Do your research if investing interstate. Graphic: News Limited Source: News Limited

Investing in residential property interstate can deliver big financial benefits, but there are traps lurking for those who don't do proper research.

Land tax savings can add up to several thousand dollars, while diversifying your assets outside your backyard is seen as a wise investment strategy.

University lecturer and author Peter Koulizos says state property markets can move in different directions, so spreading purchases across states means you can tap into growth areas, but also lower your risk when a particular market does poorly.

"For example, in the past two years Melbourne has probably increased 30 per cent, whereas Perth has dropped in values," he says.

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Land tax is one of the most painful problems for serious real estate investors.

Depending on which state you live, a $500,000 property could cost you between $0 and $5000 a year.

"Because land tax is state-based, you can own eight properties one in each state and territory and not pay one cent in land tax," says Koulizos, who wrote The Property Professor's Top Australian Suburbs.

Defence Housing Australia, which manages 18,000 properties nationwide, says prices vary dramatically between states."For example, what you can get in Sydney for $400,000 is very different from what you can get in Adelaide for the same amount," says DHA general manager, sales and marketing, Tony Winterbottom.

Figures released by RP Data show Sydney's median house price is $605,000, followed by Canberra ($560,000), Melbourne ($557,750) and Darwin ($540,000). But Darwin and Canberra's weekly rents, at $520 and $490 respectively, are higher than Sydney's ($450).

Winterbottom says property investors can do a lot of research about an area before setting foot there.

"You can start by following the nation's property markets closely," he says.

"Once you have short-listed some areas that appeal, conduct closer scrutiny.

"Ask questions about the location's history, past performance, population projections and planned infrastructure.""Qualified professionals can be useful in understanding a new market and make purchasing interstate less daunting.

"It's wise to invest in a good property manager."

Winterbottom says traps for investors include poor research, not understanding all the costs, believing hype, not understanding conveyancing processes and failing to conduct background checks on professionals.

"A guarantee is only as good as the person giving it to you," he says.

Koulizos says investors should avoid being sucked in by sales talk and be wary of agents selling new apartments.

"Don't let emotions get in the way," he says.

"Queensland is a great place to holiday, but is it the best place to invest in?"

Investors should visit any area they plan to buy in and check out shops, schools and local infrastructure.

"If you are planning on spending about $400,000 to $600,000, then go and spend $400-$600 on a plane ticket and go and look at the property," Koulizos says.