However here they paid you in full in advance to fulfilled their obligation on the lease. 

I may be misreading this, but from my experience of human nature and working with teenagers, if you see this young man as a "punk" or "jerk" and treat him like one, he'll fulfill that role.

Given that I will be considered self-employed and will initially not have income (or at least not income that is steady or predictable), I will be having my parents co-sign the FHA loan to fulfill the income requirements.I clearly have sufficient capital to not only fund a 3.5% down investment, but to also make the subsequent mortgage payments.

Get ready for a fun and fulfilling journey - the obstacle is the way, stay with it!

Yes, fulfill your end of the agreement.

From my understanding if the tenant does not fulfill the agreements in the contract then you can withhold the security deposit. 

Since contract for deed (when done properly) does not get recorded, nor does a deed get transferred to the purchaser until the contract is fulfilled, you will not have to "foreclose".You will, however probably have to do an 'ejectment' (in simple terms a more complicated eviction) if the purchaser will not voluntarily move out.  

After you fulfill the occupancy requirement.

With a land contract the buyer agrees to fulfill certain obligations (like pay a certain amount of money) by a certain date before the seller will transfer title to them.

Condo fulfills several criteria1. cheap within the price range with no mortgage2.Easy to manage3.