You need a
Yard-a-Pult
Seriously, take your time, tactical retribution is best. Sounds like this guy will not have a problem overstepping his bounds. Part of your frustration is that the guy has taken the upper hand from you. You can change that, legally.
Cause doubt to his credibility. Don't put it past him to have camera's watching his property too. The advice from others regarding catching him in the act of damaging your vehicles is very tactical.
Have you thought of checking the MI sexual offender list? People that don't like to deal with other people usually have a past. Maybe might be able to dig up some dirt on the guy. Are you sure he is legally licensed to carry a firearm? One call to the PD will get that question answered. Noting to the PD of his gun carrying ways, including the unsnapping of the holster will answer the legality of his possession, and let the PD decide their opinion of brandish. Observe and report, the less you sound like you know what "brandishing" really means will help. Noting that you felt threatened will help set the tone for the PD's response. Make sure the PD knows you have kids you are concerned about.
I had a crazy neighbor across the street at my old house. He would come out (older guy on disability) screaming if you parked in front of his house, even if it was across the street. he would put up no parking signs on his lawn when anybody had a party with guests parking in the street. HE would yell careful threats when they did, like "I can't guaranteee your car will be in the same condition. He was pretty uptight about his lawn, even what's technically the city easement. I let it go most of the time, really since he was home all day and watching his front yard, he was watching my house too. He was neighborly enough to keep an eye on everybody elses yard in sight too..
But... One day my next door neighbor had a truck delivering topsoil (or something like that) and stopped in front of his house. Old coot came out and confronted the driver (driver was just doing his job). Neighbor started to beat on the truck (nothing damaging, but pissed the driver off). Driver got out and confronted him. Neighbor started physical contact, driver ended it by putting neighbor on his ass. Neighbor went into the house and came back with a shotgun. PD got called, Police ended intervening and seizing all of his guns. Neighbor did not get arrested (not sure how) but my wife watched him standing on the front stoop with an armload of gun bags. That event changed my opinion of the guy. There's eccentric, then there's a little crazy. Glad I moved from there. All my current neighbors are damn good neighbors. Dead end street, eclectic mix of backgrounds, everybody seems cool. Being the guy with the welder and the shop full of tools helps build friendship too
