Most EB-5 investors evaluate a project by its paperwork. Is the I-956F approved? Is the TEA rural? How many jobs will it create? Beyond Paradise 1 clears all of it — I-956F and I-526E approved, Rural TEA priority processing, and 1,246+ projected jobs against a 300-job requirement for this tranche. But paperwork is not what determines whether invested capital gets repaid. The market does. What follows examines why this real estate project is difficult to replicate, and what that means for a senior secured lender.
The market commentary below draws on Mike Drutar, Principal Broker and Owner of NextHome Paradise Realty, and the sales agent of record for the project. He has been a real estate broker in Kailua-Kona for more than 20 years, was named Realtor of the Year in 2019 and Broker of the Year in 2023 by his peers. He also serves as a director at the National Association of Realtors and has worked with Watt Capital on this development for roughly two and a half years.
Supply: twenty years of nothing new
Beyond Paradise 1 is the first new condominium development in West Hawaii in more than 20 years — not just in the immediate neighborhood, but across a market extending roughly 30 miles in every direction. Every competing vacation-rental condominium in that radius is at least two decades old.
The reason is not weak demand. Between federal, state and county holdings, Hawaii has one of the highest percentages of government land ownership in the country. Very little land is open for development, and the legal, legislative and entitlement hurdles are substantial. Hawaii did not participate in the mainland building boom for exactly this reason.
When asked how many competing projects in the area had failed over the past five years, Drutar's answer was zero. None have failed because none have tried; the entitlements are close to impossible to obtain. For a lender that cuts both ways, and both ways are favorable: no competing new supply is arriving to compete on price, and there is no local record of new-development failure to underwrite against.
The site's original permit was issued approximately 20 years ago and carries development rights as they existed then, including short-term rental capability. A developer starting from a blank slate in Kona today could not assemble such a package. Drutar describes the parcel as the last great piece of land in Kona for a project of this kind.
This is the single most important thing to understand about the asset: the scarcity is legal, not just geographic. Geography limits how much land exists. Entitlement limits how much of it can ever be built — and that limit is not going to loosen anytime soon.
Land: the value floor beneath the collateral
Hawaii's supply constraint shows up most clearly in raw land costs, and in what obsolete housing still sells for.
- 10,000 sq ft lot in Kona: approximately $350,000 for the land alone, at entry pricing near town.
- 1950s single-wall home: still sells for $500,000–$700,000 — on post and pier, with limited plumbing and electrical.
- Why? The land is worth most of the price.
Investors sometimes read old houses selling near a million dollars as evidence of an overheated market. In Hawaii it is the opposite signal — a hard floor under land values in a market where new supply cannot respond to demand. For an EB-5 investor holding a senior secured position on the entity that owns the land, that floor sits underneath the collateral independent of the vertical construction above it.
Short-term rental rights: the regulation is moving in the project's favor
Short-term rental (STR) capability is the most consequential feature of this site. Two otherwise comparable properties side by side — one STR-permitted, one not — differ in price by $200,000 to $500,000 in this market. Statewide, STR inventory accounts for only about 6% of Hawaii's housing stock (UHERO, May 2025). And the scarce combination is not STR alone: it is STR paired with ocean views. Nearby properties with ocean views generally do not permit short-term rentals, and the two competing resorts hold inventory that largely has no ocean view.
Hawaii County only allows un-hosted vacation rentals in resort, hotel, commercial and certain multi-family districts. Outside those districts an operator continues only under a nonconforming use certificate — a tolerated exception rather than a property right. The county has been tightening that framework steadily: a countywide registration and enforcement regime took effect in 2026, and a broader rewrite of the vacation rental code is before the County Council.
