UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                  For The Fiscal Year Ended December 31, 1998

                                      or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                           Commission File #0-17593

                      Inland Monthly Income Fund II, L.P.
            (Exact name of registrant as specified in its charter)

       Delaware                                       36-3587209
(State of organization)                (I.R.S. Employer Identification Number)

2901 Butterfield Road, Oak Brook, Illinois    60523
 (Address of principal executive office)     (Zip Code)

Registrant's telephone number, including area code:  630-218-8000

          Securities registered pursuant to Section 12(b) of the Act:

Title of each class:          Name of each exchange on which registered:
       None                                      None

       Securities registered pursuant to Section 12(g) of the Act:
                           LIMITED PARTNERSHIP UNITS
                               (Title of class)

Indicate by  check  mark  whether  the  registrant  (1)  has  filed all reports
required to be filed by Section 13  or  15(d) of the Securities Exchange Act of
1934 during the  preceding  12  months  (or  for  such  shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes X  No   

Indicate by check mark if disclosure  of delinquent filers pursuant to Item 405
of Regulation S-K is not contained  herein,  and  will not be contained, to the
best of registrant's knowledge,  in  definitive proxy or information statements
incorporated by reference in Part  III  of  this  Form 10-K or any amendment to
this Form 10-K. [X]

State the aggregate market value of  the  voting stock held by nonaffiliates of
the registrant. Not applicable.

The Prospectus of the  Registrant  dated  August  4,  1988, as supplemented and
filed pursuant to Rule 424(b) and  424(c)  under  the Securities Act of 1933 is
incorporated by reference in Parts I, II  and III of this Annual Report on Form
10-K.


                                      -1-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                               TABLE OF CONTENTS


                                    Part I                                 Page
                                    ------                                 ----
  Item  1. Business......................................................   3 

  Item  2. Properties....................................................   4 

  Item  3. Legal Proceedings.............................................   7 

  Item  4. Submission of Matters to a Vote of Security Holders...........   7 


                                    Part II
                                    -------
  Item  5. Market for the Partnership's Limited Partnership
            Units and Related Security Holder Matters....................   7

  Item  6. Selected Financial Data.......................................   8

  Item  7. Management's Discussion and Analysis of Financial
            Condition and Results of Operations..........................   9

  Item  8. Financial Statements and Supplementary Data...................  14

  Item  9. Changes in and Disagreements with Independent Auditors on
            Accounting and Financial Disclosure..........................  29


                                   Part III
                                   --------
  Item 10. Directors and Executive Officers of the Registrant............  29

  Item 11. Executive Compensation........................................  34

  Item 12. Security Ownership of Certain Beneficial Owners and
            Management...................................................  35

  Item 13. Certain Relationships and Related Transactions................  35


                                    Part IV
                                    -------
  Item 14. Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K..........................................  36

  SIGNATURES.............................................................  37






                                      -2-



                                    PART I

Item 1. Business

The Registrant, Inland Monthly  Income  Fund  II, L.P. (the "Partnership"), was
formed on June  20,  1988  pursuant  to  the  Delaware  Revised Uniform Limited
Partnership Act, to  invest  in  improved  residential,  retail, industrial and
other income producing properties. On August 4, 1988, the Partnership commenced
an Offering of 50,000 Limited Partnership  Units  (subject to an increase of up
to 30,000 additional Units) pursuant to a Registration under the Securities Act
of 1933. The  Offering  terminated  on  August  4,  1990,  with  total sales of
50,647.14 Units at  $500  per  Unit,  resulting  in  gross offering proceeds of
$25,323,569, not including the General  Partner's  contribution of $500. All of
the holders of these Units were admitted to the Partnership. Inland Real Estate
Investment Corporation is the  General  Partner.  The Partnership acquired five
properties utilizing $21,224,542 of  capital  proceeds collected. On January 8,
1991, the Partnership  sold  one  of  its  properties,  The Wholesale Club. The
Limited Partners of  the  Partnership  share  in  their  portion of benefits of
ownership of  the  Partnership's  real  property  investments  according to the
number of Units held.  The  Partnership  repurchased  551.64 Units for $260,285
from various Limited Partners through the Unit Repurchase Program. There are no
funds remaining for the repurchase of Units through this program.

The Partnership is engaged  in  the  business  of  real estate investment which
management considers  to  be  a  single  operating  segment.  A presentation of
information about operating segments would  not be material to an understanding
of the Partnership's business taken as a whole.

The  Partnership  acquired  fee  ownership   of  the  following  real  property
investments:

     Property and Location            Square Feet          Date of Purchase   
-------------------------------   -------------------  -----------------------
Scandinavian Health Spa                  26,040               10/19/88
Health & Racquet Club
Broadview Heights, Ohio

Wholesale Club                          103,000               12/06/88
Commercial Warehouse                                    (sold 01/08/91)
Fort Wayne, Indiana

Colonial Manor                          107,867               06/07/89
Nursing Home Facility
LaGrange, Illinois

K mart                                   84,146               12/29/89
Retail Store
Chandler, Arizona

Euro-Fresh Market Plaza                  52,475               12/31/90
Shopping Center
Palatine, Illinois

Reference is made to Note 4  of  the  Notes  to Financial Statements (Item 8 of
this Annual  Report)  for  additional  descriptions  of  the Partnership's real
property investments.


                                      -3-



The Partnership's real  property  investments  are  subject to competition from
similar  types  of  properties  in  the  vicinity  in  which  each  is located.
Approximate occupancy levels for  the  properties  are  set forth on a year-end
basis in the table in  Item  2  below  to  which  reference is hereby made. The
Partnership's real property investments  are  located  in Arizona, Illinois and
Ohio.  The Partnership  has  no  real  property investments located outside the
United States.  The  Partnership  does  not  segregate  revenues  or  assets by
geographic region,  and  such  a  presentation  would  not  be  material  to an
understanding of the Partnership's business taken as a whole.

The Partnership currently has significant  net operating leases with Elite Care
Corporation ("Elite"), K mart  Corporation  ("K  mart") and Scandinavian Health
Spa, Inc. ("SHS"). Revenues from the Elite lease for the Colonial Manor Nursing
Home, the K  mart  lease  for  the  K  mart  store  and  the  SHS lease for the
Scandinavian  Health   Spa   represents   approximately   42%,   22%  and  17%,
respectively, of the Partnership's income for the year ended December 31, 1998,
approximately 40%, 21% and 17%,  respectively,  of the Partnership's income for
the  year  ended  December  31,  1997  and  approximately  41%,  21%  and  17%,
respectively, of the Partnership's income for the year ended December 31, 1996.

The Partnership has utilized its proceeds for investment to acquire properties.
The leases at certain of  the  Partnership's properties entitle the Partnership
to participate in gross receipts  of  lessees  above fixed minimum amounts. The
Partnership's receipt of such amounts  will  depend  in  part on the ability of
those  lessees  to  compete   with   similar  businesses  in  their  respective
vicinities.

The Partnership also competes with  many  other entities engaged in real estate
investment activities in the  disposition  of  property.  The ability to locate
purchasers for the properties will  depend  primarily  on the operations of the
properties and the desirability of the locations of the operating properties.

The Partnership had no employees during 1998.

The terms of transactions between the Partnership and Affiliates of the General
Partner of the Partnership are set  forth  in  Item  11 below and Note 3 of the
Notes to Financial Statements (Item 8 of this Annual Report) to which reference
is hereby made for a description of such terms and transactions.


Item 2.  Properties

The Partnership owns directly the properties referred to in Item 1 above and in
Note 4 of the Notes to Financial  Statements  (Item 8 of this Annual Report) to
which reference is hereby made for a description of said properties.












                                      -4-



The following is a list  of  approximate occupancy levels for the Partnership's
investment properties as of the end of each of the last five years:

  Properties                   1998      1997      1996      1995      1994
  ----------                   ----      ----      ----      ----      ----
Scandinavian Health Spa        100%      100%      100%      100%      100%
  Health & Racquet Club
  Broadview Heights, Ohio

Colonial Manor                 100%      100%      100%      100%      100%
  Nursing Home Facility
  LaGrange, Illinois

K mart                         100%      100%      100%      100%      100%
  Retail Store
  Chandler, Arizona

Euro-Fresh Market Plaza         85%       95%       95%       89%*      89%
  Shopping Center
  Palatine, Illinois

* Certified Grocers Midwest, Inc.  vacated  Water  Tower Market Plaza in August
  1995. Certified occupied 29,317  square  feet,  or  approximately 56%, of the
  shopping center. This  occupancy  reflects  the  payment of guaranteed rental
  income  received  under  the  original  lease.  (See  Liquidity  and  Capital
  Resources.)



The following is a list of  average  effective annual rents per square foot for
the Partnership's investment properties for each of the last five years:

  Properties                   1998      1997      1996      1995      1994
  ----------                   ----      ----      ----      ----      ----
Scandinavian Health Spa      $ 13.79     13.79     13.79     13.79     12.54
  Health & Racquet Club
  Broadview Heights, Ohio

Colonial Manor                  8.00      8.00      8.00      8.00      8.00
  Nursing Home Facility
  LaGrange, Illinois

K mart                          5.37      5.37      5.37      5.37      5.37
  Retail Store
  Chandler, Arizona

Euro-Fresh Market Plaza         3.96      4.64      4.66      4.18      4.92
  Shopping Center
  Palatine, Illinois








                                      -5-



<TABLE>The following tables set forth  certain  information with respect to the
amount and expiration of leases for the Partnership's investment properties:
<CAPTION>
                                       Square
                                        Feet                           Renewal           Current        Rent Per
             Lessee                    Leased      Lease Ends          Options         Annual Rent     Square Foot 
             ------                   --------   --------------       ---------        ------------   -------------

<S>                                    <C>         <C>               <C>                <C>              <C>
Scandinavian Health Spa,                26,040      12/2004           2/5 years         $359,094         $13.79
    Inc.

