Investing in ATMs, with Dave Zook, The Real Asset Investor
Are you looking for opportunities to invest in real assets for cash flow? Today, we’re talking with Dave Zook, a successful investor and syndicator who creates value for people through opportunities for investing in ATMs. We also discuss investing in other real assets: multi-family apartments, and self-storage.
So if you want to learn about investing for cash flow in real assets that withstand market turmoil, tax-efficient investing, and creating momentum through stacking investments … tune in below!
Table of contents
The most popular alternative investments we talk about on The Money Advantage is real estate. Interestingly enough, investing in ATMs is almost like real estate, though it probably hasn’t crossed your radar. ATM investing is a great way to invest for cash flow, and Dave Zook has changed the game.
No matter how large your pile of money is, cash flow is what allows you to build time and money freedom. You’ve got to have money flowing. Investing in ATMs is one way to create a cash flowing investment, with some significant tax benefits.
Where Does Investing Fit in the Cash Flow System?
Investing is just one step in the path to time and money freedom.
That’s why we have created the 3-step Business Owner’s Cash Flow System. It’s your roadmap to take you from just surviving, to a life of significance, purpose, and financial freedom.
The first step is keeping more of the money you make by fixing money leaks, becoming more efficient and profitable. Then, you’ll protect your money with insurance and legal protection, and Privatized Banking.
Finally, you’ll put your money to work, increasing your income with cash-flowing assets.
How Investing in ATMs is Tax Advantaged
Dave Zook stumbled into ATM investments after landing a tax bill of about $500,000. He realized that despite all the time and effort he had poured into his business, he’d still have to give half of his earnings back to the government. That’s when he researched tax strategies, many of which we talk about on The Money Advantage. He discovered the secret to tax-free wealth using the incentives that the government wants you to take. Through investments and practices that support the economy, the government will reward you with deductions.
Multi-family apartments were Dave Zook’s starting point to take these tax benefits. Providing housing is one of our favorite ways to slash taxes. It creates monthly cash flow, and it provides a necessary service to the public. The government doesn’t want to act as a landlord, so by properly structuring your real estate deal, you can partake in certain deductions. Not to mention, your Privatized Banking system is an ideal way to fund the purchase of properties. This strategy helped him continue to have fun in his line of work, while simultaneously making money that he didn’t have to lose. Thinking differently put Zook in a position to keep more of what he had and put it to work in more ways.
By bringing his tax liability down to around 0-3%, Dave could invest in other asset classes like self-storage and ATMs. After passively investing in ATMs for a few years, a sponsorship team approached Zook to become a partner and scale the business. Now, they’re one of the top 5 ATM operators in the country.
In Zook’s words, “The times where you learn the most are when you’re experiencing either great pleasure or great pain.” For him, having only a few days before April 15th to come up with a couple hundred thousand dollars was the catalyst for major change.
Applying the Tax Code to ATMs
Section 179 of the tax code is a great incentive for businesses both big and small. It also makes investing in ATMs more favorable. This section incentivizes businesses to invest in new equipment. The government then allows them to write off the entire purchasing price in the year of purchase.
Since late 2017, businesses have also been able to use bonus depreciation on qualifying assets, alongside section 179. For example, let’s say you sell an asset for a profit, and then purchase an asset that gives you 100% bonus depreciation. In the first year, you can write off the entire purchase. This allows you to reinvest and offset capital gains. Proper strategy, discussed with a tax professional, can help you determine whether this strategy will work for you.
Dave Zook maintains two different tax strategies for investing in ATMs. The first is using the 100% bonus depreciation to offset some other income like capital gains or depreciation recapture. However, if you do nothing and allow the ATMs to do their thing, they’ll cash flow. What happens is the depreciation from your purchase of the ATMs will offset the cash flow and the tax liability. This way, the income from your ATMs will be tax free for the first four years of a seven-year investment. The first one is a more aggressive strategy, while the latter is a conservative approach. Yet both will manage your tax liability.
Maintaining your tax liability is often about balancing the asset depreciation of your active income versus the appreciation of your passive income. If you focus on building an immense pile of money without thinking about tax liability, you can destroy your momentum. In Dave’s words, “If you’re getting hit with a big tax bill, that’s your fine or your penalty from the government for not doing what they want you to do.”
How Does Investing in ATMs work?
When entering an investment, it’s important not only to think of the tax impact. You must also consider how the investment will work in your personal economy. Research and strategy and your own principles will help you determine whether an investment is right for you.
