Australians are being warned over the pitfalls of investing in the American property market, with many investors losing their life savings over promises made by shonky real estate promoters.

Thousands of Australians have been attracted to buy bargains in the largely stagnant US property market, encouraged by promoters promising a far greater return on investment than has been available in the Australian market in recent years.

Negative growth in Australian home values has seen many riding the strong Australian dollar into the US, which in large areas has remained depressed since a huge housing bubble and glut of sub-prime properties helped trigger the global financial crisis.

Andrew Allen, the Australian founder of MyUSA Property, is one of many promoters offering a smorgasbord of dirt cheap American properties, all of which are subtly owned and or sold into limited liability companies which avoid consumer protection laws and regulations for non-residents.

MyUSA Property promises bargains galore that Americans just cannot afford, promising to take care of everything from property managers to renovators, mortgage brokers and stable tenants to pay back the debt.

But some investors warn it is very often too good to be true.

Sydney investor and Qantas pilot, Jeremy Laws, says the Australian investment frenzy in the US is attracting a great school of sharks.

"It’s a very easy way for the less scrupulous purchasers to circumvent the property regulations in Australia and in the States. It’s pure off-shore wild west stuff," he said.

"Andrew Allen is a fool to himself and a burden to others. What he’s doing is unconscionable.

"If you treat this like a hobby and a passive investment you’re more than likely to get burnt. They pray on fear and once they conquer the fear thing with you, then they’ll sell you an overpriced property."

He says knowledge of where to buy in America remains crucial to a solid investment.

"If you buy a two-bedroom apartment in Trump Tower, New York, you’ll never have a tenant problem. If you go to an area in Detroit with a 20 per cent return, you’re going to need a handgun to collect the rent," he said.

Consumer advocate and real-estate writer Neil Jenman says the US market is a shonky sell because of an oversupply of properties.

He says the biggest indicator lies in American investors' reluctance to invest in their own market.

"If the US real estate market was so good, why aren’t the Americans buying it?" he said.

"The reasons the Americans aren’t buying it is they know they’ve got an oversupply of properties.

"What bothers me about these promoters of these properties is that they are shonky people. They’re dodgy - we’ve all probably heard about the Queensland real estate scams - these are the same people now who are telling investors to come and invest in US real estate."

Investors killed

Mr Jenman says some Australian investors have lost their lives when trying to chase up tenants who have fallen behind in their rents.

The trial continues in Detroit for the man who allegedly shot and killed Australian investor Greg McNicol from Victoria, who was trying to collect a late rent payment from the accused’s daughter.

"More people have guns in the United States than don’t have guns," Mr Jenman said.

"We’ve already had one Australian investor killed over there. Many others are being slaughtered financially."

Mr Jenman has long campaigned for improved ethics in the real estate industry. He is particularly critical of Trent Richards, Andrew Allen’s co-founding director of MyUSA Property - and later, US Property Sales Australia.

Richards is a high flyer with a penchant for helicopters and fast cars, but has a scandal-plagued history with the Insight Investment Corporation which is now in receivership.

"Trent Richards is synonymous to me with the word shonk," Mr Jenman said.

"Trent Richards has form in selling overpriced properties in Australia. Now he’s selling properties in the United States - and I would absolutely warrant for certain that these properties would be overpriced."

Mr Richards did not respond to interview requests. US Property Sales, which he later founded, is still pitching for customers – as is MyUSAProperty - and CEO Andrew Allen’s new venture Prime USA Property is now targeting overseas investors.

Squatter tenants

Melbourne school teacher Gavin Hicks believed Andrew Allen’s assurances. He was asked to pay a service fee of $13,000 to invest his $65,000 savings in small apartments in Ohio and a home in Detroit.

But the only tenants he got were squatters. His investment, worth nowhere near what he paid, has now been boarded up and Andrew Allen has gone missing.

"He was making guarantees. They would pay themselves off in a couple of years," Mr Hicks said.

"Even though the house looked fine, the actual neighbourhood – it wasn’t a good idea. It was pretty silly but I was going through what Andrew was saying basically and I had faith in what he was selling.

"Even if I don’t get my money back I want to see Andrew Allen held to account for what he’s done."

Mr Allen did not respond to the ABC’s repeated requests for an interview.

Queensland policeman Alan Wilke pinned $300,000 and his retirement hopes on assurances given by Jason Paris of US Properties.

He and his wife Gillian bought a LLC title to a foreclosed house and a town house in Las Vegas, which never delivered rental returns assured by Mr Paris and cannot be resold for anything near the price paid.

"In hindsight I think it’s been the worst mistake of our life," Mr Wilke said.

"I’d strongly recommend other people get the facts in hand before they make any conscious decisions to buy properties in the US.

"It looks like our retirement plans are shot to pieces. I’ll probably have to work till I’m 100."

US Properties say they charged clients an $8,000 marketing fee. But only later did public records reveal the Wilkes' properties cost $37,000 less than what Jason Paris charged them.

The promoter now says that was for improvements, but the Wilkes say they had to do their own improvements.

Authorities like ASIC and the Office of Fair Trading suggest they have limited jurisdiction and so are powerless to stop these companies.

But Mr Jenman says the moral of the story remains the same: buyers beware.

"One of America's leading economists is Robert Schiller. He has actually said just last week that he believes the real estate market in the United States may stay the way it is for our lifetimes," he said.