He says that this property should be easily sold between 200 to 225K.I asked him that some comps are around 140K and he mentioned that we will do some high end rehab with some modifications(adding extra bed room) which should give an ARV ~225K.

Part will depend on the price range you're buying and selling....under $200k they're earning their money....under $100k, you need to pay me extra, no matter how many you do.  

Now, SQUEEZE $200k out of that extra $100k!

The challenge with out of area is lack of local knowledge & difficulty managing from a far.

Just for some extra money to later invest?

I'm having difficulties finding a lender that would do a cashout refi on a property I just rehabbed

He required a $5,000 deposit and then a higher monthly payment with the "extra" applied to buying down the purchase price.If the buyer defaulted, he would keep the $5,000 deposit and he had the monthly payment that was higher than it would rent for.

We don't know your numbers, so can't say if it is worth it, but it probably isn't worth an extra $50K/unit, if it's an extra $50K spread across all 8 units...maybe.

Without giving them any type of written warning for these issues, you may have difficulty making them leave if they challenge it. 

Is there a way to figure out how much extra people charge for average properties in a good location vs  average location?