If you have had it a few years I would imagine the value has increased substantially. 

Also, due to increased liability exposure property insurance premiums is adversely impacted causing fewer and fewer building owners to seek out ATM tenants.

•Not a rental value booster – Unlike in higher-end rentals, including appliances doesn’t significantly increase rent in C-class areas.

Over the years a completely remolded the house and mobile home and made improvements to the lots and increased the rents to $2,350 per month.

What Nathan said.You are following the red herring of the (real or imagined) roach problem, but the tenant just told you they cannot afford a $35/mo. rent increase in an under market rent apartment!

The BEST method for real estate investing is very simple: increase earnings, reduce expenditures, save, and invest from your own funds.You should focus on increasing earnings and learning how to manage your budget.

But with a co-living setup, renting out each bedroom separately at $850 per room could generate $4,250+ per month—a 70% increase in rental income. 

Possibly; but there's nothing out there from recent years associating it with any actual increased risk. 

It’s too soon tell but from what I’m seeing the hit on the Federal workforce is also impacting contractors throughout the DMV… I expect panic selling which increases inventory, however, with higher interest rates, which will likely continue upwards if tariffs & deporting our cheap labor comes to fruition, first time homebuyers are shut out.  

The slow and steady approach is fine for this property but it feels like a waste to sit on a low performing asset and assuming rent increase is a strong enough lever to pull on for FI.