Meaning you will have a check book, debit card, and direct access to your retirement funds to be able to use for any investment or expenses needed for that investment as long as it's compliant.It's important to note since the investment is held at the bank, the custodian will not be able to review investments for compliance with IRS rules and regulations or do any record keeping of this account for you.

To answer your question - within the city limits STR's are not permitted, outside the limits there is no regulation.

If you find properties outside of city limits that might help with possible regulations. 

The local rules and regulations for building in our area is what is keeping the volume of building low.

Prior to that regulation FNMA didn't care how many mortgages you had only that you qualified for each. 

Is the India service provider going to know all of the US laws/regulations?

At this point, I see only 3 options1) assign the contract to someone else, meaning sell the apartment (but I will need approval from the developer)2) talk to the developer and ask for a minimum one-week rental (Min City Regulation) at least for the 1st year to get over the bad time.3) to just go ahead and purchase the apartment and suck up any loss I might make and try to get in refinanced as soon as possible with a lower interest rate.What are your thoughts?

@Emre Dura you may want to connect with @Drew Sygit to discuss this in further detail after reading below...All foreign investors owning U.S. rental property are responsible for paying taxes on any and all rental income they earn in the U.S. regardless of any tax treaties that may exist.Since some of the regulations and requirements can be confusing, Logical Property Management (LPM) has created this document to summarize the options for a foreign investor.

Consider your long-term plans and local zoning regulations carefully to make an informed decision.Good luck!

Why do you think the federal government regulates and investigates businesses like this?