In the ATM space, there are two sorts of operators: the mom and pop operator, and the institutional operator. Dave’s team buys large portfolios in the institutional space, then brings small portions to individual investors. So he invests in $10-20 million portfolios and offers units of six machines to investors at $104,000. This allows individual investors to take part in institutional-grade portfolios. Previously, an individual would never have had a shot at pitching an ATM to a business like a 7-Eleven. Now, that space is open to individuals who go through institutional portfolios.
Dave’s company deals largely with essential businesses and places that are open 24/7, which means they’ve maintained profit throughout 2020. The demographic of those who use ATMs is exploding. Not to mention, ATMs are in high foot-traffic areas where people would reasonably want access to cash.
To make this type of investment work, it’s got to be a win for all involved. The investor, the partners, the location, and the customers will all have to see this as a win. That’s also how they divide the revenue stream. The management team, the investor, and the location will all receive a piece of the profit. Fortunately, these ATM portfolios are often in existing locations, so you can predict the profitability based on its transaction history.
An Opportunity for 7 Years
When you invest in ATMs, you’re really investing for cash flow and tax benefits, rather than specific machines. The ATM is the mechanism to extract value from that small piece of real estate. You’re taking a three-foot by three-foot space of prime real estate, and you’re monetizing that space. It’s like the concept that J. Massey shared about cell phone towers and billboards. You’re monetizing a particular piece of real estate in an optimal way.
Dave’s business model is available to accredited investors only. To be accredited, you must:
- You must have a net worth of $1 million, outside of your home or
- Have an income of $300,000 if married, or
- For a single individual, have an income of $200,000
Dave has a portfolio open now until December 22nd, which pays out $2,184 per month. This is a 7-year investment of $104,000. Though not a liquid fund, your money is not at risk for 7 years. With the bonus depreciation, your money is truly at risk for about 3 years. After that point, you’re looking at pure cash flow.
The Future of Investing in ATMs
While many believe that the use of cash is declining, Dave argues that cash users have never been more prevalent. He has invested in the ATM space since 2011, at the advent of Venmo, virtual wallets and crypto currencies. At the time, people believed that cash would fade out of use, yet it’s still highly circulated even today. In fact, cash transactions have grown by over 50%, and Dave’s ATM portfolios are doing better than ever before.
If cash transactions do become less prominent, there will be other ways to extract revenue from the same plot. You must evolve with the times and fill new gaps in the marketplace. In fact, Dave is already looking for fresh ways to monetize the space.
Dave’s company is strategizing for the future of ATMs. Aside from placing ATMs in prime locations, his company is looking to monetize digital toppers for his machines. These are standalone units with their own infrastructure, which can deliver marketing messages. Future scalability could see unique, personalized marketing messages based on collected data. This will not only deliver specific messages to the location’s demographic, but sold to other companies.
Begin Investing in ATMs Today
Dave’s current opportunity closes on December 22nd. He is also expecting to open another portflio in the first quarter of 2021. If you’re interested in investing or learning more, you can get a full report from Dave. You can visit his website, The Real Asset Investor, or email him directly at email@example.com to get the report. This report will provide all the details to help you make the most informed decision possible.
About Dave Zook
Founder and CEO, The Real Asset Investor
Dave is a successful Business owner, Syndicator, and an Investment and Tax Strategist.
He has acquired more than $150MM of Real Estate since 2010. This includes several thousand Multi-family apartment units, institutional grade self-storage facilities, and Cleaner Energy distillation units.
His team is also one of the top 5 ATM operators in the country.
Dave and his wife Susan, along with their 4 children, live in Lancaster, PA.
Find Out Your Next Step to Time and Money Freedom
Do you want to use Privatized Banking, alternative investments, or cash flow strategies to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We would love to help you.
Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/.
By the way, want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth … plus gives you the ability to have your money do 2 things at the same time, boosting your investment returns?
Go to https://privatizedbankingsecrets.com/freeguide to learn more.
Thanks for Tuning In!
Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!
Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!
And, finally, please take a minute to leave us an honest review and rating on Apple Podcasts. They really help more people find our work, and I make it a point to read every single one of the reviews we get.
Why would a commercial real estate investor, author, and syndicator move away from apartments and become a self-storage investor? Paul Moore, real estate investor and author of Storing Up Profits, demonstrates how to capitalize on America’s obsession with stuff by investing in self-storage. So, if you want to find out what’s to love about self-storage,…Read More
Here’s a listener question about personal finance for beginners: “What is the foundation or the starting point of wealth building? What are the core things I would want in place to start building wealth?” You might be asking the same question. Do you have savings you want to do something with? Are you wondering if…Read More