I have a two story house in Arizona. I have one unit for downstairs and one unit for upstairs. The unit upstairs has one thermostat to control all 4 rooms. The thermostat is located in common area where there is no duct but has 3 returns. This area is usually hotter than rooms. When I set the temp at a certain level, the master bedroom is very cold and other two rooms are warmer.

Is there a way I can have two thermostats for upstairs? One in master which control only master area and one inside one of the rooms so that rooms get better cooling? What kind of money am I looking to spend for this?

Is it a bad design that they put thermostat in the area with returns? Should it have been elsewhere?

Yes to the two thermostats. You will have to have a electric powered damper installed.
Before doing that and spending big bucks you might try a close the duct dampers if you have them or adjust the discharge grill flow lever to see if that will work for you.

Thermostats near the returns are sampling the air in that area to operate the thermostats. Not a big problem but no as nice as separate room thermostats.

You might also call a local professional HVAC company and get there take on your situation.

go with what hvac1000 said i toataly agree with him