Elite Care Corporation                 107,867       1/2001           1/10 years         909,383           8.43

K Mart Corporation                      84,146       7/2013           4/5 years          452,000           5.37

Euro-Fresh Market Plaza:
    Euro-Fresh Market                   29,317      11/2003           2/5 years          109,939           3.75
    Edelweiss Delicatessen               2,000    Month to Month        None              16,253           8.13
    Land of Pets Pet Shop                4,000       3/1999             None              39,240           9.81
    Lim's Dry Cleaners                   1,500      12/2002             None              18,075          12.05
    TLC Medical Center                   1,275      11/2003             None               8,925           7.13
    TLC Medical Center                   1,700       7/2003             None              12,197           7.17
    TLC Medical Center                   2,294      11/2003             None              22,389           9.76
    Donka Chiropractic                   2,500       5/2002           1/5 years           24,000           9.60
    Vacant                               7,889

                                                     Approx.        Annual             Annual Base    % of Total    % of Annual
                                       Number    Gross Leasable      Base      Total    Rent Per         GLA         Base Rent
                              Year       of      Area ("GLA") of   Rent of    Annual   Sq. Ft Under   Represented   Represented
                             Ending    Leases    Expiring Leases   Expiring    Base     Expiring      By Expiring   By Expiring
        Property             Dec 31,  Expiring    (square feet)     Leases    Rent(1)    Leases         Leases        Leases   
        --------             -------  --------   ---------------   --------   -------  ------------   -----------   -----------
<S>                           <C>       <C>         <C>             <C>       <C>        <C>           <C>           <C>
Scandinavian Health Spa       1999-       -             -         $    -     $359,094  $      -             -             -
                              2003
                              2004        1           26,040        359,094   359,094       13.79         100%          100%

Colonial Manor Living Center  1999        -             -              -      927,348         -             -             -
                              2000        -             -              -      946,947         -             -             -
                              2001        1          107,867        970,139   970,139        8.99         100%          100%

K Mart                        1999-       -             -              -      452,000         -             -             -
                              2008

Euro-Fresh Market Plaza       1999        1            4,000         39,240   236,005        9.81        7.62%        16.63%
                              2000        -             -              -      198,549         -             -             -
                              2001        -             -              -      200,413         -             -             -
                              2002        2            4,000         31,898   185,348        7.97        7.62%        17.21%
                              2003        4           34,586        153,450   153,450        4.44       65.91%          100%

(1) No assumptions have been made regarding the  releasing  of  expired  leases.    It is the opinion of the General
    Partner that the space will be released at market prices.


</TABLE>



                                                        -6-


                                      -6-



Item 3. Legal Proceedings

The Partnership is not subject to any material pending legal proceedings.


Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during 1998.



                                    PART II


Item 5. Market for the Partnership's Limited Partnership Units and Related
        Security Holder Matters

As of December 31, 1998, there were  2,056 holders of Units of the Partnership.
There is no public  market  for  Units  nor  is  it anticipated that any public
market for Units  will  develop.  Reference  is  made  to  Item  6  below for a
discussion of cash distributions made to the Limited Partners.

Although the Partnership had established  a  Unit Repurchase Program, there are
no funds remaining for the repurchase of Units through this program.

































                                      -7-



Item 6.  Selected Financial Data


                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

       For the years ended December 31, 1998, 1997, 1996, 1995 and 1994

                 (not covered by Independent Auditors' Report)


                            1998       1997       1996       1995       1994
                            ----       ----       ----       ----       ----
Total assets........... $15,621,400 15,973,079 16,313,004 16,720,422 17,242,725
                        =========== ========== ========== ========== ==========

Total income........... $ 2,071,413  2,148,859  2,108,760  2,072,835  2,109,593
                        =========== ========== ========== ========== ==========


Net income............. $ 1,258,738  1,277,365  1,269,375  1,250,956  1,297,389
                        =========== ========== ========== ========== ==========

Net loss per the one
  General Partner Unit. $    (4,297)    (4,316)    (4,316)    (4,316)    (4,316)
                        =========== ========== ========== ========== ==========

Net income allocated per
  Limited Partnership
  Unit (b)............. $     25.21      25.58      25.43      25.06      25.98
                        =========== ========== ========== ========== ==========

Distributions to
  Limited Partners..... $ 1,653,426  1,653,426  1,703,419  1,703,356  1,756,765
                        =========== ========== ========== ========== ==========

Distributions per
  Limited Partnership
  Unit (b)............. $     33.01      33.01      34.00      34.00      35.07
                        =========== ========== ========== ========== ==========


(a) The above selected financial data  should  be  read in conjunction with the
    financial statements and related  notes  appearing elsewhere in this Annual
    Report.

(b) The net income per Unit and  distribution  per  Unit data is based upon the
    weighted average number of Units outstanding of 50,095.50.









                                      -8-



Item 7.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations

Certain statements in this  "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations"  and  elsewhere  in this annual report on
Form 10-K constitute  "forward-looking  statements"  within  the meaning of the
Federal Private Securities  Litigation  Reform  Act  of  1995.   These forward-
looking statements involve  known  and  unknown  risks, uncertainties and other
factors which  may  cause  the  Partnership's  actual  results, performance, or
achievements to be materially  different  from any future results, performance,
or achievements  expressed  or  implied  by  these  forward-looking statements.
These factors include, among  other  things,  competition for tenants; federal,
state, or local  regulations;  adverse  changes  in  general  economic or local
conditions; uninsured losses; and  potential  conflicts of interest between the
Partnership and its Affiliates, including the General Partner.

Liquidity and Capital Resources

On August 4, 1988, the Partnership  commenced an Offering of 50,000 (subject to
increase to  80,000)  Limited  Partnership  Units  pursuant  to  a Registration
Statement  on  Form  S-11  under  the  Securities  Act  of  1933.  The Offering
terminated on August 4, 1990, with  total  sales of 50,647.14 Units at $500 per
Unit, resulting in gross  offering  proceeds  of $25,323,569, not including the
General Partner's contribution of $500. All  of the holders of these Units have
been admitted to  the  Partnership.  The  Partnership  acquired five properties
utilizing $21,224,542 of capital  proceeds  collected.  On January 8, 1991, the
Partnership sold one of its properties,  The Wholesale Club. As of December 31,
1998, cumulative  distributions  to  Limited  Partners  totaled $21,289,742, of
which $4,395,565 represents proceeds from  the  sale  of The Wholesale Club and
$16,894,177  represents  distributable  cash  flow  from  the  properties.  The
Partnership repurchased 551.64 Units for $260,285 from various Limited Partners
through the Unit  Repurchase  Program.  There  are  no  funds remaining for the
repurchase of Units through this program.

As of December 31,  1998,  the  Partnership  had  cash  and cash equivalents of
$1,161,470 which includes approximately $446,800 held in an unrestricted escrow
account for the payment of real  estate taxes for Colonial Manor Living Center.
The Partnership intends to use  such  remaining funds for distributions and for
working capital requirements.

The properties owned by the Partnership  are  generating cash flow in excess of
the 8% annualized  distributions  to  the  Limited  Partners (paid monthly), in
addition to covering  all  the  operating  expenses  of  the Partnership. As of
December  31,  1998,  the  Partnership  has  made  cumulative  distributions of
$253,868 in addition to the 8%  annualized  return to the Limited Partners from
excess cash flow. To  the  extent  that  the  cash  flow from the properties is
insufficient to meet  the  Partnership's  needs,  the  Partnership  may rely on
advances from Affiliates of the General Partner, other short-term financing, or
may sell one or more of the properties.








                                      -9-



During May 1996, Euro-Fresh  Market  ("Euro-Fresh")  began its occupancy of the
anchor store of Water Tower Market Plaza in Palatine, Illinois and the shopping
center was renamed Euro-Fresh Market Plaza.  Eagle Foods had assigned the lease
on February  4,  1994  to  Certified  Grocers  Midwest,  Inc. ("Certified") who
vacated in August 1995. Under the original  lease, as well as the assignment of
the lease, Eagle Foods  had  guaranteed  payments  until  November 1998.  As of
December 1, 1998, Eurofresh  Market  Inc.  entered  into  a lease which expires
November 30, 2003 for the same space.  Under the terms of the new lease, annual
rental income for this space has increased 40%.  As of December 31, 1998, there
were five vacant spaces at Euro-Fresh Market Plaza for 7,889 square feet.


Results of Operations

At December 31, 1998, the  Partnership  owns  four operating properties. Two of
the  Partnership's  four  operating  properties,  Scandinavian  Health  Spa and
Colonial Manor Living Center, are  leased  on  a "triple-net" basis which means
that all expenses of the property are  passed through to the tenant. The leases
of the other two properties  owned  by  the  Partnership, K mart and Euro-Fresh
Market Plaza provide that the Partnership be responsible for maintenance of the
structure and the parking lot  and  the  tenants  are required to reimburse the
Partnership for  portions  of  insurance,  real  estate  taxes  and common area
maintenance. The Partnership sold one of its properties, The Wholesale Club, on
January 8, 1991.

Rental and additional  income  and  property  operating  expenses to Affiliates
decreased for the year ended December 31,  1998, as compared to the years ended
December 31, 1997 and 1996, due  to three additional tenants leaving Euro-Fresh
Market Plaza as well as the  two  already  vacant spaces that have not yet been
released.  In addition, additional  rental  income decreased due to a write-off
of $25,200 of  real  estate  tax  recovery  income  receivable  owed by vacated
tenants.  

Interest income increased for the year  ended December 31, 1998, as compared to
the years ended December 31,  1997  and  1996,  due  to an increase in interest
rates.

Other income was higher for the  year  ended  December 31, 1997, as compared to
the years ended December 31,  1998  and  1996, due to the Partnership receiving
miscellaneous receipts relating to Colonial Manor Living Center.

Professional services to Affiliates increased  for  the year ended December 31,
1998 as compared to 1997  due  to  an increase in in-house accounting services.
Professional services to Affiliates decreased  for  the year ended December 31,
1997, as compared to the year ended  December 31, 1996, due to decreases in in-
house legal and accounting services  required by the Partnership.  Professional
services to non-affiliates increased for the  years ended December 31, 1998 and
1997, as compared to the  year  ended  December  31,  1996, due to increases in
legal services and accounting fees.

