.- Should I keep the policy as is at $24k to just cover my initial investment?

If you purchased the property correctly, the tenant's rent payment will cover the mortgage.

I would only do it if I had the time and they paid me a decent fee to cover my time and an ice-cream cone.  

$79k @ 3.5% would be a down payment of just $2,765 which would leave you ~ $13k for other REI projects (or to cover more costly renovations).

Penetrations/cracks in the building covering: This is common with stucco.

It is very possible that he wants this to cover himself in the event that he sends you leads on Sellers that may be FSBOs or not represented. 

The Numbers:4x 2 bed / 2 bath 1,000 sq ft unitsPurchase Price- $175,000 Appraised at $215,000Term- 25 yearsInterest- 3.625%P&I- $856.79Taxes- $358.83Insurance- $195.00PMI- $119.00Total mortgage payment- $1,529.62Water- $225.00Vacancy (5%)- $125.00Repairs (5%)- $125.00CapEx (5%)- $125.00Gross Rent (3 units) - $1,875.00Almost all expenses are covered by the rental income.

If you need to sell sometime in the near future, you may have the seller's costs covered. 

If it was me, I would suffer the delay.

(Not a live in flip) He also was wondering if he should refi his house, pull 75k out, pay the vehicles off and put the rest down on a new house. rent the original house out and take that money to pay the refi mortgage, the rent would cover the mortgage plus an extra 150 per month ..I’ve been telling him about refining his house and use that towards a BRRRR or some other real estate investing.