Both dh's and my step mother's family had vacation homes.
From what I could see, they sound a lot better than the reality. In both cases, they were fairly close by, one an hour away, the other two hours. Step-mother's is cottage on a lake and is only usable in the summer. IL's was a house on some acreage in an area with a lake and skiing, but they were not right on the water, although they did moor a boat.
It's a huge amount of work. There's household maintenance, cleaning, yardwork, schlepping food back and forth. You spend a chunk of your vacation time doing this work. In the case of a house on an island, I can only imagine repairs would be more complicated.
Neither family rented the place out but tried to maximize weekends and vacations there. Both families felt a sense of guilt if they weren't there because they paid for it, so damn it, they should be enjoying it.
Once kids are into their early teens, they may be less than enthused about spending weekends and vacations isolated from friends. It became a huge source of bickering in both families. If the kids are involved in sports, music, theater, etc., they may have obligations to be home. Once the kids were married, the parents expected that their married kids would want to spend their vacations with them in the vacation houses, but the new spouses didn't relish spending vacations with the ILs. More bickering ensued.
When the parents got old enough to want to pass the places on, it was a source of discord. My BIL really wanted us all to buy it from MIL together. He was the only one who wanted it and he couldn't understand why we all didn't want to pay for it so he and his family could use it. He's a bit of a bully and there were some ugly scenes. Something similar happened in step-mother's family and some of her kids feel like the final disposition was very unfair.
We do like renting other people's vacation homes. Our favorite vacation is a house on a remote lake that is gorgeous. It's like a little slice of heaven. We've rented the same place several times, but we've also rented other places. The rent is much cheaper than a hotel. If we want to do something else for vacation, it's no big deal. We love the area, but would not want to be permanently tied to spending all our vacations there. In this case, there is no way the owners are breaking even on the place, let alone earning money.
As other people have said, do the numbers. Don't forget about all the expenses of owning a home and dealing with renters.