM on site. This included tourist areas and city spots that were populated with nightclubs, restaurants, and valets to target zones where staff was tipped. He also looked for small businesses that offered cash back at checkouts, which was a nuisance to the business because they had to be sure there would always be enough dollar bills in the register.

Alex would pitch the businesses as though he was offering a service. He would be responsible for providing and maintaining the machine at no charge to them. He recalled cold calling over a hundred businesses and physically walking into over 20 locations.

“When I started this and I had gone out there and I was getting nos and yeses, wins and losses, It was very difficult for me to go back to work and not think about my business. And I think that’s what caught me, was just the fact that I was growing something for myself and I wanted to continue to grow it.”

He initially had the idea of starting with three ATMs but by the time he was done, he was able to secure six locations: three liquor stores, two barber shops, and one nail salon in the San Francisco Bay Area. The first three were incentivized by cashback and the last three by cash tips.

Once the machines arrived on location, he loaded each ATM up with about $2,000 to $3,000 in cash.

Not every location was a grand slam. Alex noted that a decent minimum return on an ATM should be at least $200 a month per machine. Within the first month, Alex could already tell that the only three machines producing a return were the ones he placed at the liquor stores. They had a net profit of about $250 to $500 a month per location from fees charged for withdrawals. In contrast, the lower traffic locations were only producing $25 to $100 a month. He let the machines sit for two months before deciding it was time to move them.

Alex also found a mentor from Facebook who was successful in the business. Based on his mentor’s advice, he moved the three machines to two convenience stores and another liquor store. From there, they began to bring a net profit almost immediately, with the highest return being $600 a month, he said. He suddenly had six operational machines that brought in roughly $3,000 a month in net profit, he said. It took him approximately six months to get a return on his investment.

Funding the businesses

While Alex had enough cash saved to purchase the machines, he realized he would need the bills to stock the ATMs. So instead, he signed up for two personal credit cards and used them to buy the hardware, he said. They were cards that specifically offered zero interest for the first 12 months, he noted. This would give him enough time to create cash flow without incurring interest every month.

When he purchased his first set of six machines, Alex assumed he got a good discount, which was $2,100 an ATM. He would later realize it was a bad deal because it required him to pay a 30% commission from the fees his ATMs charged. While the sales agent he worked with told him it was standard practice, he later realized it wasn’t the only way.

The next set of machines would be purchased from his mentor. They were both new and refurbished and cost between $1,800 to $2,200 depending on the model.

Additional costs for the ATMs included an internet wireless modem for $150, a monthly internet charge of $6.99, and installation by a technician of $300.

Alex would gradually use the profits from his ATMs to buy more machines. And by 2020, he had accumulated 30 ATMs across the San Francisco Bay area that were operative. Each brought in anywhere from $250 to as much as $1,500 a month in net profit.

Altogether, these little assets cash flowed anywhere between $9,000 to $12,000 a month in net profit, he said. While his side hustle didn’t make up for his salary, he was fully able to cover his bills with the profits. This was enough to make him want to leave his job in 2021 to build a business in this sector.

During this time, he met an ATM provider who he partnered with and they scaled to become a provider of ATMs. This allowed him to sell off his machines so that he could become remote.

Even while in the act of building his side hustle, Alex still had doubts running through his mind. The chatter from those around him kept him questioning his ability to carry this through. Some of his colleagues thought it was a bad idea to invest in an unknown business and told him he should just pick up extra hours instead. In hindsight, he’s glad he kept going.

“Invest in yourself. Self-education is everything,” Alex said reflecting on his journey. “All this started from a friend of mine, giving me an idea, and then me taking that idea and doing my due diligence and just researching it, buying books, watching videos, reading, reading, reading to the point where I was comfortable enough to execute it on my own.”

This story was originally published in June 2023.