General and administrative expenses to Affiliates decreased for the years ended
December 31, 1998 and 1997, as  compared  to  the year ended December 31, 1996,
due to decreases in investor  services  and  data processing expenses.  General
and administrative expenses to  non-affiliates  was  higher  for the year ended
December 31, 1997, as compared to  the  years ended December 31, 1998 and 1996,
due to greater printing, supplies and state tax expenses.


                                     -10-



Property operating expenses  to  non-affiliates  decreased  for  the year ended
December 31, 1998, as compared to  the  year  ended December 31, 1997, due to a
decrease in operating  expenses  at  Euro-Fresh  Market  Plaza.   Such expenses
include repairs and  maintenance,  painting,  supplies  and  real estate taxes.
This decrease was partially offset  by  an  increase in common area maintenance
and marketing.  Property operating expenses to non-affiliates increased for the
year ended December 31, 1997, as compared  to the year ended December 31, 1996,
due to an increase  in  operating  expenses  at  Euro-Fresh Market Plaza.  Such
expenses  include  repair   and   maintenance,   insurance,   legal  and  other
professional fees and real estate taxes.  This increase was partially offset by
decreases in common area maintenance and marketing.  


Year 2000 Issues

GENERAL
-------
Many computer operating systems  and  software  applications were designed such
that the year 1999 is the  maximum  date  that can be processed accurately.  In
conducting business, the Partnership relies  on computers and operating systems
provided by equipment manufacturers, and also on application software developed
internally and,  to  a  limited  extent,  by  outside  software  vendors.   The
Partnership has assessed its  vulnerability  to the so-called "Year-2000 Issue"
with respect to its equipment and computer systems.

STATE OF READINESS
------------------
The Partnership  has  identified  the  following  three  areas  for "Year-2000"
compliance efforts:

Business  Computer  Systems:  The  majority  of  the  Partnership's information
technology systems  were  developed  internally  and  include accounting, lease
management, investment portfolio  tracking,  and  tax  return preparation.  The
Partnership has rights to the  source  code  for these applications and employs
programmers who are  knowledgeable  regarding  these  systems.   The process of
testing these internal  systems  to  determine  year  2000 compliance is nearly
complete.  The Partnership does  not  anticipate any material costs relating to
its  business  computer  systems  regarding  year  2000  compliance  since  the
Partnership's  critical  hardware  and  software  systems  use  four  digits to
represent the applicable year.  The Partnership does use various computers, so-
called "PC's", that may run software that  may not use four digits to represent
the applicable year.  The  Partnership  is  in  the  process  of testing the PC
hardware and software to determine year  2000  compliance, but it must be noted
that such PC's  are  incidental  to  the  Partnership's  critical systems.  The
Partnership is considering independent testing of its critical systems.












                                     -11-



Tenants and Suppliers: The Partnership is  in the process of surveying tenants,
suppliers and other parties with whom the Partnership does a significant amount
of business to identify the Partnership's  potential exposure in the event such
parties are not year 2000  compliant  in  a  timely  manner.  At this time, the
Partnership is not aware of any party that is anticipating a material Year 2000
compliance issue.  However, since  this  area  involves some parties over which
the Partnership  has  no  control,  such  as  public  utility  companies, it is
difficult, at best, to judge  the  status  of  the outside companies' year 2000
compliance. The Partnership is working closely  with all suppliers of goods and
services in an effort to minimize the  impact of the failure of any supplier to
become  year  2000   compliant   by   December   31,  1999.  The  Partnership's
investigations  and  assessments  of  possible   year  2000  issues  are  in  a
preliminary stage, and currently the  Partnership  is not aware of any material
impact on its business, operations or  financial  condition even if one or more
parties is not Year 2000 compliant  in  a  timely manner, due to the number and
nature of the Partnership's diverse tenant base.

Non-Information Technology Systems:  In  the  operation  of its properties, the
Partnership  has  acquired   equipment   with   embedded   technology  such  as
microcontrollers, which  operate  heating,  ventilation,  and  air conditioning
systems,  fire  alarms,  security   systems,  telephones  and  other  equipment
utilizing time-sensitive technology.    The  Partnership  is  in the process of
evaluating its potential exposure and  costs if such non-information technology
systems are not year 2000  compliant  and  expects  to  be able to complete its
assessment during the second quarter of 1999.

YEAR 2000 RISKS
---------------
The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of  its  business computer systems would be the
inability to access information  which  could  result  in  the failure to issue
financial reports.  The  most  reasonable  likely  worst  case scenario for the
Partnership with respect to  the  year  2000  non-compliance  of its tenants is
failure to receive rental income  which  could  result in the Partnership being
unable to meet  cash  requirements  for  monthly  expenses. The most reasonable
likely worst case scenario for  the  Partnership  with respect to the year 2000
non-compliance of its suppliers is  the  failure to supply necessary utilities;
including, but not limited to heating, as  a result of a malfunctioning of non-
information technology systems in some of the Partnership's properties.

YEAR 2000 COSTS
---------------
The Partnership's General Partner  and  its  Affiliates  estimate that costs to
achieve  year  2000  compliance   will   not  exceed  $100,000.  However,  only
approximately 1% of these costs will  be  directly allocated to and paid by the
Partnership. The balance of the  year 2000 compliance costs, approximately 99%,
will be paid by  the  General  Partner  and  its  Affiliates.   Total year 2000
compliance  costs  incurred  through   December   31,  1998  are  estimated  at
approximately $5,000.








                                     -12-



CONTINGENCY PLAN
----------------
The Partnership is expects to  be  Year  2000  compliant in advance of the year
2000.  The Partnership  will  continue  to  monitor  its  progress and state of
readiness, and is in the  process  of  formulating a contingency plan which the
Partnership will be prepared to adopt  with  respect to areas in which evidence
arises that it may not  become  Year  2000  compliant in sufficient time.  With
respect to its tenants, suppliers  and  other parties with whom the Partnership
conducts business, the Partnership does  not yet have sufficient information to
identify the types  of  problems  it  may  encounter  in  the event these third
parties are not Year  2000  compliant.    As  information  is obtained that may
indicate such parties may not  become  Year  2000 compliant in sufficient time,
the Partnership is prepared to develop contingency plans, accordingly.



Inflation

In  general,  rental  income  and  operating  expenses  for  those  Partnership
properties  operated  under  triple-net  leases,  Scandinavian  Health  Spa and
Colonial Manor Living Center, are not  likely to be directly affected by future
inflation, since rents are fixed under the leases and property expenses are the
responsibility  of  tenants.  The  capital  appreciation  of  triple-net-leased
properties is likely to  be  influenced  by  interest rate fluctuations. To the
extent that inflation  affects  interest  rates,  future  inflation may have an
effect on the capital appreciation of triple-net-leased properties.

Both the K mart  and  Euro-Fresh  Market  Plaza  properties  are subject to net
leases containing rental escalation  clauses  which  take effect when specified
sales volumes are achieved by  the  tenants. If inflation, over time, increases
the prices of goods sold by these  tenants, this may result in increased rental
income for the Partnership.  In  addition  to  the  grocery  store which is its
anchor tenant, Euro-Fresh Market Plaza  also includes smaller commercial spaces
which are  subject  to  renewal  under  short-term  leases.  For  these spaces,
inflation is likely to increase  rental  income  from leases to new tenants and
lease renewals, subject to normal market conditions.


Item 7(a). Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.
















                                     -13-



Item 8.  Financial Statements and Supplementary Data



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)




                                     Index
                                     -----
                                                                          Page
                                                                          ----
Independent Auditors' Report.............................................  15

Financial Statements:

  Balance Sheets, December 31, 1998 and 1997.............................  16

  Statements of Operations, for the years ended
    December 31, 1998, 1997 and 1996.....................................  18

  Statements of Partners' Capital, for the years ended
    December 31, 1998, 1997 and 1996.....................................  19

  Statements of Cash Flows, for the years ended
    December 31, 1998, 1997 and 1996.....................................  20

  Notes to Financial Statements..........................................  21

Real Estate and Accumulated Depreciation (Schedule III)..................  28


Schedules not filed:

All schedules other than those indicated in  the index have been omitted as the
required information is inapplicable  or  the  information  is presented in the
financial statements or related notes.


















                                     -14-







INDEPENDENT AUDITORS' REPORT


To the Partners of 
Inland Monthly Income Fund II, L.P. 

We have audited the accompanying  balance  sheets of Inland Monthly Income Fund
II, L.P. (a limited partnership)  as  of  December  31,  1998 and 1997, and the
related statements of operations, partners' capital, and cash flows for each of
the three years  in  the  period  ended  December  31,  1998.   Our audits also
included the financial statement schedule  listed  in  the Index at Item 14(c).
These  financial  statements   and   financial   statement   schedule  are  the
responsibility of  the  Partnership's  management.    Our  responsibility is to
express an  opinion  on  these  financial  statements  and  financial statement
schedule based on our audits. 

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards  require  that  we  plan  and  perform the audit to
obtain reasonable assurance about whether  the financial statements are free of
material misstatement.  An audit includes  examining, on a test basis, evidence
supporting the amounts and disclosures  in  the financial statements.  An audit
also  includes  assessing  the   accounting  principles  used  and  significant
estimates made by  management,  as  well  as  evaluating  the overall financial
statement presentation.  We believe that  our audits provide a reasonable basis
for our opinion.

In our opinion,  such  financial  statements  present  fairly,  in all material
respects, the financial position of Inland Monthly  Income Fund II, L.P.  as of
December 31, 1998 and 1997,  and  the  results  of  its operations and its cash
flows for each of the three  years  in  the  period ended December 31, 1998, in
conformity  with  generally  accepted  accounting  principles.    Also,  in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.



