A new trend dubbed "peer-to-peer” financing is emerging in the financing arena and it's already more common than most people think. Instead of borrowing money from a bank or other financial institution to purchase real estate or small businesses, private individuals become the lenders.

Surprisingly, this "new” trend isn't so new at all. People have been lending money to their peers for hundreds of years. Today, these transactions are formalized through Cash Flow Notes, a written document that states a promise to pay and the terms of the agreement. The untapped peer-to-peer lending market: Cash Flow Notes

Financing through a cash flow note is an attractive option for many transactions, particularly real estate. Now a $350 billion industry, peer-to-peer seller financing is a growing global phenomenon. Already, the sale of most small businesses incorporate peer-to-peer lending and one in 13 American homes is purchased using these cash flow notes.

Currently, there are approximately $91 billion in

privately held single-family residences and another $200 billion in commercial real estate notes. In fact, there are so many cash flow notes in the U.S. alone that if you could find and purchase $1 million worth of notes every day, it would take more than 240 years to find them all.

Two ways to make money

Most people get started in cash flow notes by simply matching a seller - someone who is holding a note - with a buyer and then collecting a fee for putting the deal together with no capital outlay required.

Additionally, many investors are looking to buy these notes. It is not uncommon to receive returns of 20 percent or more as well as immediate monthly cash flow and because these notes are secured by real estate, they are extremely safe investments.

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