I usually filter with the same number of bedrooms/bathrooms/sqft as my potential property and I go right to the same street.

What about (seriously) (2) bunk beds in one of the bedrooms (like an army barracks) , and turn the other bedroom into the office, and do no mods to the house.They are just going to move out eventually anyway.Then take that money and invest it, or give it to them to use.5 bathrooms in a house that size?

Getting on the phone and actually calling sellers to find ones who are motivated to sell their home at a discount in exchange for an easier closing process than the typical process, is the most important thing to do. 

Tiny house situation below 800sf. and the only bathroom is located in the basement.

full rehab and adding bathroom and walk in closet, hallway and bedroom.

Single rooms with a bathroom down the hall. 

Finally, they get back to him, that it was a friend who gave a friend a significant discount.

For example, is it an extra bedroom or bathroom? 

But they have their own living room, kitchen, bathroom, bedroom, office - it's a completely separate space in practice.

They would be sold at discounts but it would be to other investors and a quick process.