DELOITTE & TOUCHE LLP



Chicago, Illinois
January 29, 1999










                                     -15-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets

                          December 31, 1998 and 1997




                                    Assets
                                    ------

                                                       1998          1997
Current assets:                                        ----          ----
  Cash and cash equivalents (Note 1).............. $ 1,161,470     1,151,954
  Accounts and rents receivable...................     162,558       170,804
  Current portion of deferred rent
    receivable (Note 5)...........................        -            1,103
  Other assets....................................       1,875         2,061 
                                                   ------------  ------------
Total current assets..............................   1,325,903     1,325,922 
                                                   ------------  ------------
Investment properties (including acquisition
  fees paid to Affiliates of $1,430,682)
  (Notes 1, 3 and 4):
  Land............................................   3,998,149     3,998,149
  Buildings and improvements......................  13,957,812    13,814,185 
                                                   ------------  ------------
                                                    17,955,961    17,812,334
    Less accumulated depreciation.................   4,047,610     3,617,865 
                                                   ------------  ------------
Net investment properties.........................  13,908,351    14,194,469 
                                                   ------------  ------------
Other assets:
  Deferred leasing fees to Affiliates (net of
    accumulated amortization of $143,005 and
    $124,912 for 1998 and 1997, respectively)
    (Notes 1 and 3)...............................      84,727       102,820
  Deferred rent receivable, less current portion
    (Notes 1 and 5)...............................     302,419       349,868 
                                                   ------------  ------------
Total other assets................................     387,146       452,688 
                                                   ------------  ------------
Total assets...................................... $15,621,400    15,973,079
                                                   ============  ============









                See accompanying notes to financial statements.


                                     -16-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets
                                  (continued)

                          December 31, 1998 and 1997



                       Liabilities and Partners' Capital
                       ---------------------------------
                                                       1998          1997
                                                       ----          ----
Current liabilities:
  Accounts payable................................ $     3,007         2,708
  Accrued real estate taxes.......................     185,785       188,729
  Distributions payable (Note 7)..................     140,427       140,427
  Due to Affiliates (Note 3)......................         472         1,648
  Deposits held for others........................     458,203       384,448
  Other current liabilities.......................        -           26,925 
                                                   ------------  ------------
Total current liabilities.........................     787,894       744,885

Commission payable to Affiliate (Note 3)..........     132,000       132,000 
                                                   ------------  ------------
Total liabilities.................................     919,894       876,885 
                                                   ------------  ------------
Partners' capital (Notes 1, 2 and 3):
  General Partner:
    Capital contribution..........................         500           500
    Cumulative net income.........................      59,977        64,274 
                                                   ------------  ------------
                                                        60,477        64,774 
  Limited Partners:                                ------------  ------------
    Units of $500. Authorized 80,000 Units,
      50,095.50 Units outstanding (net of offering
      costs of $3,148,734, of which $653,165
      was paid to Affiliates).....................  21,916,510    21,916,510
    Cumulative net income.........................  14,014,261    12,751,226
    Cumulative distributions...................... (21,289,742)  (19,636,316)
                                                   ------------  ------------
                                                    14,641,029    15,031,420 
                                                   ------------  ------------
Total Partners' capital...........................  14,701,506    15,096,194 
                                                   ------------  ------------
Total liabilities and Partners' capital........... $15,621,400    15,973,079
                                                   ============  ============







                See accompanying notes to financial statements.


                                     -17-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations

             For the years ended December 31, 1998, 1997 and 1996


                                         1998          1997          1996
Income:                                  ----          ----          ----
  Rental income (Notes 1, 4 and 5).. $ 1,897,476     1,917,095     1,918,275
  Additional rental income..........     113,886       165,331       157,981
  Interest income...................      40,280        36,424        32,504
  Other income......................      19,771        30,009          -    
                                     ------------  ------------  ------------
                                       2,071,413     2,148,859     2,108,760 
Expenses:                            ------------  ------------  ------------
  Professional services to
    Affiliates......................      12,485        11,850        14,024
  Professional services to
    non-affiliates..................      27,258        27,230        25,541
  General and administrative
    expenses to Affiliates..........      23,447        25,632        30,024
  General and administrative
    expenses to non-affiliates......      12,591        15,115        13,781
  Property operating expenses
    to Affiliates...................      32,041        33,150        31,848
  Property operating expenses
    to non-affiliates...............     257,015       308,838       274,488
  Depreciation......................     429,745       431,587       431,587
  Amortization......................      18,093        18,092        18,092 
                                     ------------  ------------  ------------
                                         812,675       871,494       839,385 
                                     ------------  ------------  ------------
Net income.......................... $ 1,258,738     1,277,365     1,269,375
                                     ============  ============  ============
Net income (loss) allocated to
  (Note 2):
  General Partner................... $    (4,297)       (4,316)       (4,316)
  Limited Partners..................   1,263,035     1,281,681     1,273,691 
                                     ------------  ------------  ------------
Net income.......................... $ 1,258,738     1,277,365     1,269,375
                                     ============  ============  ============
Net loss allocated to the
  one General Partner Unit.......... $    (4,297)       (4,316)       (4,316)
                                     ============  ============  ============
Net income per Unit allocated to
  Limited Partners per weighted
  average Limited Partnership
  Units of 50,095.50................ $     25.21         25.58         25.43
                                     ============  ============  ============




                See accompanying notes to financial statements.


                                     -18-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                        Statements of Partners' Capital

             For the years ended December 31, 1998, 1997 and 1996



                                        General       Limited
                                        Partner       Partners       Total   
                                     ------------  ------------  ------------
Balance January 1, 1996............. $    73,406    15,832,893    15,906,299

Net income (loss)...................      (4,316)    1,273,691     1,269,375
Distributions ($34.00 per weighted
  average of Limited Partnership
  Units of 50,095.50)...............        -       (1,703,419)   (1,703,419)
                                     ------------  ------------  ------------
Balance December 31, 1996...........      69,090    15,403,165    15,472,255

Net income (loss)...................      (4,316)    1,281,681     1,277,365
Distributions ($33.01 per weighted
  average of Limited Partnership
  Units of 50,095.50)...............        -       (1,653,426)   (1,653,426)
                                     ------------  ------------  ------------
Balance December 31, 1997...........      64,774    15,031,420    15,096,194

Net income (loss)...................      (4,297)    1,263,035     1,258,738
Distributions ($33.01 per weighted
  average of Limited Partnership
  Units of 50,095.50)...............        -       (1,653,426)   (1,653,426)
                                     ------------  ------------  ------------
Balance December 31, 1998........... $    60,477    14,641,029    14,701,506
                                     ============  ============  ============




















                See accompanying notes to financial statements.


                                     -19-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                           Statements of Cash Flows

             For the years ended December 31, 1998, 1997 and 1996



                                         1998          1997          1996
Cash flows from operating activities:    ----          ----          ----
  Net income........................ $ 1,258,738     1,277,365     1,269,375
  Adjustments to reconcile net
      income to net cash provided by
      operating activities:
    Depreciation....................     429,745       431,587       431,587
    Amortization....................      18,093        18,092        18,092
    Changes in assets and liabilities:
      Accounts and rents receivable.       8,246       (31,357)       20,528
      Other assets..................         186        (1,568)          177
      Deferred rent receivable......      48,552        31,663        (1,066)
      Accounts payable..............         299       (11,414)        8,628
      Accrued real estate taxes.....      (2,944)        4,764         3,940
      Due to Affiliates.............      (1,176)       (1,277)       (4,473)
      Other current liabilities.....     (26,925)         -             -    
Net cash provided by operating       ------------  ------------  ------------
  activities........................   1,732,814     1,717,855     1,746,788 
                                     ------------  ------------  ------------
Cash flows from investing activities:
  Capital expenditures..............    (143,627)         -             -    
Net cash used by investing           ------------  ------------  ------------
    activities......................    (143,627)         -             -    
                                     ------------  ------------  ------------
Cash flows from financing activities:
  Deposits held for others..........      73,755        43,681        18,912
  Cash distributions ...............  (1,653,426)   (1,653,044)   (1,703,800)
Net cash used in financing           ------------  ------------  ------------
    activities......................  (1,579,671)   (1,609,363)   (1,684,888)
                                     ------------  ------------  ------------
Net increase (decrease) in cash and
    cash equivalents................       9,516       108,492        61,900
Cash and cash equivalents at
  beginning of year.................   1,151,954     1,043,462       981,562 
Cash and cash equivalents at end     ------------  ------------  ------------
  of year........................... $ 1,161,470     1,151,954     1,043,462
                                     ============  ============  ============









                See accompanying notes to financial statements.


                                     -20-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements

             For the years ended December 31, 1998, 1997 and 1996


(1) Organization and Basis of Accounting

The Registrant, Inland Monthly  Income  Fund  II, L.P. (the "Partnership"), was
formed on June  20,  1988  pursuant  to  the  Delaware  Revised Uniform Limited
Partnership Act, to  invest  in  improved  residential,  retail, industrial and
other income producing properties. On August 4, 1988, the Partnership commenced
an Offering of 50,000 (subject to increase to 80,000) Limited Partnership Units
pursuant to a  Registration  under  the  Securities  Act  of 1933. The Offering
terminated on August 4, 1990, with  total  sales of 50,647.14 Units at $500 per
Unit, resulting in gross  offering  proceeds  of $25,323,569, not including the
General Partner's contribution for $500. All of the holders of these Units have
been admitted to the Partnership.  Inland Real Estate Investment Corporation is
the General Partner.  The  Limited  Partners  of  the  Partnership share in the
benefits  of  ownership  of  the  Partnership's  real  property  investments in
proportion to the  number  of  Units  held.  The Partnership repurchased 551.64
Units for $260,285 from  various  Limited  Partners through the Unit Repurchase
Program. There are no funds remaining  for the repurchase of Units through this
program.

The preparation of financial  statements  in conformity with generally accepted
accounting principles requires  management  to  make  estimates and assumptions
that affect the reported amounts  of  assets  and liabilities and disclosure of
contingent assets and liabilities at  the  date of the financial statements and
the reported amounts  of  revenues  and  expenses  during the reporting period.
Actual results could differ from those estimates.

Offering costs have been offset against the Limited Partners' capital accounts.

Statement  of  Financial  Accounting  Standards  No.  121  "Accounting  for the
Impairment of Long-Lived Assets and  for  Long-Lived  Assets to be Disposed of"
("SFAS 121") requires  the  Partnership  to  record  an  impairment loss on its
property to be held for investment  whenever its carrying value cannot be fully
recovered  through  estimated  undiscounted   future   cash  flows  from  their
operations and sale.  The amount of  the impairment loss to be recognized would
be the difference  between  the  property's  carrying  value and the property's
estimated fair value.  As of  December  31,  1998 and 1997, the Partnership has
not recognized any such impairment.

