In recent years companies offering fantastic income for investors willing to invest and purchase a property in the United States are springing up like mushrooms after the rain. Some such companies even went as far as a marketing stunt in which they offer a guaranteed income for several years. While there are many interesting opportunities in the market, it is important to be wary of alleged "deals" in which the main gainer from the "deal" (and sometimes the only gainer) is the marketing company. Although the purchase agreements sometimes do not look particularly long or complex (certainly compared to other investment transactions), it is highly recommended to review such agreements with a specialist lawyer before executing them.
In the current economic situation it is difficult not to be tempted by offers for purchasing real estate abroad and particular in the USA, especially with an alleged “guaranteed” return of over 10% per annum against investment of only several dozens of thousands of dollars. However, investors who were tempted to invest in such assets without being accompanied by a lawyer who is familiar with such investment agreements may find themselves losing their investment and sometimes stuck without being able to sell the assets in which they invested.
Moreover, many foreign investors are unfamiliar with the American local market generally and specifically the real estate market, including the differences between the American states and counties that may affect not only the cost of the property but also the taxation involved in the transaction. Moreover, in many cases the marketing company is purchasing the property in 20 to 30 grands and then turns around and sells the same property for about 50 grands, without any upgrades of the property except, sometimes, a "guaranteed income" (which the company has no problem to grant as it has already made a huge earning). However, when the investor tries to sell the property, the investor may discover that the property cannot be sold on the open market except with a large loss. Similarly, rental prices also reflects the real price of the property so the income may be lower than expected (and even a "guaranteed income" is ensured, it will be time limited) .
The set of agreements for the purchase of a US property may seem at first simple and short, however without proper legal review of the agreement, the foreign buyer may find itself in a legal dispute in the United States under American law where just the legal costs of managing the conflict may be higher than the value of the property. Thus, as a first stage, money should not be transferred until a specific property is chosen (it is preferable that the funds will be transferred into a local (at the jurisdiction of the investor) escrow account until the point where there is a specific property that the purchaser decided to purchase and that specific property had been checked for legal ownership and a title insurance company agreed to insure the transaction). The purchaser should ensure that the agreement is under the local law of the investor (and not the American) and that any dispute regards the agreement will be take place in the purchaser's jurisdiction and there are no restrictions preventing the purchaser from being released from the marketing company or from the management company in the future if the purchaser is not satisfied with the service of those.
To conclude, close supervision and a support of an attorney who is experienced in carrying out such transactions, throughout the entire transaction - from the negotiation stage through providing comments or corrections to the set of agreement - and with a special view on the tax structuring aspect of the transaction, may minimize the legal risks involved in such type of investment and increase the chances of the investment being a fruitful one.