., rate of return on deposit rather than fully asset value.  

Perhaps thats how they have become so rich, by holding lots and lots of DEPOSITS with bids.Do they even have agency with the owner of what they are auctioning (ie the bank that has just foreclosed on the property or whatever)?

If you can afford a $15k "SUMMIT", you should consider instead, affording it as your deposit on a REAL deal (but before you buy, you can post your numbers-analysis right here to bounce your ideas off - just like you have with this Thread)!

If you have a great deal ask for a high amount non-refundable deposit e.g $10,000 people with money and are willing to do deals will pay.

Even though this tenant was Section 8 they have to pay the full Security Deposit along with their first months rent. 

You also need to separate out the estimate items that are tenant damages that you can deduct from the security deposit; there is probably some time limit during which you must return the security deposit, and with that you would provide the itemized repair bill showing the security deposit deductions.

Should I require a deposit of any kind? 

You can have an inspection period but HUD expects as an investor you already know what you're doing so you can't leave the contract without losing your deposit.

Would you keep a "Pet Fee" out of the security deposit?  

They sign a contract on their new house, or put down a deposit on a rental.