Depreciation expense is computed using  the straight-line method. Buildings and
improvements are based upon estimated  useful  lives  of  30 to 40 years, while
furniture and fixtures are based upon estimated  useful lives of 5 to 12 years.
Repair  and  maintenance  expenses  are  charged  to  operations  as  incurred.
Significant improvements are capitalized  and  depreciated over their estimated
useful lives.





                                     -21-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


Deferred leasing fees are amortized on  a  straight-line basis over the term of
the related lease.

Rental income is recognized  on  a  straight-line  basis  over the term of each
lease. The difference between rental  income  earned on the straight-line basis
and the cash rent due under the  provisions of the lease agreements is recorded
as deferred rent receivable.

The Partnership  considers  all  highly  liquid  investments  purchased  with a
maturity of three months or  less  to  be  cash  equivalents and are carried at
cost, which approximates market.  For  the  years  ended  December 31, 1998 and
1997, included in  cash  and  cash  equivalents  is  approximately $446,800 and
$372,200, respectively, held in an  unrestricted escrow account for the payment
of real estate taxes for Colonial Manor Living Center.

No provision for Federal income taxes  has  been made as the liability for such
taxes is that of the Partners rather than the Partnership.

The Partnership records are maintained  on  the  accrual basis of accounting in
accordance with generally accepted  accounting principles ("GAAP"). The Federal
income tax return has been prepared  from such records after making appropriate
adjustments, if any,  to  reflect  the  Partnership's  accounts as adjusted for
Federal income tax reporting purposes. Such adjustments are not recorded in the
records of the Partnership.  The  net  effect  of  these items is summarized as
follows:
                                       1998                      1997         
                             ------------------------  ------------------------
                                              Tax                      Tax
                                GAAP         Basis        GAAP        Basis
                                Basis     (unaudited)     Basis    (unaudited)
                             -----------  ------------ ----------- ------------
Total assets................ $15,621,400   18,770,133   15,973,079   19,121,812

Partners' capital:
  General Partner...........      60,477        7,700       64,774       11,997
  Limited Partners..........  14,641,029   17,842,538   15,031,420   18,232,931

Net income (loss):
  General Partner...........      (4,297)      (4,297)      (4,316)      (4,316)
  Limited Partners..........   1,263,035    1,263,035    1,281,681    1,359,396

Net income per Limited
  Partnership Unit..........       25.21        25.21        25.58        27.14

The net income per Unit is based  upon  the weighted average number of Units of
50,095.50.




                                     -22-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


Statement of Financial Accounting  Standards  No.  128 "Earnings per Share" was
adopted by the Partnership for the  year  ended  December 31, 1997 and has been
applied to all prior  earnings  periods  presented in the financial statements.
The Partnership has no dilutive securities.

A presentation of information about operating segments as required in Statement
of Financial Accounting Standards  No.  131  "Disclosures  About Segments of an
Enterprise and Related Information" would  not  be material to an understanding
of the Partnership's business taken as a whole as the Partnership is engaged in
the business of  real  estate  investment  which  management  considers to be a
single operating segment.


(2) Partnership Agreement

The Partnership Agreement  defines  the  allocation  of distributable available
cash and  profits  and  losses.  Limited  Partners  will  receive  100% of cash
available  for  distribution  until  the   Limited  Partners  have  received  a
Cumulative Preferred Return  of  8%  per  annum  through  August  4, 1993 and a
Preferential Return of 10%  per  annum  for  the  period  after August 4, 1993.
Thereafter, the General  Partner  shall  be  allocated  an  amount equal to any
Supplemental Capital Contributions outstanding at  the time of the distribution
and then 95%  of  cash  available  for  distribution  will  be allocated to the
Limited Partners and 5%  will  be  allocated  to  the General Partner. Net Sale
Proceeds will be distributed to  the  Limited Partners until they have received
an amount equal  to  their  Invested  Capital  and  any  deficiency  in the 10%
Preferential Return.  Thereafter,  any  remaining  Net  Sale  Proceeds  will be
distributed 85%  to  the  Limited  Partners  and  15%  to  the General Partner.
Distributions of Net Sale Proceeds  to  the Limited Partners represent a return
of Invested Capital.

Pursuant to the terms of the Partnership Agreement, the profits and losses from
operations are allocated as follows:

(a) Depreciation shall be allocated 99% to  the taxable Limited Partners and 1%
    to the General Partner.

(b) To the extent the minimum  distribution  of  8% per annum through August 4,
    1993  to  the   Limited   Partners   is   funded  by  Supplemental  Capital
    Contributions, the distribution shall  be  treated as a guaranteed payment,
    and the resulting deduction shall be allocated to the General Partner.

(c) The remaining net profits shall  be  allocated 100% to the Limited Partners
    until the Limited  Partners  have  been  allocated  an  amount equal to the
    distribution required to provide them  a  Cumulative Preferred Return of 8%
    per annum through August 4, 1993 and a Preferential Return of 10% per annum
    for the period after August 4, 1993.

(d) The remainder, if any, shall be  allocated  95% to the Limited Partners and
    5% to the General Partner



                                     -23-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


The General Partner was required to make Supplemental Capital Contributions, if
necessary, in sufficient amounts to allow the Partnership to make distributions
to the Limited Partners to  provide  a  non-compounded return on their invested
capital equal to 8%  per  annum  through  August  4,  1993.  The amount of such
Supplemental Capital Contributions was $30,155.  The  entire amount was paid to
the Partnership in April of 1990.  The  General Partner was repaid on August 4,
1993, after the Limited Partners  received  a Cumulative Preferred Return of 8%
per annum through August 4, 1993.


(3) Transactions with Affiliates

The General  Partner  and  its  Affiliates  are  entitled  to reimbursement for
salaries and expenses of employees  of  the  General Partner and its Affiliates
relating to the administration of  the  Partnership. Such costs are included in
professional services to Affiliates and  general and administrative expenses to
Affiliates, of which $472 and  $1,648  was  unpaid  as of December 31, 1998 and
1997, respectively.

An Affiliate of the General Partner earned Property Management Fees of $32,041,
$33,150, and $31,848 for  the  years  ended  December  31, 1998, 1997 and 1996,
respectively, in connection  with  managing  the Partnership's properties. Such
fees are included in property  operating  expenses  to Affiliates, all of which
have been paid as of December 31, 1998.

In connection with the  sale  of  The  Wholesale  Club  on January 8, 1991, the
Partnership recorded $132,000 of  sales  commission  payable to an Affiliate of
the General  Partner.  Such  commission  has  been  deferred  until the Limited
Partners receive their  Original  Capital  plus  a  return  as specified in the
Partnership Agreement.


(4) Investment Properties

Colonial Manor Living Center, LaGrange, Illinois
------------------------------------------------
On June 7, 1989, the Partnership took title to this property which an Affiliate
of  the  General  Partner  purchased  on  behalf  of  the  Partnership  from an
unaffiliated third party for  $6,787,232.  The  property  consists of a 107,867
square-foot nursing care facility located in LaGrange, Illinois. The total cost
of this property to the  Partnership was $7,521,881, which includes acquisition
fees of $601,675 and  acquisition  costs  of  $132,974. The center is currently
100% leased to Elite  Care  Corporation.  The  lease  is a triple-net lease and
expires January 2001. The  tenant  has  the  right  to  extend the lease for an
additional ten-year term. The rent per  annum is $909,372 and adjusts annually.
In 1992, the current operator of  this  facility negotiated with a new operator
to sublease the facility. The General  Partner approved the transaction with no
significant changes to the terms of the lease.


                                     -24-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

Scandinavian Health Spa, Inc., Broadview Heights, Ohio
------------------------------------------------------
On October 19, 1988,  the  Partnership  took  title  to  this property which an
Affiliate of the General Partner purchased on behalf of the Partnership from an
unaffiliated third party for $2,760,000. The  property consists of a 26,040 net
rentable square-foot, two-story masonry  building  including a pool, whirlpool,
two saunas, suspended running track,  two racquet ball courts, extensive locker
room areas, a nursery  and  offices.  The  total  cost  of this property to the
Partnership was $3,016,527,  which  includes  acquisition  fees of $241,500 and
acquisition costs of $15,027. The lease expires in December 2004 and the tenant
has the option to extend  the  lease  for two additional five-year periods. The
tenant has leased 100%  of  the  rentable  space  on  a  triple-net basis for a
current monthly amount of $29,925.

K mart Retail Store, Chandler, Arizona
--------------------------------------
On December 29, 1989,  the  Partnership  took  title  to this property which an
Affiliate of the General Partner purchased on behalf of the Partnership from an
unaffiliated third party for  $4,568,000.  The  property  consists of an 84,146
square-foot retail building. The total cost of this property to the Partnership
was  $5,072,473,  which  includes  acquisition  fees  of  $406,862  and related
acquisition costs of $97,611. The tenant  has  a lease for 100% of the rentable
space on a net basis and is  responsible  for payment of the real estate taxes,
insurance  and  all  utilities.   The   Partnership  will  be  responsible  for
maintenance of the structure and  the  parking  lot.  The lease requires a base
rent of $452,000 per annum and  additional  rent  equal to 1% of gross sales in
excess of $14,000,000. The lease expires  in  July  2013 and the tenant has the
option to extend the lease for four additional five-year periods.

Euro-Fresh Market Plaza, Palatine, Illinois
-------------------------------------------
On December 31, 1990,  the  Partnership  took  title  to  this property from an
unaffiliated third party for $2,000,000. The property consists of two buildings
aggregating 52,475 square feet. One of  the  buildings  is a food store and the
other is a multi-tenant building  containing twelve commercial units. The total
initial cost of this property to the Partnership was $2,186,383, which includes
acquisition fees of  $180,645  and  related  acquisition  costs  of $5,738. The
property is 85% leased on a  net  basis  with the tenants responsible for their
portion of real estate taxes  and  common  area maintenance. The Partnership is
responsible for its share of real estate taxes and common area maintenance plus
the maintenance of the  structures  and  the  parking  lot. Then anchor tenant,
Eagle Food Store, had a lease through May 1997 with an annual rent of $78,600. 









