You can make your criteria as strict and specific as you like, as long as you don't violate any fair housing protected groups. 

We have strict laws here regarding SD's

Devon,Strictly speaking you don't need a college degree to do real estate.If the only reason you don't want to go to college is because you think it's "worthless", you've got the wrong reason. 

He self-manages them but after being burned once, he has been strict with his rental criteria so tenants have typically been highly educated, and responsible.

Set strict qualifications and do not deviate from it just to get a tenant in there.

You need to pay attention to your reinvestment requirements as allocated when you sell but your purchase doesn't have to conform to a strict %. 

-The condo is strictly a rental and is valued around $70k-The duplex is a rental and a owner occupied.

If the partners agree to specially allocate one item (for example, capital gains) 80/20 for economic purposes per SEE safe harbor, the corresponding tax amounts must also be allocated 80/20.However, IRS has a framework that can reallocate the partnership items based on the “ partner's interest in the partnership” if IRS determines the method of sharing the partnership items lacks the “Substantial Economic effect” (SEE) To meet the SEE, there are strict rules to maintain meaningful capital accounts including Deficit Makeup Requirement for those accounts.With the requirement, the partner must at some point contribute sufficient capital to eliminate the deficit, and the partner has the burden of the loss that partnership has and the allocation of the partnership will be respected by the IRS.This is a very high-level summary of the rules and is not comprehensive. there are many exceptions as well.Since the substantial economic effect, safe harbor allocation rules are complex and requires considerable additional recordkeeping, it's easier to follow PIP standard. 

I was hoping to possibly hear which brokers strictly work with REO's?

I like it, I use it strictly as a tool!