Here's a revision...any market evaluation should include an examination of market cycle analysis.First of all, it depends on your goals. 

I've never had the nerve to actually do something about it because I never knew where to even start.

Will I have to take the exam in KY?

It is pretty exciting but also a little nerve wracking since this is my first deal but I have already learned so much just from going through this process.

Also quite nerve racking since I'm just starting out, that's all I have.

You could make the adjustment and if they didn't like it, they'd move out, which would also solve your issue.I would examine the following:Do they take good care of the propertyIf they moved out, how much would I have to rehab and spend to get market rentWhat are my short term goals for the propertyWhat are my long term goals for the propertyWill keeping that one un-rehabbed keep the value of your rehabbed one downHow much overhead do they create as-is?  

You need to rebuild the credit, a counselor (not a bankruptcy attorney) can address this route.Learn RE from credible sources, RE schools, take a local college course, get a text book that Agents use to pass the exam, in 3 weeks you'll be ahead of most on the internet or chasing some system.

If you do not already know how you should first learn how to examine deeds, tax records, zoning for the property, assessors records anything and everything that will tell you if what is there is a legal unit and zoned for its current use.

Before we get into the developement part, lets back up a second and examine the deal.

You shouldn't make an offer on this type of property until you have examined their rent roll, P&L and other financials for the past 3-5 years, minimum.