in latest Android Sudio 3.2.1
1- you will see two files with the name 'local.properties'
2- one will be inside folder named 'app' ( app level folder ), Only if you have not yet been able to sync your project. if you cant see it in the folder strucrure in Android studio then physically find this folder in Finder . (right click and reveal in finder in case you use a MAC machine). Make changes here.
3- and other will be inside 'gradle script'
make sure you have same path there . Also make changes here (if you can see this file)
Basically find this file at its physical location in the project folder (physical location ) and make changes
eg. : sdk.dir=/Users/Rakesh/Library/Android/sdk
in both the files .