Question

Arnold has watched television commercials promoting the use of pyramiding as a real estate investment technique. If Arnold wants to try this approach, which action would he take?

a) Selling a property to reduce risk
b) Acquiring additional properties using equity from existing ones
c) Paying off existing mortgages to increase cash flow
d) Liquidating all real estate assets for quick profits

Answer 1

Arnold would acquire additional properties using equity from existing ones if he decides to use the pyramiding real estate investment technique he watched in commercials.

Step-by-step explanation:

If Arnold has watched commercials promoting the use of pyramiding as a real estate investment technique and wants to try this approach, he would take the action of acquiring additional properties using equity from existing ones. This technique involves leveraging the increase in property values (like Freda's house which increased from $150,000 to $250,000, or Frank's house that appreciated from $100,000 to $160,000) to purchase more properties, thus building a larger portfolio. It's important for Arnold to evaluate the risks and seek professional advice before engaging in this or any investment strategy.