                                     -25-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


The current tenants in the  12-unit  building  have  leases ranging from one to
five years at an average monthly  rent  of  $1,883 per tenant. In January 1994,
the anchor tenant at the  shopping  center,  Eagle  Foods, closed its store. In
February 1994, with the approval  of  the General Partner, Eagle Foods assigned
its lease to Certified Grocers  Midwest, Inc. ("Certified"). Certified occupied
the store from March 1994  until  August  1995.  In May 1996, Euro-Fresh Market
("Euro-Fresh") began its occupancy of the  anchor store and the shopping center
was renamed Euro-Fresh Market Plaza. Under  the  original lease, as well as the
assignment of the lease,  Eagle  Foods  had  guaranteed payments until November
1998.  As of December 1,  1998,  Euro-Fresh Market, Inc. negotiated a new lease
which expires November 30, 2003 for an annual rent of $109,939.



Cost and accumulated depreciation of  the  above  properties as of December 31,
are summarized as follows:
                                                1998          1997    
    Health and Racquet Club:                ------------   ------------
         Cost.............................. $ 3,016,527      3,016,527
         Less accumulated depreciation.....     740,015        667,817 
                                            ------------   ------------
                                              2,276,512      2,348,710 
    Retail Store:                           ------------   ------------
         Cost..............................   5,072,473      5,072,473
         Less accumulated depreciation.....     954,366        849,298 
                                            ------------   ------------
                                              4,118,107      4,223,175 
    Nursing Home:                           ------------   ------------
         Cost..............................   7,521,881      7,521,881
         Less accumulated depreciation.....   1,968,920      1,763,468 
                                            ------------   ------------
                                              5,552,961      5,758,413 
    Shopping Center:                        ------------   ------------
         Cost..............................   2,345,080      2,201,453
         Less accumulated depreciation.....     384,309        337,282 
                                            ------------   ------------
                                              1,960,771      1,864,171 
                                            ------------   ------------
    Total.................................. $13,908,351     14,194,469
                                            ============   ============










                                     -26-



                      INLAND MONTHLY INCOME FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


(5) Operating Leases

Certain tenant leases contain provisions  providing for stepped rent increases.
Generally accepted accounting principles require that rental income be recorded
for the period of  occupancy  using  the  straight-line basis. The accompanying
financial statements include a decrease of  $48,552, a decrease of $31,663, and
an increase of $1,066 in  1998,  1997  and 1996, respectively, of rental income
for the period of occupancy for which stepped rent increases apply and $302,419
and $350,971 in related deferred  rent  receivable  as of December 31, 1998 and
1997, respectively. These  amounts  will  be  collected  over  the terms of the
related leases as scheduled rent payments are made. Deferred rent receivable of
$3,719 was written off against  rental  income  for the year ended December 31,
1997, due to two tenants vacating at Euro-Fresh Market Plaza.

Minimum lease payments to be received  in  the future from operating leases are
as follows: 

    1999..........................................      $ 1,945,018
    2000..........................................        1,956,591
    2001..........................................        1,090,556
    2002..........................................          996,443
    2003..........................................          947,691
    Thereafter....................................        4,653,094 
                                                        ------------
    Total.........................................      $11,589,393
                                                        ============

Pursuant to  the  lease  agreements,  tenants  of  Euro-Fresh  Market Plaza are
required to reimburse the  Partnership  for  their  pro  rata share of the real
estate taxes and operating expenses of  the property. Such amounts are included
in additional rental income.

The Partnership currently has significant  net operating leases with Elite Care
Corporation ("Elite"), K mart  Corporation  ("K  mart") and Scandinavian Health
Spa, Inc. ("SHS"). Revenues from the Elite lease for the Colonial Manor Nursing
Home, the K  mart  lease  for  the  K  mart  store  and  the  SHS lease for the
Scandinavian  Health   Spa   represents   approximately   42%,   22%  and  17%,
respectively, of the Partnership's income for the year ended December 31, 1998,
approximately 40%, 21% and 17%,  respectively,  of the Partnership's income for
the  year  ended  December  31,  1997  and  approximately  41%,  21%  and  17%,
respectively, of the Partnership's income for the year ended December 31, 1996.


(6) Subsequent Events

During January 1999, the  Partnership  paid  a  distribution of $140,427 to the
Limited Partners.



                                     -27-



<TABLE>                                                  INLAND MONTHLY INCOME FUND II, L.P.
                                                               (a limited partnership)
                                                                    Schedule III
                                                      Real Estate and Accumulated Depreciation
                                                                  December 31, 1998
<CAPTION>
                          Initial cost
                          to Partnership                            Gross amount at which carried
                               (A)                                      at end of period (B)                     
                     -----------------------    Costs     -------------------------------------------------           Life on which
                                             capitalized                                                    Date      depreciation
                                 Buildings    subsequent              Buildings               Accumulated   Con-      in latest Stmt
                                    and          to                     and         Total     Depreciation  stru-Date of Operations
                        Land    improvements acquisition    Land    improvements     (C)          (D)       cted Acq   is computed  
                     ---------- ------------ ------------ --------- ------------- ---------- -------------- ---- ---- --------------
<S>                   <C>        <C>          <C>          <C>       <C>           <C>        <C>           <C>  <C>  <C>
Health & Racquet Club:
  Scandinavian Health                                                                                                 
    Spa, Inc.                                                                                                    10/19
  Broadview Hts., OH $  850,609   2,165,039          879    850,609   2,165,918    3,016,527      740,015   1984  1988  30 years

Nursing Home Facility:
  Colonial Manor                                                                                                 06/07
  LaGrange, IL          416,390   7,105,491         -       416,390   7,105,491    7,521,881    1,968,920   1924  1989  40 years

Retail Store:
  K mart                                                                                                         12/29
  Chandler, AZ        1,920,439   3,152,034         -     1,920,439   3,152,034    5,072,473      954,366   1986  1989  30 years

Shopping Center:
  Euro-Fresh Market Plaza
                                                                                                                 12/31
  Palatine, IL          810,711   1,375,672      158,697    810,711   1,534,369    2,345,080      384,309   1973  1990  30 years
                                                                                                                      
                     ---------- ------------ ------------ --------- ------------  ---------- -------------  
             Totals  $3,998,149  13,798,236      159,576  3,998,149  13,957,812   17,955,961    4,047,610
                     ========== ============ ============ ========= ===========   ========== =============
                                                                                                                  
Notes:
  (A) The initial cost to the Partnership represents the original purchase price of the properties, including amounts incurred
      subsequent to acquisition which were contemplated at the time the property was acquired.
  (B) The aggregate cost of real estate owned at December 31, 1998 for Federal income tax purposes was approximately $17,956,000
      (unaudited.)
  (C) Reconciliation of real estate owned:
                                                               1998              1997              1996
                                                               ----              ----              ----
         Balance at beginning of year.................... $ 17,812,334        17,812,334       17,812,334
         Capital expenditures............................      143,627              -                -    
                                                          -------------     -------------    -------------
         Balance at end of year.......................... $ 17,955,961        17,812,334       17,812,334
                                                          =============     =============    =============

  (D) Reconciliation of accumulated depreciation:

         Balance at beginning of year.................... $  3,617,865         3,186,278        2,754,691
         Depreciation expense............................      429,745           431,587          431,587 
                                                          -------------     -------------    -------------
         Balance at end of year.......................... $  4,047,610         3,617,865        3,186,278
                                                          =============     =============    =============

</TABLE>

                                                            -28-


                                     -28-



Item 9.  Changes in and Disagreements with Independent Auditors on Accounting
         and Financial Disclosure

There were  no  disagreements  on  accounting  or  financial disclosure matters
during 1998.


                                   PART III


Item 10.  Directors and Executive Officers of the Registrant

The  General  Partner  of  the   Partnership,  Inland  Real  Estate  Investment
Corporation, was organized in 1984 for the purpose of acting as general partner
of limited partnerships formed  to  acquire,  own  and operate real properties.
The General Partner is a wholly-owned subsidiary  of The Inland Group, Inc.  In
1990, Inland Real Estate Investment  Corporation became the replacement General
Partner for an additional 301  privately-owned real estate limited partnerships
syndicated by Affiliates.    The  General  Partner  has  responsibility for all
aspects of the  Partnership's  operations.    The  relationship  of the General
Partner  to  its  Affiliates  is  described  under  the  caption  "Conflicts of
Interest" at pages 11 to 13 of  the  Prospectus, a copy of which description is
hereby incorporated herein by reference.


Officers and Directors

The officers, directors, and key  employees  of  The Inland Group, Inc. and its
Affiliates ("Inland") that are  likely  to  provide services to the Partnership
are as follows:


                               Functional Title

  Daniel L. Goodwin....... Chairman and Chief Executive Officer
  Robert H. Baum.......... Executive Vice President-General Counsel
  G. Joseph Cosenza....... Senior Vice President-Acquisitions
  Robert D. Parks......... Senior Vice President-Investments
  Norbert J. Treonis...... Senior Vice President-Property Management
  Brenda G. Gujral........ President and Chief Operating Officer-IREIC
  Catherine L. Lynch...... Treasurer
  Paul J. Wheeler......... Vice President-Personal Financial Services Group
  Roberta S. Matlin....... Assistant Vice President-Investments
  Mark Zalatoris.......... Assistant Vice President-Due Diligence
  Patricia A. Challenger.. Vice President-Asset Management
  Kelly Tucek............. Assistant Vice President-Partnership Accounting
  Venton J. Carlston...... Assistant Controller










                                     -29-



    DANIEL L. GOODWIN (age 55)   is  Chairman  of the Board of Directors of The
Inland Group, Inc.,  a  billion-dollar  real  estate and financial organization
located in Oak Brook,  Illinois.    Among  Inland's subsidiaries is the largest
property management firm in  Illinois  and  one  of the largest commercial real
estate and mortgage banking firms in the Midwest.

Mr. Goodwin has served as Director  of  the  Avenue  Bank  of Oak Park and as a
director of the Continental Bank of  Oakbrook  Terrace.  He was Chairman of the
Bank Holding Company of American National Bank  of DuPage.  Currently he is the
Chairman of the Board of Inland Mortgage Investment Corporation.

