So I'll pay for the fridge or other personal property items to help them get out and settled somewhere else. 

I'd add in Capital Expenditures to the expenses, unless your HOA covers replacing items like a fridge, a door inside, etc.

As well as the fridge.

The only updates to the property I have done is replaced the furnace, fridge, and dishwasher.Would it be best for me to use my heloc to add bedrooms to the basement or go the full legal suite route to generate more rental income from this property? 

Washing machines (2) (lost the clutch & main pump <1yr old), fridges (2) one had 3 new boards installed until we gave up & sold it, stoves (control wiring faulty & one ceramic top cracked by itself) & dishwashers (entire pump mechanism failed < 1 yr old).

Always check behind the fridge.

Also, our fridge is leaking and our water randomly shuts off and we barely get hot water?

Instead of a $300-$600 reduction in rent yearly see if they'd be cool with the same rent and a new fridge, oven or dishwasher. 

Pulled out fridge and dishwasher and treated behind.

They want to see your stainless steel fridge and your updated bathroom.