We live in a paid for home, should we refi or new mortgage?

[Wesley Cook]

Hello, everyone!  My wife and I have recently paid off our home and are really interested in getting started with investing in a rental property.  We are currently leaning towards buying a duplex or a multi-unit property, but we are a bit unsure what our best financing option would be.  We want to eventually acquire more than just 1 property.  Our paid for home is worth about $200k and we have been told by our previous mortgage lender that we could just refinance for $400 and then have the investment property paid for in cash.  The problem we foresee with this is that we don't want to lock up all of our money in the first rental property and not be able to have money for the 2nd property when the time comes.  Taking out a new mortgage on the 1st rental property would have a large closing cost ($2,500), so we are trying to work out ways to avoid those high closing costs and would not have the 25% down payment right away.  Anyone have ideas?  :)  Thanks!