The majority of people do not want to live in an area with rampant drug activity and gun violence.

Wrong is wrong....and if you are willing to put a little old lady out on the streets, with no relocation assistance.... you're morally bankruptYou should work for a bank, drug cartel, mafia because that is exactly how they operate, it's not personal, it's just business.You are going to make tens of thousands of dollars....why not look for the win/win and make a little less, either doing enough cash for keys to help her relocate and land on her feet OR carry her tenancy for reasonable increases that she can afford, until her inevitable and probably sooner than later end.People DO NOT make your primary business model finding under-performing assets that you evict little old ladies out of!!! 

Happy people tend to be more productive  (assuming the happiness comes from contentment, rather than drugs or denial)  Productive people tend to make better decisions.   

One issue that was a bit different was the crime associated with drug dealing.

Let's take a chemistry course and go "Breaking Bad" and sell drugs till we go to jail.

This place was the eye sore of the neighborhood, and referred to by multiple neighbors as “The Drug House”.

Once you open the door the odour just rushes into your face like drugs

If the fraternity that is living in your house gets kicked off campus by the University for hazing, drugs, etc (it will happen), you can find a new group to get your house back.Rents, whatever they are, are almost always assured by the alumni boards and national organizations, and there is quite a lot of money within the organizations.

Two days later, it was being ran by drug dealers and prostitutes.

Those items have to be taken to the dump or broken down to fit into the small trash bins.If you own the whole complex putting a security gate upfront helps to keep out the drug dealers or people parking at night and also keeps out most illegal dumpers.If the street is shared with other investor owned properties then it might be other tenants dumping trash onto your properties.You need to write into the lease that for trash only certain items are allowed to be put into trash and that putting those other items in that are not allowed is a lease violation.