With the rents being below market and with minor increases, the value seems to be there.

The increases have been out of this world.

Hi!

So my hometown is a very small up and coming neighborhood with houses that range from 250k -450k. I am 35 minutes outside New York and 40 minutes from jersey shore. Next year they are launching a ferry service i...

Allow him to stay for an increased rate that makes it worth your time, somewhere around 25% or higher.

Does it actually work and increase profits without turning off potential guest? 

Your equity is reducing your possible returns not increasing your cash flow.If your father has no use for additional income he could leave it where it is and not care if it is impacted in a market shift or he could pull it out and invest in a income fund or a REIT. 

In may of this year I was going to increase the rent but I gave him a chose to pay $50 more per month or if he signed a two year contract I would keep the rent at $850/month.

The fact that housing has increased much more than rents historically indicates that rent appreciation will be greater than property appreciation for a while. 

Rent is at the market so not looking to increase for this term. 

I'm working as an Insights Strategist during the day, putting in a few hours of marketing consulting work on the side during the week, and studying up on real estate investing on the weekends (and whatever time I have left over during the week).Having worked in the finance industry for the last couple years, I became increasingly aware of different types of investing vehicles, but never really considered real estate investing until I moved to Miami this last July.