Cockatoo dwarfs, like most dwarf cichlids, are bottom-oriented. This means the footprint of the tank is much more important to them than the overall water-holding capacity. A long, low tank is preferable to a high or display-type tank. In other words, a 20-gallon (76-liter) long is preferable to a 20 high, and a 30-gallon (113-liter) long or 33-gallon (125-liter) extra long is preferable to a 29-gallon (110-liter). A “breeder” style tank would be even better. My favorite tank for a group of cockatoos is a 30- or 40-gallon (113- or 151-liter) breeder.
Cover the bottom with a thin layer of fine gravel or even sand. Add a couple of pieces of driftwood with epiphytic plants like Anubias or Java fern attached, a couple of caves (new ceramic or plastic flower pots or even coconut shells with a hole cut in them), and a clump of Java moss.
Choose whichever filter you prefer, as you are more likely to service one that you like and are comfortable with. I use sponge filters or mattenfilters in all of my tanks, even my 125- and 135-gallon (473- and 511-liter).
As I mentioned earlier, there is no need for a heater as long as the room temperature doesn’t go below 60°F (15°C) for any length of time. If you absolutely have to have a heater, set it for 72° to 74°F (22° to 23°C).
As said before, your local water is probably fine for the very-adaptable cockatoo apisto. Instead of focusing on hitting an exact pH or hardness number, realize that in the wild, these numbers fluctuate throughout the year and hitting an exact number isn’t that important for cacatuoides. What is important is to do large, regular water changes to keep dissolved organic compounds and nitrogenous wastes in check.
I like to do a 50-percent water change every week to 10 days, though with my travel schedule, that sometimes stretches out to once every 30 days. But with just eight cacatuoides and some small livebearers as dithers in the tank, the bioload is very light and doesn’t build up very quickly in a 40-gallon (151-liter) breeder.