Dont touch your retirement.The most important rule of investing/ wealth building is: "Don't spend the principle."

Here's my scenario: Right now, all of our income comes from my employment salary, and from investments (rental income from RE and Stocks).  

He has a few rental properties but does most of his investing in the US stock market.

Good for you; that's legal as you are a principle in the transaction. 

1031 Exchange for greater than one yearFor less than one year the capital gains taxes are the same whether it is stocks, etc.

I set aside $2k for annual maintenance but think it would be less than this.One thing that is a blessing and a curse at the moment is the interest rates at the moment are great approx 5%.If anyone wanted to check out the property I'm happy to share as it is listed for sale publicly (not sure if it breaks forum rules is all).When I run it through my own calculator taking into account principle paydown it doesn't really cashflow well but will pay itself off and will much money (as long as it doesn't depreciate).Anyone have any thoughts or advice for me?

If you apply that additional cash flow from the debt service savings to the principle amount every month you would be surprised at the time it takes to pay it off.  

I'm using stocks, real estate etc.

Just like a regular mortgage you pay principle and interest right away and the rate is fixed for the life of the loan2.

It is NOT the quality of the residential stock - it is supply constraints.