The bad location, may get you a 10 cap on paper vs a 6 cap for the good location, but the value you can add, increased rents and being able to actually collect rents will make up for it in the end

He is now claiming material price and labor increases over 6 months to the tune of $40000 (total project price is $292000).

This is a double edged sword, if things turn south it can be just as bad.Refinance is best used in growing market, on top of that the tenant is paying off the principal, So even if your cashflow is low you are increasing your equity each time principal is paid. 

How often does your rate increase/adjust? 

The appreciation has been nice, but need to increase the monthly cashflow of the properties.  

I might be able to follow a similar path to increase value.

Last year for our FL properties VRBO produced 55% of our bookings, Airbnb produced 15% (increasing each year) and the rest was produced by Homeaway (9%), TripAdvisor (7%) and repeat guests (14%).Last year for our CO property VRBO produced 64% of our bookings, Airbnb produced 2% and the rest was produced by Homeaway (11%) and repeat guests (23%).I find the differences between the two locations interesting. 

However i am curious if we decided to replace both concrete pads, if it would significantly increase our appraisal value for the HELOC we are looking to get?

I have my doubts that $30k worth of work will add $120k in value, it will likely either cost much more to do the rehab or the value increase would be much less. 

I attended the FHA home owners education class and received the certificate of completion, so I am working with the lender on the 3.5% down and down payment assistance, so I have less money out of pocket and can focus more of my funds on renovation and increasing equity.The properties I am looking at either have basements that are finished, or basements that I can finish myself to rent out separately either on a month to month basis, or as an AirBnB, or they have detached garages that are big enough to convert to a studio, or AirBnB.