I personally wouldn't go out and purchase a cheap $500 bike, do a bunch of upgrades, and expect to end up equivalent to a $1200 bike. Plus, you'll end up hemorrhaging money doing so, even if you try to be cheap.
You'll find a lot of subtle differences. Brakes were mentioned above. Shocks will be different. Just about every part will be different down to the bare frame, and even that will be different. As mentioned, perhaps differences between bolt-on axles, quick release, and thru-axles. Even handlebars will likely be different.
If you choose to go down that path, look for a good used bike, or frame as a donor, then build to suit your needs. Noting, of course, the slow evolution in components over the years that can also impact your frame.