I am currently doing a rehab on a foreclosure. 1300 sqft SFR. The plumbing on this house is all old galvanized pipes. I got two quotes from plumbers which one is to replace the whole thing with PEX and doing drainage,...

We then get billed that $4100 balance.Something was up, we didn't just increase our monthly water consumption by 4,000% all willy nilly. 

Once your credit is stable and you begin to increase your income and savings THEN worry about real estate (or perhaps invest some money in index funds/stocks to begin as well).

By doing this, I figure I can significantly increase my ROI. 

If the 165 ARV is based on the bad layout, you could compare the cost of a floor plan change to how much it would increase the ARV. 

One thing I'm not sure of is location in this case, I suppose I could either look in a well established area and expect equity to increase through remodeling or in a less desirable area that I'm gambling will attract more attention in the future.

There are plenty of tips and tricks out there but in the end for STR's it all comes down to creating a valuable experience for your guests....all success flows directly from that but you can certainly increase your bottom line by optimizing processes and reducing costs when possible.  

At the last minute he decided to increase value by adding a chandelier, it almost detailed the project, hilarity ensued, and in the end they got it installed.

There's nothing wrong with increasing the deposit during renewals.

My thoughts are that by setting all the low cost/free marketing efforts in place it allows me to tweak my system for handling leads before I increase the volume.