You're trying to keep it under $500.00? Lotza luck there, seriously. A decent .21 isn't cheap which in itself would blow most of your budget.
I'm building the boat that Mark is probably talking about. The kit is $109.00. You can get a Zenoah clone from Bruce at
www.gizmomotors .com for just under $100.00. Zippkit's Easy-Vee is better suited for a stock gas engine. His hardware kit will kind of blow your budget though at around $350.00 which is cheaper than the name brand stuff like Speedmaster. You still need a radio system You can pick up a new Futaba 3-channel radio system (minus servo's) for $70.00. Add in building materials like glues and paint and it adds up even further.
In the long run gas will be cheaper when you consider the price of fuel, glow plugs and support equipment.