While nothing beats a 401k or IRA investment when it comes to retirement planning, many people are looking into investment properties as a supplemental retirement plan. We've all heard stories of people hitting it rich after an initial investment on a second mortgage, leaving them with enough money to pay off their existing mortgages and debt. Yet, we've also heard how fickle the real estate market can be, sometimes stagnating for years at a time. If you're asking yourself, "Will an investment property be sensible for my retirement plan?" -- then read on.

Pros of owning investment properties are obvious. Hypothetically speaking, imagine owning a six-plex in a slow-changing, yet prosperous part of Atlanta where you charged each tenant $1,000. Your monthly mortgage for the building might be $3,000 but you'll still have that extra $3,000 cushion each month. Another benefit of property investments is the generous tax kickback you may receive. If you delight in getting your lump sum tax return at the end of the year, then perhaps investing and selling properties when you need that quick chunk of cash is right for you. Also, there's no penalty for opting out early or age regulations regarding when you can start using your earnings. You don't have to be rich or super business savvy to add property ownership into your retirement planning agenda. It's been dubbed "the equal opportunity wealth builder."

Cons of investment properties include the no guarantee risk. It's also not a feasible option for everyone because of high transaction prices. Not everyone has thousands of dollars saved to make a substantial down payment. Vacancies, bad tenants, maintenance costs and property oversupply are a few of the disadvantages. Like any investment, there are many factors beyond your control that could affect your income. For better guarantees, 401ks or IRAs should be included in your financial retirement planning.

Your success in real estate investment properties will depend largely on when and where you buy. Money Magazine reported the most growth in Panama City, Florida and Washington state -- cities like Olympia, Spokane and Mount Vernon. Slow-changing but profitable markets exist in Atlanta, Providence and Albuquerque. First time investors will want to avoid ex-boomtowns like Los Angeles, Santa Barbara and Las Vegas, where exorbitantly high prices make the market unsustainable. While downtown real estate can be profitable, it's not advised for people who are simply retirement planning for some supplemental income.

Many couples buy large homes to fit their children comfortably, but find it's too much space when the kids move out of the house. In this case, downgrading to a small bungalow or apartment and letting someone else pay the mortgage is beneficial. While it's not superior to a 401k or IRA, investment properties are a retirement planning option that may work for you.

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Tags: maintenance costs, initial investment, real estate investment, second mortgage, kickback, feasible option, extra 3, property investments, wealth builder, oversupply, property ownership