That is a tailwind. Every move narrows legal short-term rental supply toward properly zoned, registered, professionally managed inventory, and none of it adds a single unit. KAINANI's short-term rental capability comes from the site's entitlement rather than from grandfathering — in Drutar's words, it will be the project's right, so it does not need to be grandfathered. A grandfathered use can be legislated away; an entitlement is a property right. As compliant supply compresses and visitor demand holds, what remains legal becomes more valuable. On Drutar's read, KAINANI stands alone: no short-term vacation rental complex in this market has ocean views, none has a comparable amenity center, and none was built within the last 20 years.
Competitive set: twenty years old, and aging expensively
KAINANI does not compete against new construction, because there is none. It competes against condominiums inside Waikoloa Beach Resort and Mauna Lani Resort — all 20-plus years old, most now due for expensive remodels, and typically without ocean views. In addition, what a buyer in the competing set must fund out of pocket is already built into a KAINANI home.
Exteriors. Richly designed, professionally color-coordinated elevations; community-wide landscaping by award-winning landscape architect C2 Collaborative; private lanais and balconies with unobstructed views.
Interiors. Chef's kitchens with standard Bosch appliances and available Wolf and Sub-Zero upgrades; washer and dryer in every home; split-zoned air conditioning; master baths with dual sinks and tiled showers; walk-in closets; energy-efficient LED lighting throughout; and a private attached garage with storage for beach gear. A buyer choosing KAINANI takes delivery of all of it new, with no remodel to fund — and, if financing, amortizes it over 30 years rather than writing a check for a capital improvement.
The amenity center is designed to exceed every other vacation-rental condominium in West Hawaii: men's and women's saunas and steam rooms, a hot tub, a 2,000 sq ft fitness center, large pools, family gathering space, and pickleball courts. Hawaii has a long history of developments that promised amenities somewhere down the line and never delivered them. Watt inverted the sequence and is building the amenity center at the beginning, targeting completion with Phase 1 in Q1 2027. As a market signal, it says the developer is underwriting all six phases rather than optimizing the first sale. As a sales mechanism, it removes the buyer's largest reason to wait. For an EB-5 lender waiting to be repaid from how quickly units sell, that sequencing de-risks the exit.
Pricing: the median is the wrong benchmark
A frequent due-diligence objection: the area median price is roughly $900,000, while KAINANI units are priced from approximately $1.3M to $1.9M.
The median is a bit skewed. Kailua-Kona's 96740 zip code blends $200,000 condominiums with estates assessed at $45 million and $70 million. The correct comparison is price per square foot against the actual competing inventory — new construction with ocean views and short-term rental rights, against 20-year-old resort condominiums with neither. Drutar's framing is that this is not a median property but a luxury one, and in a K-shaped economy the median is precisely where a seller does not want to be.
Two things support the price. In the week before the August 2026 investor webinar, 133 brokers and agents specializing in West Hawaii toured the site across 12 guided tours, and not one objected to the pricing. And a developer selling 120 units cannot discount the way an individual seller can. A $100,000 concession to one buyer becomes public comparable data and reprices the remaining inventory. The structural incentive is to hold the price, which is precisely the incentive an EB-5 lender wants the sponsor to have.
Phase pricing is expected to escalate, with Phase 1 being the least expensive. Rather than discount, Beyond International Group investors are offered the KAINANI Founders Circle: application plus proof of funds secures priority unit selection ahead of the public release, at first-phase pricing.
The buyer: who typically buys these units?
Repayment depends on absorption, and absorption depends on the buyer pool.
- Buyer profile: 90–95% from the U.S. mainland, weighted to the West Coast — not the local workforce.
- Purpose: second home, retirement home, or investment property.
- Age profile: predominantly 55+, many 65–70+.
- Priorities: wellness and longevity — the amenity program is designed around this profile.
- Financing: roughly 60% all cash; financing buyers typically borrow half or less.
- Rate sensitivity: low.
- Absorption estimate: 3–4 units per month (independent analysis).
The defining characteristic of this cohort is that it has more money than time. These buyers pay for convenience, luxury, and proximity to family, and they transact on preference rather than on financing conditions. The STR entitlement widens the pool further. The same unit works as a second home, as a pure investment, or both. Statewide context supports the demand base — Hawaii draws 9.5–9.7 million visitors annually, and in 2024 out-of-state buyers accounted for 20% of single-family and 31% of condominium transactions statewide (UHERO).
