We have also read that some investors roll the dice here and do the quitclaim process and hope this doesn't happen - seems very risky? 

@Daniel Guerra I think @JD Martin did a good job explaining why it's risky to pay up front.

This is a very risky strategy.

Buying a home at auction is one of the most risky forms of real estate purchasing (this varies widely on the style of auction), so if you'd be putting said investor in a spot where they COULD make $30k for the risk they take on, but then that $30k is eaten up with the inspection, subsequent repairs and replacements, and holding costs then that's a sticky wicket.In short if you can truly guarantee the investor a certain return, it's worth a conversation!

On thought is to flip a property, although this seems like a risky time in the market cycle for someone to try a first flip.I have been approached by a company that seems to have quite a lot of experience flipping properties and my first conversations with them have been very professional and raise no red flags.That being said, I am also new to this area and have quite a lot to learn before putting these large quantities of money in the hands of another.

My goal is to eventually reach $5,000 a month in passive income.My thoughts: In my opinion, buying a property solely for the purpose of expected appreciation is very risky, but they can pay off well if you win.

If there is significant upside, it may be worth the risk. I

From my experience in insurance, the only risk I came across was with asbestos siding.  

If you went with the 7 unit first, your cash would be stuck in there longer, although it is a less risky investment being that it is stabilized. 

The renovation piece of the BRRRR strategy makes it a significantly more time consuming and risky endeavor (you do get paid for that time and risk in additional profits though).