I think all of that works out the way you think it does aside from the uncertainty of expense costs. What I'm describing though is the middle case between your two example extremes of not buying the property at all (netting you that 7.3MM number) and doing the buy-to-let thing (the 11.4MM in your example), where you get a normal mortgage but still invest the remaining cash flow.

If I'm not failing my math somewhere, using your numbers for the loan value and rate, that looks like this:

If you got an ordinary 30yr fixed mortgage, I'd expect the interest rate (if you're getting 4.2% on an interest-only) to be around 3.2%. This puts you at about 36k/yr plus your estimated 60k expenses for about 69k cashflow. If you invest that over thirty years, you end up with about 6.7MM and a paid-off property plus that same 5.3MM you cite as the estimated property value for an end result of about 12MM.

You can probably even beat that with a 15yr fixed since those are even lower interest.

Of course, if I'm wrong about the interest rate this whole example falls through, but I think it's something you should look into.