Best to think about your goals and objectives and maybe share those and others can help match the options with your goals.  

These are fewer in number than you think, but yes it's a good match for them.

Things I did right:1) I was able to market it well for the time I had and had a list of people who wanted in if my first group didn't send in their security deposits.

It would be no different than any other tenant - lease & security deposit. 

If so, you can usually charge rates that match campus apartments, but you will need to furnish the apartment. 

In the meantime we spoke on the phone about a $15k deposit upfront to lock the property up this year.

There are a lot of great markets out there (there are no Holy Grail) and there is always another deal, ultimately it's about getting started with a property that matches your goal more so than the geography of it.

You will need to get an estoppel letter from the tenant and signed by the landlord  saying everything is correct in the lease including security deposits and anything that was a verbal agreement( discount on rent for mowing yard). 

I am not comfortable to proceed with this purchase so what is your advice to me to withdraw this purchase agreement and to get back my earnest money deposit from the Auction company?

Everything written here matches what I've read elsewhere, there is some risk because you're also dealing with a HOA.