Carrying cost: the lowest property tax in the nation — and why it is structural
Hawaii's effective property tax rate of roughly 0.25–0.28% is the lowest in the country, and it is not a temporary incentive a future legislature trims. Every other state funds K-12 education substantially through county-level property taxes. Hawaii is the only state that funds its entire K-12 system at the state level, through state income tax and general excise tax. Because Hawaii property taxes are not carrying an education system, the rate is structurally low.
For a buyer underwriting a short-term rental, low carrying cost improves net yield, which supports what a rational buyer will pay — and therefore supports the sales proceeds from which EB-5 capital is repaid.
Credit: translating market scarcity into credit protection
The above matters to an EB-5 investor for one reason: it determines the reliability of the repayment source. Beyond Paradise 1 is structured as a senior secured loan, and the collateral is equity in the entity that holds the land and is constructing the buildings.
- Divisible collateral. A hotel, a senior-housing facility, or an apartment building cannot be liquidated in pieces. For-sale townhomes can be sold unit by unit — which is why Beyond International Group consistently prefers for-sale product.
- Continuous cash recovery. Phased construction with rolling sales means repayment is fed by an ongoing stream of closings rather than a single refinancing or portfolio sale that either happens or not.
- Meaningful cushion. On the sponsor's analysis, unit pricing would need to fall on the order of 30% before EB-5 investors begin to take a loss — a decline Watt Group has not experienced across 45 years of building in Hawaii.
- Short duration. A 3+1+1 year loan structure with a 2.5-to-3-year target repayment drawn directly from unit sales proceeds. Earliest repayment is modeled at 30 months against a completion target of roughly 41 months.
The market case and the credit case are the same case: an entitlement that cannot be reproduced, in a supply-constrained market with no new competing product, selling a differentiated asset to a cash-heavy buyer pool, with a sponsor structurally motivated to defend price.
Status: where sales stand today
Hawaii law requires that new condominiums be offered exclusively to owner-occupants for the first 30 days of sales — no investors, no second-home buyers, no vacation buyers. That window ran from July 22 to August 21, 2026, during which the project was legally prohibited from writing contracts with its actual target market. Early sales figures should not be read as a demand signal.
As of the August 2026 webinar the team was maintaining a prospect list of 109 buyers on weekly outreach, had completed the 133-person broker tour, and had hosted its first investor site visits — while being unable to execute a contract with any of them. Pre-sales marketing to investors and second-home buyers opens following the owner-occupant window, with first sales expected between mid-September and mid-October and Phase 1 (Buildings A, B and C plus the amenity center) targeted for completion in Q1 2027.
Talk with our team
Beyond Paradise 1 offers a rural, SDIRA-eligible EB-5 investment with a short repayment target, a senior secured position, and layered protections — in a market where the supply constraint is legal as well as geographic. Partial participation is available from $300,000, and retirement capital already held may be the fastest route to filing ahead of the September 30, 2026, rural set-aside deadline.
Schedule a 1:1 consultation. We will walk through the project, the collateral and repayment mechanics, funding options, and what a properly prepared I-526E looks like in a specific case.
This article is for general educational purposes and is not tax, legal, immigration, or investment advice, nor an offer to sell or a solicitation to buy any security. EB-5 investments involve risk, including possible loss of capital and the risk of petition denial. Projections, absorption estimates, pricing expectations, and repayment targets are forward-looking and not guaranteed. Broker commentary reflects the opinion of the cited broker. Pending legislation described here is not final law and may change; regulatory outcomes are subject to county action. SDIRA structures must comply with IRS and USCIS requirements, and outcomes depend on individual circumstances. Any investment is made solely through the official offering documents and is limited to qualified investors. Consult your own immigration attorney, tax advisor, and financial professional before acting.