Mr. Goodwin has been in the  housing  industry  for more than 28 years, and has
demonstrated a lifelong interest in  housing-related  issues.  He is a licensed
real estate broker and a member  of  the National Association of Realtors.  Mr.
Goodwin has developed thousands of  housing  units in the Midwest, New England,
Florida, and the Southwest.  He  is  also the author of a nationally recognized
real estate reference book for the management of residential properties.

Mr. Goodwin has served on  the  Board  of the Illinois State Affordable Housing
Trust Fund for the past six years.   He is an advisor for the Office of Housing
Coordination Services of the State  of  Illinois,  and  a member of the Seniors
Housing Committee of the  National  Multi-Housing  Council.  Recently, Governor
Edgar appointed Mr. Goodwin as Chairman of the Housing Production Committee for
the Illinois State Affordable Housing Conference.    He also served as a member
of the Cook County  Commissioner's  Economic Housing Development Committee, and
he was the Chairman of the  DuPage  County  Affordable Housing Task Force.  The
1992 Catholic Charities Award  was  presented  to  Mr.  Goodwin for his work in
addressing affordable housing needs.   The  City  of Hope designated him as the
Man of the Year for the Illinois  construction industry.  In 1989,  the Chicago
Metropolitan  Coalition  on  Aging  presented  Mr.  Goodwin  with  an  award in
recognition of his  efforts  in  making  housing  more  affordable to Chicago's
Senior Citizens.  On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin  with  an  award,  recognizing  The  Inland  Group as the
leading corporate provider of transitional  housing  for the homeless people of
DuPage County.  Mr. Goodwin also  serves  as Chairman of New Directions Housing
Corporation, a leading provider of affordable housing in northern Illinois.

Mr. Goodwin is a product  of  Chicago-area schools, and obtained his Bachelor's
and Master's Degrees  from  Illinois  Universities.    Following graduation, he
taught for five  years  in  the  Chicago  Public  Schools.    His commitment to
education has continued through his  work  with  the BBF Family Services' Pilot
Elementary School in  Chicago,  and  the  development  of the Inland Vocational
Training Center  for  the  Handicapped  located  at  Little  City  in Palatine,
Illinois.  He  personally  established  an  endowment  which  funds a perpetual
scholarship program for inner-city  disadvantaged  youth.   In 1990 he received
the Northeastern  Illinois  University  President's  Meritorious Service Award.
Mr. Goodwin  holds  a  Master's  Degree  in  Education  from  Northern Illinois
University, and in 1986, he was awarded an Honorary Doctorate from Northeastern
Illinois University College of Education.    More  than 12 years ago, under Mr.
Goodwin's direction, Inland instituted  a  program to educate disabled students
about the workplace.  Most  of  these  original  students are still employed at
Inland today, and Inland  continues  as  one  of  the  largest employers of the
disabled in DuPage County.  Mr. Goodwin has  served as a member of the Board of
Governors of Illinois State Colleges  and  Universities,  and he is currently a
trustee of Benedictine University.  He was elected Chairman of the Northeastern
Illinois University Board of Trustees in January 1996.


                                     -30-



In 1988 he received the  Outstanding  Business  Leader Award from the Oak Brook
Jaycees and in March 1994,  he  won  the  Excellence in Business Award from the
DuPage Area Association of Business and Industry.  Additionally, he was honored
with a dinner sponsored by Little  Friends  on  May 17, 1995 for rescuing their
Parent-Handicapped Infant Program  when  they  lost  their  lease.   He was the
recipient of the 1995 March  of  Dimes  Life Achievement Award and was recently
recognized as the 1998  Corporate  Leader  of  the  Year  by the Oak Brook Area
Association of Commerce and Industry.    The  Ray Graham Association for People
with Disabilities honored Mr. Goodwin as  the  1999  Employer of the Year.  For
many years, he  has  been  Chairman  of  the  National  Football League Players
Association Mackey Awards for the benefit  of inner-city youth and he served as
the  recent  Chairman  of  the   Speakers   Club   of  the  Illinois  House  of
Representatives.

    ROBERT H. BAUM (age  55)  has  been  with  The  Inland  Group, Inc. and its
affiliates since 1968 and is one of  the four original principals.  Mr. Baum is
Vice Chairman and Executive Vice President-General Counsel of The Inland Group,
Inc.  In his  capacity  as  General  Counsel,  Mr.  Baum is responsible for the
supervision  of  the  legal  activities  of  The  Inland  Group,  Inc.  and its
affiliates.  This responsibility  includes  the  supervision  of The Inland Law
Department and serving as liaison with outside counsel.  Mr. Baum has served as
a member  of  the  North  American  Securities  Administrators Association Real
Estate Advisory Committee and as a  member of the Securities Advisory Committee
to the Secretary  of  State  of  Illinois.    He  is  a  member of the American
Corporation Counsel Association and  has  also  been  a  guest lecturer for the
Illinois State Bar Association.   Mr. Baum has been admitted to practice before
the Supreme Court of the United States,  as well as the bars of several federal
courts of appeals and federal district  courts  and  the State of Illinois.  He
received his B.S. Degree from the  University  of Wisconsin and his J.D. Degree
from Northwestern University School of Law.   Mr. Baum has served as a director
of American National Bank  of  DuPage  and  currently  serves  as a director of
Westbank.  Mr. Baum  also  is  a  member  of  the Governing Council of Wellness
House, a charitable  organization  that  provides  emotional support for cancer
patients and their families. 

    G. JOSEPH COSENZA (age 55)  has  been  with  The Inland Group, Inc. and its
affiliates since 1968 and is one of  the four original principals.  Mr. Cosenza
is a Director  and  Vice  Chairman  of  The  Inland  Group,  Inc. and oversees,
coordinates and directs Inland's  many  enterprises.   In addition, Mr. Cosenza
immediately  supervises  a  staff  of  nine  persons  who  engage  in  property
acquisition.  Mr. Cosenza has been  a  consultant to other real estate entities
and lending institutions on property appraisal methods.

Mr. Cosenza received his B.A.  Degree from Northeastern Illinois University and
his M.S. Degree from  Northern  Illinois  University.    From  1967 to 1968, he
taught at the LaGrange School District  in  Hodgkins, Illinois and from 1968 to
1972, he served as  Assistant  Principal  and  taught in the Wheeling, Illinois
School District.  Mr. Cosenza has been a licensed real estate broker since 1968
and an active member of  various  national  and local real estate associations,
including the National Association of Realtors and the Urban Land Institute.

Mr. Cosenza has also been Chairman  of  the  Board of American National Bank of
DuPage, and has  served  on  the  Board  of  Directors  of  Continental Bank of
Oakbrook Terrace.  He  is  presently  a  Director  on  the Board of Westbank in
Westchester and Hillside, Illinois.


                                     -31-



    ROBERT D. PARKS  (age  55)    is  a  Director  of  The  Inland Group, Inc.,
President,  Chairman  and  Chief  Executive   Officer  of  Inland  Real  Estate
Investment Corporation and President,  Chief Executive Officer, Chief Operating
Officer and Affiliated Director of Inland Real Estate Corporation.

Mr. Parks is responsible for  the ongoing administration of existing investment
programs,  corporate  budgeting  and  administration  for  Inland  Real  Estate
Investment Corporation.   He  oversees  and  coordinates  the  marketing of all
investments and investor relations. 

Prior to joining Inland, Mr.  Parks  was  a  school teacher in Chicago's public
schools.  He received his B.A. degree from Northeastern Illinois University and
his M.A. degree from the University  of  Chicago.    He is a member of the Real
Estate Investment Association and a member of NAREIT.

    NORBERT J.  TREONIS  (age  48)    joined  The  Inland  Group,  Inc. and its
affiliates in 1975 and he is  currently Chairman and Chief Executive Officer of
The Inland Property Management Group, Inc.  and a Director of The Inland Group,
Inc.  He serves on the  Board  of Directors of all Inland subsidiaries involved
in the  property  management,  acquisitions  and  maintenance  of  real estate,
including   Mid-America    Property    Management   Corporation,   Metropolitan
Construction Services, Inc.  and  Inland  Commercial  Property Management, Inc.
Mr. Treonis is charged with  the  responsibility  of the overall management and
leasing of all apartment  units,  retail,  industrial and commercial properties
nationwide.

Mr. Treonis is a licensed real estate broker.  He is a past member of the Board
of Directors of American National Bank of DuPage, the Apartment Building Owners
and  Managers  Association,   the   National   Apartment  Association  and  the
Chicagoland Apartment Association.

    BRENDA G. GUJRAL  (age  56)  is  President  and  Chief Operating Officer of
Inland Real Estate Investment  Corporation  (IREIC),  the parent company of the
Advisor.  She is  also  President  and  Chief  Operating Officer of the Dealer-
Manager, Inland Securities Corporation  (ISC),  a  member  firm of the National
Association of Securities Dealers (NASD).

Mrs. Gujral has overall responsibility  for  the operations of IREIC, including
the distribution  of  checks  to  over  50,000  investors,  review  of periodic
communications to those investors, the  filing  of quarterly and annual reports
for Inland's publicly registered  investment  programs  with the Securities and
Exchange Commission, compliance with other  SEC and NASD securities regulations
both for IREIC and ISC,  review  of  asset management activities, and marketing
and communications with  the  independent  broker/dealer firms selling Inland's
current and prior programs.  Mrs.  Gujral works with internal and outside legal
counsel in structuring and registering  the prospectuses for IREIC's investment
programs.

Mrs. Gujral has been with  Inland  for  18  years, becoming an officer in 1982.
Prior to joining  Inland,  she  worked  for  the  Land  Use Planning Commission
establishing an office in Portland,  Oregon,  to implement land use legislation
for that state.

She is a graduate of California State  University.   She holds Series 7, 22, 39
and 63 licenses from the NASD  and  is  a member of the National Association of
Real Estate Investment Trusts (NAREIT)  and  the National Association of Female
Executives.


