Your calculation is wrong because:
1) You don't own the $1.3m, since $800k is not your money. Hence your return should be based on your own capital which is only $500k.
2) Interest only count for the loan of $800k since easier to compare to alternative investments for your own capital of $500k.
3) Considering the above, your actual return on your $500k is much much higher than what you calculated, especially now the loan interest is about 1%, not 1.5%. That is the advantage of leverage, but also the disadvantage of leverage because your loss get magnified!
4) Is it any wonder so many citizens are still buying new launch and using whoever family names they can lay their hand on? They are carrying leverage to a "new art" level to overcome the 60% LTV for 2nd property (while 80% for 1st property), 4 years SSD, ABSD ...!