If you are new to investing, but want to get started listen up! If you are a seasoned investor you may already know this, but this may be a good time to review the most successful process Investors use when buying property.

This process has been tried and is proven to lead you down the road to successful real estate investing. The process is simple, as long as you have an understanding of the fundamentals of investing.

Step 1 - Buying Property
When you buy property you want to make sure it is under the most favorable conditions and terns for you! The more leverage you have (including other people’s money) the better off you are.

Step 2 - Fixing up the Property
Chances are, if you are buying investment property, you will want to buy something for a lower price. Properties that need a little work are priced much lower then properties in perfect condition. If you buy a property and have the resources to fix it up for very little money then take advantage of this opportunity. The fixing up may be as simple as a few nails pounded into walls, a fresh coat of paint, or completely converting property into condos, apartments, or office space.

Step 3 - Selling or Renting the Property
Once the property has been fixed up you can sell it for a decent profit. You can also rent it out to tenants. The property can be financed now that it is in better condition.

If you are buying property just to fix it up and sell it for profit you should repeat this three step process again and again. For investors that rent out their property you can use this process again and again on all of the investment property you buy.

You do not have to limit yourself to buying standard real estate property. All other forms of real estate investments can allow you to benefit from these three steps.

Real Estate Paper
Ever wonder about all of the paperwork you have to go through when dealing with investment property? You can make money in what is considered “paper”. This includes contracts, mortgage notes, trust deeds, and other documents.

So what exactly does real estate paper do and how can you benefit from it?

When a person purchases real estate paper they are purchasing the note on a property. The property is considered security for the payment made on the note. Once you purchase a paper you then will be eligible to receive income. This income will be accumulated through either a series of small payments or in one lump sum.

So, you’re probably asking why you would want to bother with buying real estate paper when you can just buy the property and make money that way. Buying paper does have its advantages. It is one of the safest ways to invest. Your investment is secure, and unless something goes incredibly awry you will make a profit!

You can apply the three step process to real estate paper. Seasoned investors have been investing in paper for years. However, there is a little known technique they can use that many do not know about or aren’t sure how to profit by using it.

So what is it that can allow you to profit from investing in paper? It’s simple. By using leverage you can finance the paper just as you would your real estate property. You will be able to find many lenders that are willing to provide financing (both private and public institutions). This will make financing your property easier because you already have real estate paper financed.

Not only that, when you finance paper your rate of interest is lower than your amount of profit. Since paper can be financed 100% you are already ahead of other, clueless investors that don’t know the secrets to investing in paper.

When you finance paper expect a discount! By purchasing paper you are guaranteed some sort of discount in pricing. You just have to convince the financer that the discount is necessary. You also will probably borrow the entire amount for the price of the paper, so you do not pay a cent up front.

There will some sort of return on your borrowed money. Expect the return to be up to 10%. You will see an increase in cash flow within a month. Your net worth will increase. The amount of the increase is how much you saved thanks to your discount.

Just like your property you can pretty up the paper. This is more in a metaphoric sense. Sure you can decorate the paper with fancy designs and pictures (who would want to!), but that is not what I mean by upgrading. All you have to is use your imagination.

I know you probably will not believe this but there are close to 120 differ ways to “upgrade” your paper. You can raise payments, restructure the paper, the list goes on and on.

One easy way to Profit from Paper
Once you have upgraded the real estate paper you can sell it (just like you would sell your property after you fixed it up). If you do not want to sell it try refinancing the paper. You will not believe the amount of money you can make from refinancing.

Try to apply the three step process and see how it works. I’ll give you an example to remind you of how the process works.

Step 1 - Buy Real Estate Paper
Just like step 1 for buying property you want to purchase the paper. You will want to both control and finance the paper through different sources.

Step 2 - Fix the Paper up “Upgrade”
Step 2 was to fix up the property. Now you’re going to fix up your paper. You should be able to find several ways to fix the paper up. Consult an expert at investing (i.e. a real estate agent) to assist you with the process. Perhaps they know a way that is more profitable than other methods that have been tried previously. If you plan to buy paper continuously you may want to try different methods of upgrading to see what works best for you.

Step 3 – Sell the Paper
Yes, you guessed it. You are going to sell the paper to increase your cash flow. If you decide not to sell you can refinance and still make a hefty profit.

So who are you going to sell the paper to? Why not sell it to the person that is paying on the paper. I’m sure you’re asking, “Why would they want to buy it?” They would want to buy it because you are going to give them a discount on the price if they pay the note off.

Often you are selling the paper at less than half of the discount you originally received. You can make quite a profit, and to them it is a deal, because they end up paying less than what it is worth, and you end up receiving extra cash.

While you may not think the profit is too much you can often sell a paper and profit from it within one month. Investing in property can take months at a time. If you think about it, you can increase your profit by purchasing several notes in the same amount of time you would purchase property and make as much if not more in increased income.

By financing you make a profit and do not even need to invest. The profit is usually greater than selling it so you may want to consider selling after you refinance.

Remember the more the note is worth the more money you will make in profit.

There is one more thing you need to know about buying paper. It deals with the payer of the note. Usually they will not have the amount of money you need to pay the note off. It’s your job to convince them that it is in their best interest by making them the best offer they can imagine.

So what can you offer them to make them want to pay off their note?

How does a lower monthly payment sound? You can teach them how to lower the amount of their loan by at least 2K, pay of their loan in a short time, help them make their own profit, and benefit on your own because they will be paying you for the paper.

You can do this! They will probably be skeptical at first, but once they see that it works they will be thanking you for saving them money and putting money in their pockets.

They need to go to their lender (usually a bank) and get a new loan. Have them get the loan for $500 dollars more than what they should pay you for the paper. That money will go directly into their pocket.

Since they will no longer owe you for the note they will owe a smaller amount (for the new loan). The monthly payment has decreased as well, though the interest will usually rise a little.

You have actually made them quite a deal, and have profited in the process.

As you can see, profiting in paper can really make a difference if it is done correctly. Do you really want to miss out on higher income in a short amount of time at very little risk to you? If you are like me I doubt you will let this opportunity pass you by.