Should you buy or rent a vacation home?

(CNN) You've got a little extra cash and you'd like to find a place to escape.

Should you buy a property and build equity with the potential for rental income? Or should you rent a getaway with no fixed costs, maintenance or hassle?

"Vacation homes tend to be the kiss of death for most people's financial plan," says Patrick King, certified financial planner at Transformative Financial.

During the buying process the assumptions around expenses, rental revenue, taxes, insurance and property management tend to be wildly optimistic, King says. "One kitchen remodel or a new roof could blow a hole in your return on investment calculations."

But even if a vacation home does turn out to be a terrible investment, it might provide years of family enjoyment, and many consider it a labor of love.

Here's how financial planners, homeowners and investors have approached the decision to buy or rent a vacation home.

Asset or liability?

The economics of owning a second home rarely work because there are so many unexpected costs, says Eric Gabor, a certified financial planner and founder of Eagle Grove Advisors.

"People think they are buying an asset, but often, with all the cash outflows, it's more of a liability."

If a buyer is paying all-cash, that's one thing, but likely the second home will add debt to a family's balance sheet and more expenses including property taxes, maintenance and insurance.

"With all these expenses, you would likely be better off staying at a hotel or using a service like Airbnb or VRBO," says Gabor. "I'd rather you earmark $15,000 and do a seasonal rental and mitigate your risk."

Given the risk and expense of real estate, he says, an investor would do better putting the money in the stock market.

But in some circumstances, buying vacation properties can make sense, says Jirayr R. Kembikian, a certified financial planner with Citrine Capital.

"If an individual can buy a property and still have a diversified portfolio, and can also cover the mortgage, insurance, and taxes with rental income, it could make sense," Kembikian says. However, this is only possible if they have substantial assets or the vacation property is very inexpensive.

"Usually it is a purely emotional decision for these individuals and it makes zero financial sense," he says.

A sweet home, but a terrible investment

Wendy Marsden plants flowers around her vacation property on an island off the New England coast every spring just so she'll have a beautiful bouquet to leave for rental guests, along with a bottle of wine, when they check in. The house has become a refuge during the off-season, is in a place she's been coming to for years and to which she's considering retiring.

"However, it is a terrible investment," she says.

Since Marsden is also a certified public accountant, certified financial planner and registered investment adviser at ProsperiTea Planning in Massachusetts, she knows all too well that the costs do not add up.

She says she has earned as much as $14,000 a year renting out the place. But the taxes alone on the property are $8,000. Another $4,000 goes to utilities and fees for listing her property for rent. When she adds in mortgage interest payments, insurance and the costs of repair and maintenance, the total annual cost to own and operate the house is around $24,000.

"All in all, our life would have less stress, we'd have more time at the place we love, and we'd have a great deal more money if we didn't own this vacation home," says Marsden.

So when her clients start talking about buying a vacation home, she tells them about freezing pipes and no-show renters.

She counsels clients to rent vacation homes and invest in commercial property instead.

But she understands the intangibles of owning. "If you still want your own vacation home, just be clear that it's not an investment, it's consumption item," says Marsden. "Don't fool yourself that it's a good move."

Double down on the investment

In order to earn positive cash flow from his rental property on a resort lake in Washington, Garrett Kaiser, who works as a real estate broker in Seattle, researched the return on investment of houses in the area. He discovered that larger houses had better rental rates than smaller homes.

"We got a five bedroom place and could charge higher rents because we are hosting large family groups, wedding parties who are happy to split the cost," Kaiser says.

His year-round property is booked solid during the 10 weeks of summer at $1,000 a night. In the shoulder seasons and winter there will be fewer bookings and it will rent for $200 to $300 a night. If it is free for a weekend, his family will use it.

After owning other investment properties and sweating out managing them himself, Kaiser thought hiring a property manager was an expense he was willing to take on in order to alleviate some of the headaches of owning a property three hours away.

Not only does his property management company, Vacasa, set up the comings and goings of guests, its marketing reach earns him rents that are about 25% higher than similar rentals in his area, he says.

"If I'm able to charge an additional $20,000 a year because of the property management service, even if they are charging me $25,000, that is $5,000 I'm happy to spend to not have to think about any of it."