So $130k mortgage plus $100k = $230k value of townhouse? If that is correct, and you're renting it out at $1750/mo, that falls below the 1% rule-of-thumb so I'd be wary of the long term viability of this investment without more concrete numbers. You claim it nets $750/mo after mortgage and HOA fees, but how much of that $750/mo will eventually get eaten up by insurance, taxes, vacancy, repairs, maintenance, property management, etc? Conservatively, many budget at least 10% vacancy (when it takes a month to find a new tenet), 10% repairs (when tenets break stuff AND long-term big capital expenditures like eventual new floors, new kitchen every 15 years, new HVAC every 20 years, new roof, etc), 10% maintenance (when stuff just breaks), and 10% property management (like hendlefe said, even if you're doing it yourself).
My guess is that once you account for that, your yield will not look as nice as you're thinking.
As-is, your annual "return" on your $100k tied up in the house is $750*12 / $100,000 = 7.5%.
If we factor in a mere $175/month (10% vacancy) additional expense, that drops your annual return on cash tied up to be around 5%. Extra on top of that lowers your yield further.
My guess is that this math doesn't end well.
If your overall yield is less than ~7% (average VTSMX return since 1992), you're investing in a riskier asset class than the stock market with a lower return.
Assuming that is true, I would say sell the townhouse after the current lease is up. You're not actively bleeding money, but long-term it will likely be more trouble than it's worth as an investment.
I'm I'm totally wrong about all my assumptions here, because you already accounted for it all, feel free to punch me in the face.
I can't get two reliable cars needing little maintenance for less than $11K/each.
This I would say is completely wrong. You could get perfectly reliable cars for half that (call it $5k). You could for a lot less too (my cars are worth $2k combined and neither were made this century), but we'll call it $5k for two 2005~2008ish cars.
So based on everything I know so far, I'd recommend this:
Sell the house.
Buy two perfectly fine ~$5k cars that will last you many years (They are out there, I promise.)
Sell both fancypants cars.
Pay off student loans/mortgage if the interest rate is high (3~5% depending on your personal risk tolerance).
Invest what's left in VTSAX.
Relax, be happy, you're doing great.
Optimize elsewhere.
Workworkworkinvestinvestinvest.
Stop working.
Relax even more, and be even happier.