                                     -32-



    CATHERINE L. LYNCH (age 40) joined  Inland  in 1989 and is the Treasurer of
Inland Real  Estate  Investment  Corporation.    Ms.  Lynch  is responsible for
managing the Corporate Accounting  Department.    Prior  to joining Inland, Ms.
Lynch worked in the  field  of  public  accounting  for KPMG Peat Marwick since
1980.    She  received  her  B.S.  degree  in  Accounting  from  Illinois State
University.  Ms. Lynch is  a  Certified  Public  Accountant and a member of the
American  Institute  of  Certified  Public  Accountants  and  the  Illinois CPA
Society.  She is registered with the National Association of Securities Dealers
as a Financial Operations Principal.

    PAUL J. WHEELER (age  46)    joined  Inland  in  1982  and is currently the
President of Inland Real Estate Equities,  Inc., the entity responsible for all
corporately owned  real  estate.    Mr.  Wheeler  received  his  B.A. degree in
Economics from  DePauw  University  and  an  M.B.A.  in Finance/Accounting from
Northwestern University.   Mr.  Wheeler  is  a  Certified Public Accountant and
licensed real estate broker.    For  three  years  prior to joining Inland, Mr.
Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan
& Tyson, Inc.

    ROBERTA S. MATLIN (age 54)   joined  Inland in 1984 as Director of Investor
Administration  and  currently  serves  as  Senior  Vice President-Investments.
Prior to that, Ms. Matlin spent 11  years with the Chicago Region of the Social
Security Administration of the  United  States  Department  of Health and Human
Services.  She is  a  Director  of  Inland  Real Estate Investment Corporation,
Inland Securities Corporation, and  Inland  Real Estate Advisory Services, Inc.
As Senior  Vice  President-Investments,  she  directs  the  day-to-day internal
operations of the General Partner.    Ms.  Matlin received her B.A. degree from
the University of Illinois.  She is registered with the National Association of
Securities Dealers, Inc. as a General Securities Principal.

    MARK ZALATORIS (age 41) joined Inland  in 1985 and currently serves as Vice
President of Inland Real  Estate  Investment Corporation.  His responsibilities
include the coordination of due  diligence activities by selling broker/dealers
and is also involved  with  limited  partnership asset management including the
mortgage funds.  Mr.  Zalatoris  is  a  graduate  of the University of Illinois
where he received  a  Bachelors  degree  in  Finance  and  a  Masters degree in
Accounting and Taxation.   He  is  a  Certified  Public  Accountant and holds a
General Securities License with Inland Securities Corporation.

    PATRICIA A. CHALLENGER (age  46)  joined  Inland  in  1985.  Ms. Challenger
serves as Senior Vice President of Inland Real Estate Investment Corporation in
the area of Asset Management.  As  head of the Asset Management Department, she
develops  operating  and   disposition   strategies  for  all  investment-owned
properties.    Ms.  Challenger  received  her  Bachelor's  degree  from  George
Washington University and  her  Master's  from  Virginia  Tech University.  Ms.
Challenger was selected and  served  from  1980-1984 as Presidential Management
Intern, where she was part of a special government-wide task force to eliminate
waste, fraud and abuse  in  government  contracting  and  also served as Senior
Contract Specialist  responsible  for  capital  improvements  in 109 government
properties.  Ms. Challenger is  a  licensed real estate broker, NASD registered
securities sales representative and is a member of the Urban Land Institute. 






                                     -33-



    KELLY TUCEK (age  36)  joined  Inland  in  1989  and  is  an Assistant Vice
President of Inland Real Estate Investment Corporation.  As of August 1996, Ms.
Tucek is responsible for  the  Investment  Accounting Department which includes
all public partnership accounting functions along with quarterly and annual SEC
filings.  Prior to joining Inland, Ms.  Tucek was on the audit staff of Coopers
and Lybrand since  1984.    She  received  her  B.A.  Degree  in Accounting and
Computer Science from North Central College.

    VENTON J. CARLSTON (age 41)    joined  Inland  in 1985 and is the Assistant
Controller of Inland Real Estate Investment Corporation where he supervises the
corporate  bookkeeping  staff  and   is  responsible  for  financial  statement
preparation and budgeting for Inland Real Estate Investment Corporation and its
subsidiaries.    Prior  to  joining  Inland,  Mr.  Carlston  was  a partnership
accountant with JMB Realty.   He  received  his  B.S. degree in Accounting from
Southern Illinois University.   Mr.  Carlston  is a Certified Public Accountant
and a member of the Illinois CPA  Society.   He is registered with the National
Association of Securities Dealers, Inc. as a Financial Operations Principal.


Item 11.  Executive Compensation

The General Partner is entitled to receive a share of cash distributions when a
Preferential Return of 10% of Cash  Available for Distribution has been made to
the Limited Partners, and a share  of  profits or losses as described under the
caption "Cash Distributions" at page 42  and "Allocation of Profits and Losses"
at pages 41  and  42  of  the  Prospectus,  and  at  pages  A-6  to A-10 of the
Partnership Agreement, included  as  an  exhibit  to  the  Prospectus, which is
incorporated herein by reference. Reference is also made to Note 2 of the Notes
to Financial Statements (Item 8  of  this  Annual  Report) for a description of
such distributions and allocations for 1997.

The Partnership  is  permitted  to  engage  in  various  transactions involving
Affiliates of the General Partner  of  the  Partnership, as described under the
captions "Compensation and Fees" at  pages  7-9  and "Conflicts of Interest" at
pages 9-11 of the Prospectus, and at pages A-12 through A-20 of the Partnership
Agreement, included as  an  exhibit  to  the  Prospectus, which is incorporated
herein by reference. The relationship of the General Partner (and its directors
and officers) to its Affiliates is set forth above in Item 10.

The General Partner of the Partnership and its Affiliates may be reimbursed for
their expenses or  out-of-pocket  expenses  relating  to  administration of the
Partnership and  salaries  and  direct  expenses  of  employees  of the General
Partner and its  Affiliates  for  the  administration  of the Partnership. Such
costs for 1998 were $35,932, of which $472 was unpaid as of December 31, 1998.

During 1998, Affiliates of  the  General  Partner  earned $32,041 in management
fees in connection with managing the  Partnership's properties, all of which is
paid as of December 31, 1998.









                                     -34-



Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) No person or group is  known  by  the  Partnership to own beneficially more
than 5% of the outstanding Units of the Partnership.

(b) The officers and directors of the General Partner of the Partnership own as
a group the following Units of the Partnership:


                                 Amount and Nature
                                  of Beneficial           Percent
    Title of Class                  Ownership            of Class   
    --------------               -----------------    --------------
    Limited Partnership          58.76 Units directly  Less than 1/2%
     Units


    No officer or director of the  General Partner of the Partnership possesses
    a right to acquire beneficial ownership of Units of the Partnership.

    All of the outstanding shares of the General Partner of the Partnership are
    owned by an Affiliate or its  officers  and directors as set forth above in
    Item 10.

(c) There exists no arrangement,  known  to  the  Partnership, the operation of
    which may, at a  subsequent  date,  result  in  a  change in control of the
    Partnership.


Item 13. Certain Relationships and Related Transactions

There were  no  significant  transactions  or  business  relationships with the
General Partner, Affiliates or their  management  other than those described in
Items 10 and 11 above. Reference is  made  to  Note 3 of the Notes to Financial
Statements (Item 8 of  this  Annual  Report)  for information regarding related
party transactions.





















                                     -35-



                                    PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The Financial Statements listed  in  the  index  at  page 14 of this Annual
    Report are filed as part of this Annual Report.

(b) Exhibits. The following documents are filed as part of this Report:

    3 Amended and Restated Agreement of Limited Partnership, and Certificate of
    Limited Partnership included as Exhibits  A  and  B of the Prospectus dated
    August 4,  1988,  as  supplemented,  are  incorporated  herein by reference
    thereto.

    4 Form of Certificate of Ownership representing interests in the registrant
    filed as Exhibit 4 to  Registration  Statement  on  Form S-11, File No. 33-
    22513, is incorporated herein by reference thereto.

    28 Prospectus dated  August  4,  1988,  as  supplemented, included in Post-
    effective Amendment No. 2 to Form S-11 Registration Statement, File No. 33-
    22513, is incorporated herein by reference thereto.

(c) Financial Statement Schedules.

    Financial statement schedules for the  years  ended December 31, 1998, 1997
    and 1996 are submitted herewith:

                                                                     Page


    Real Estate and Accumulated Depreciation, (Schedule III)........  28

    All schedules other than those indicated  in the index have been omitted as
    the required information is inapplicable or the information is presented in
    the financial statements or related notes.

(d) Reports on Form 8-K.

    None.


No Annual Report or proxy  material  for  the  year  1998  has been sent to the
Partners of the Partnership.  An  Annual  Report  will  be sent to the Partners
subsequent to this  filing  and  the  Partnership  will  furnish copies of such
report to the Commission when it is sent to the Partners.











                                     -36-



                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has  duly  caused  this  report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                            INLAND MONTHLY INCOME FUND II, L.P.
                            Inland Real Estate Investment Corporation
                            General Partner

                                  /s/ Robert D. Parks

                            By:   Robert D. Parks
                                  Chairman of the Board
                                  and Chief Executive Officer
                            Date: March 29, 1999

Pursuant to the  requirements  of  the  Securities  Exchange  Act of 1934, this
report has  been  signed  below  by  the  following  persons  on  behalf of the
registrant and in the capacities and on the dates indicated:

                            By:   Inland Real Estate Investment Corporation
                                  General Partner

                                  /s/ Robert D. Parks

                            By:   Robert D. Parks
                                  Chairman of the Board
                                  and Chief Executive Officer
                            Date: March 29, 1999

                                  /s/ Patricia A. Challenger

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: March 29, 1999

                                  /s/ Kelly Tucek

                            By:   Kelly Tucek
                                  Principal Financial Officer
                                  and Principal Accounting Officer
                            Date: March 29, 1999

                                  /s/ Daniel L. Goodwin

                            By:   Daniel L. Goodwin
                                  Director
                            Date: March 29, 1999

                                  /s/ Robert H. Baum

                            By:   Robert H. Baum
                                  Director
                            Date: March 29, 1999


                                     -37-