The big question I have is how to adjust the value of a property based on proximity to a busy road or other undesirable feature?  

Homes in the area are selling for 200-225$ a sq ft, and the size of the home makes it pretty undesirable so we decided to hire an architect to come up with plans for a second story addition over the exsisting house.

They are selling something that is so undesirable that they practically have to give it away.

Furthermore the people who would apply for a unit with above market rents may have issues renting and cannot rent units set at market (such as evictions) and could be undesirable tenants. 

Buying a bigger property with the proceeds would make your new purchase contingent on the sale of the current one, that would be pretty undesirable in a seller's market.  

Retirement or re-deploying capital vs unloading undesireable asset.What's driving the local economy?

Can you think of any other type of undesirable tenants (other than convicts, bad credit, and pet owners) where it's legal to discriminate against them?  

Charging the high end of what Rentometer shows keeps a lot of undesireables out, getting the ones that can afford it.

@Cynthia Miller It sounds like you've picked a poor location, with properties that were undesirable, subsequently the tenant pool is terrible.I just wonder what you purchased these homes for considering you can get closer to Downtown at Gratiot, Woodward, Michigan, Grand River duplex, triplex, etc for less than $30K.If you bought these "long ago".  

Also, he's inferring to Section 8 people as poor or undesirable, and having negative effect to the neighborhood.Anyways, congrats on your purchase.