If it was bad enough, I would even consider using the current pandemic in my favor by having folks sneeze, cough, etc. while viewing the property to increase the discomfort factor.As a rookie landlord, I haven't had to deal with this type of situation before and hopefully won't have to. 

@Garrett Hawk I don't remember the exact words, but this was spoken to the effect of: Success can be linked to one's tolerance to risk and discomfort.

This is because cognitive dissonance creates mental discomfort if the outcome of the study yielded a different result.

I have struggled with the thought of just raising the rent but just being aware of him sets off strong feelings of discomfort which I cant seem to let go.

You have some discomfort and clearly don't want to rent to them, I think you need to ask yourself why? 

In those places, it tends to make more financial sense to move into heavily shared housing, endure discomfort, and pay the minimum possible rent while saving up your money for your investments, especially if you find a way to live very near where you work in order to be able to minimize or eliminate transportation expenses, the second-largest expense of the American household.And then, there are most places, places not like the extremes in housing-cost cases that Steel Valley in Pennsylvania or Silicon Valley in California represent.

.- - - - - - - - - -PET AGREEMENT  (Addendum to Rental Agreement)The Month-To-Month Rental Agreement (the “Agreement”) dated_______________________ between __________________________________________________________________________, as Landlord and ________________________________________________________________________, as Tenant of real property located at _______________________________________________________, is hereby amended to include the following terms and conditions: The rental agreement specifically prohibits keeping pets and animals without Landlord permission; Tenant agrees to follow these terms and conditions in exchange for permission to keep a specific pet:Condition for keeping a pet:Tenant agrees to pay additional rent of _____________ per month for the privilege of keeping this pet.Tenant agrees to pay additional security deposit of ______________ for the privilege of keeping this pet.Name of pet: __________________________Description of pet: _______________________ (type, breed, color, age)Veterinarian: __________________________Emergency Caretaker: ____________________Tenant agrees to:1.Provide proper care for the pet in accordance with veterinary recommendations or ASPCA (American Society for the Prevention of Cruelty to Animals) guidelines.See www.aspca.org.2.Adhere to local ordinances, including leash, vaccination, and tag/licensing, requirements.3.Clean up after the pet and dispose of pet waste properly and quickly.4.Not to leave pet food or water outside the dwelling, as it could attract other animals.5.Not to leave the pet unattended for any unreasonable periods of time.6.Keep the pet from being noisy, aggressive, or from causing any annoyance or discomfort to others.7.Immediately remedy any complaints that arise from pet behavior.8.Immediately pay for any damage, loss, or expense caused to others by the pet.9.Provide pet with regular health care, to include inoculations as recommended by a veterinarian.10.Spay or neuter the pet when it becomes of age to do so.11.Arrange for an emergency caretaker for the pet.Tenant agrees to indemnify, hold harmless and defend Landlord against all liability, judgments, expenses (including attorney fees), or claims by third parties for any injury to any person or damage to property caused by Tenant’s pet.Landlord reserves the right to revoke permission to keep the pet should Tenant break this agreement or provide false or misleading information.

If the thought of discomfort is too unreasonable for you then maybe your goal isn't really that important to you.

People tend to justify the newer amount when they tie it to something of value in their mind and find it discomforting when they can't do the mental gymnastics of a bigger/nicer home.

Not 'everyone' can just hold cash and wait, that is a small percentage - even of our investment community....Any slight downturn combined with a rise of interest rates will cause a lot of folks to stand back due to fear and discomfort.