Therefore instead of expanding our portfolio to increase cash flow we are looking at reducing debt to increase cash flow. 

No PMI reducing CF.Negatives: You cannot purchase "investment" property, you must owner occupy.

The rate of return on your equity is usually far larger than you could expect to earn investing that money in other ways.In fact, many investors deliberately move every few years just so they can purchase using friendly owner-occupant mortgages, improve the property while occupying, and add to their portfolio by moving out.Now, what about selling?

He is looking to approach the lender with a reduced payoff.

Now that you have the knowledge and presumably some money to work with, the key is to pick one strategy and go all in with it (at least for now).Here's one option for you: You already both have steady paychecks to fund your current lifestyle, so more income is not necessarily the issue right now, first you may want to focus on reducing your expenses.

@Jessica RamseyFlipping(buying and selling inventory) is ordinary income that will be taxed at your marginal tax rate, state income tax and self-employment tax.Income earned through a flip is not eligible to defer the tax using a 1031 exchange."

I know that I can get a property manager and that would reduce the stress of landlording, but then I feel like I would stress about the actual real estate and something breaking or going wrong.

I should add that he is saying this because real estate is not our primary source of income, we still earn more from our day jobs.

I originally bought this property to offset taxes during college years while earning a six figure income

I have been suggested at looking at 4-plexes to fix while earning equity.