You might be better off saving some more money or moving to another area (if possible) where prices are lower, even in the nicer neighborhoods. 

Most of our purchases are in lower end areas but we rent out to HUD paid rents or Section 8 for most of our rentals.

If you have a RE license/real estate is your full time profession, you pay reg taxes on profits from selling real estate- I buy and hold for at least a year and sell some flips periodically so that is not my main business and I pay a much lower tax rate as mine are capital gains

You will find that the ROI tends to be lower percentages in nicer neighborhoods ( A & B). 

Can i charge 150$ as an application fee but set rents at 10% lower than market to get the best possible tenant and profit off the rest?

If you can find a way to remove the tenant and move in yourself for the first 12 months you can take advantage of FHA loans which cater to lower credit and allow 3-5% down. 

I work in a tire manufacturer plant and was saving up, working tons of overtime, all to invest.But after projecting forward it was going to take a very long time for me to get enough money saved up to invest in anything outside of lower end stuff (I don't want lower end properties and headaches that comes with it)So I changed my thinking into how can I make more faster.

You stated the facts yourself - the current tenant is not paying a lower rent on time.

The idea is to complete the renovations, get it filled up with tenants, and then refinance to a lower rate lender.

It lowers the number of potential buyers that can afford to purchase a house and the value of houses.