I'm 19. My Mom gave me an old property. What should I do?

[Thomas Kyder]

My Mom is financially well-off and gave me her old house. It has knob/tube wiring, and tenants (family friends) that have been there for years (and plan on staying). The house is beat up, but not terrible. New paint and floors would do wonders. The cashflow is about $500 a month from it (counting expenses. it's fully paid off so no mortgage.)

The house is in a bad part of town. I'd say a step above Warzone level. It's worth maybe 35-50k because of knob wiring and the area. It will most likely not go up in price, unless something crazy happens.

I think I would like to sell/refi the house and put the money into an FHA multifamily where I'm going to school at. I'll be there for the next 5-6 years (getting a masters) so I think it's a good idea.

My Mom has offered to co-sign my FHA loan. She has no debt whatsoever and good credit. I've been able to get insurance on the house despite the knob wiring.

I am attached to the house from growing up here and I'd rather not sell it. But it seems silly to refinance if the house is not going anywhere and has lots of deferred maintenance. The $500 cashflow is pretty stable, at least for the next few years. But would be very hard to rent out again, I think. 

Here are my questions--

1.) Should I sell the house, or refinance it?

2.) The tenants are on normal leases. Should I put anything that specifies the house isn't in the best condition? Any minimum standard of living that I should look into/be aware of?

3.)Should I fix it up before doing either of these? Repairs are roughly 5k, but up to 12k if I replace wiring.

4.)Will refinancing this house make it hard to get an FHA loan for the other property?

I'm new to the forum but read articles on here quite frequently. Thank you so much to anyone who helps.