That said, I will seek higher margins for properties that are more expensive within that market, as risk increases as you move to properties fewer buyers in that market can afford.

One consideration with all this is to avoid getting hit with capital gains taxes.

Your dad's credit score will increase. 

The time may increase on Inspections but a Stop work order ,for not filing a building permit ,will be greater.

Can the rates increase at a dangerous rate since they aren't fixed?

I know this is a business to make money, but if they were to move out or you had to evict because they can't afford the increased electric bill and the rent, then you'd be out even more money with vacancy and turnover costs.

We've increased rents on 2 of the other 3 units and soon to be all 3 of the other units.

One last consideration.

This can affect the feasibility of collateralizing your hard money loan, and the refi (you might need two, or three, loans instead of one, which not only increases the difficulty of getting the refi(s) through underwriting, but could mean 2-3 sets of origination and closing costs).

I'm about to approach the tenant with a new lease / terms with the "baked in" escalator rent increase.