If an LLC owns a rental property, can it borrow against the equity in the house to purchase another rental?

My sister and I recently inherited a rental property in PA from my dad who passed away last month. She lives in GA and I am local and will be the one taking care of the property and tenants, but we own the property 50/50. I would like to keep the rental and build a property portfolio off of it. Since it is in... show more My sister and I recently inherited a rental property in PA from my dad who passed away last month. She lives in GA and I am local and will be the one taking care of the property and tenants, but we own the property 50/50. I would like to keep the rental and build a property portfolio off of it. Since it is in both of our names, I was thinking we could set up an LLC which we would be partners of, sell the house to the LLC and then borrow against the equity in the property to buy another rental property and more down the road. There is no current mortgage but, I have heard that banks right now will not loan to an LLC for a mortgage for various reasons. Could the LLC just essentially borrow against the equity, take out a home equity loan and use that as a down payment for a future property? She has given me Power of Attorney, but I'm assuming that if we do not form an LLC, I could only borrow against half the equity for a future property. Is that correct? Any and all suggestions are appreciated!
Update: Loanmaster: The rental property is completely paid for, so I have 50% equity and so does my sister. If we "sell" the property to an LLC that we create, the LLC would then own 100% equity. Wouldn't the LLC be able to borrow say 50% of the equity (HELOC)to use for a downpayment and repairs to a... show more Loanmaster: The rental property is completely paid for, so I have 50% equity and so does my sister. If we "sell" the property to an LLC that we create, the LLC would then own 100% equity. Wouldn't the LLC be able to borrow say 50% of the equity (HELOC)to use for a downpayment and repairs to a future rental property? Or would I still have to sign a personal gauranty, since the LLC would be borrowing against its own equity? If the loan were to default, the bank would be able to get their 50% equity or whatever makes up the difference. Correct or am I misconstruing things here?
8 answers 8