U.S. Securities and Exchange Commission
                         Washington, D.C.  20549

                               FORM 10-KSB
     (Mark One)
     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 [Fee Required]

          For the fiscal year ended December 31, 1995


     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

          Commission file number:  33-26036
                                   --------

                    PROPERTY SECURED INVESTMENTS, INC.
             ----------------------------------------------
              (Name of small business issuer in its charter)

       CALIFORNIA                                  95-4075422       
     ------------------------                -----------------------
     (State of Incorporation)                 (I.R.S. Employer ID #)

                  445 South Figueroa Street, Ste. 2600,
                        Los Angeles, CA 90071-1630
                ----------------------------------------
                (Address of principal executive offices)

     Issuer's telephone no.: (213) 612-7714 (Andrew K. Proctor)

     Securities Registered Under Section 12(b) of the Exchange Act:

                      Title of Class:  Common Stock
             Name of each Exchange on which Registered:  None

               Check whether the issuer (1) filed all reports
     required to be filed by Section 13 or 15(d) of the Exchange Act
     during the past 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......

               Check if there is no disclosure of delinquent filers
     in response to Item 405 of Regulation S-B, not contained in
     this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.         [   ]

               State issuer's revenues for its most recent fiscal
     year: $20,323.
                         ________________________


                               Page 1 of 65                   <PAGE>
               State the aggregate market value of the voting stock
     held by non-affiliates computed by reference to the price at
     which the stock was sold, or the average bid and asked prices
     of such stock, as of a specified date within the past 60 days.

               At March 22, 1996 -- None -- Stock not traded

               State the number of shares outstanding of each of the
     issuer's classes of common equity, as of the latest practicable
     date.

               At March 22, 1996 - 176,980 shares of Common Stock,
               no par value


     DOCUMENTS INCORPORATED BY REFERENCE:
     -----------------------------------
               None.

          Transitional Small Business Disclosure Format (check one):

          Yes ......; No ...X...
































                         EXHIBIT INDEX AT PAGE 23


                               Page 2 of 65                   <PAGE>
                                  PART I


     Item 1.   Description of Business
               -----------------------
          (a)  History.
               -------
               Property Secured Investments, Inc. (the "Company") is
     a California corporation.  The Company was organized in 1986,
     began operations in 1987, and elected in its 1987 Federal
     Income Tax Return to be taxed as a Real Estate Investment
     Trust, a REIT.  The Company was formed to invest in fixed and
     variable rate promissory notes ("Notes") secured by first and
     second deeds of trust on real property located in Southern
     California.  The Company has also invested in notes which were
     secured by other promissory notes.  Such other promissory notes
     were in all cases secured by deeds of trust and all-inclusive
     trust deeds.  On September 12, 1994, the Company's shareholders
     approved a modification of the Company's Bylaws which had the
     effect of permitting the Company to make equity investments in
     real property as well as investing in Notes secured by real
     property.  The Company's Board of Directors has not as yet made
     any investments for the Company under this policy.

               The Company ceased acquiring Notes in 1991 and
     shortly thereafter began to distribute the proceeds of the
     Company's Note portfolio to its shareholders as payments were
     received.  At the Company's annual shareholders meeting for
     1994, the shareholders approved a proposal to sell substan-
     tially all of the Company's real estate assets.  Most of the
     Notes in the Company's portfolio were either sold or paid off
     in the fourth quarter of 1994 or first quarter of 1995.  In the
     first quarter of 1995, the Company terminated the Purchase and
     Sale Agreement pursuant to which the Company had disposed of
     the majority of its assets, leaving it with three assets in its
     portfolio, one Note and two pieces of real estate.  By
     terminating the Purchase and Sale Agreement, Jess Kent &
     Company's right to purchase the remaining assets of the Company
     was terminated.

               Pursuant to a vote of shareholders at the annual
     meeting held in September, 1994, the Company effected a one-
     for-four reverse stock split on July 7, 1995.

               In September, 1995, the Company sold one of its two
     pieces of real property for net proceeds of $69,369 which were
     paid in cash.  The Company realized a loss of $25,899 on the
     sale of such property which was acquired by foreclosure.  The
     property is located in Acton, California.

               On December 30, 1995, the Company accepted $102,000
     from the borrower under its remaining Note in full settlement
     of the borrower's obligations under the Note.  At the time of
     such payment, $240,000 in principal and accrued interest was
     due under such Note.  Given the history of defaults under such
     Note and the Company's junior position to a senior secured

                               Page 3 of 65                   <PAGE>
     lender, the Company accepted the borrower's payment offer which
     was made in connection with a refinancing of the property
     securing the Note.

               The Company is marketing for sale its sole remaining
     piece of real property, which is located in Inglewood,
     California.

          (b)  Environmental Protection.
               ------------------------
               Federal, state and local provisions relating to
     environmental protection and the discharge of material into the
     environment have not had any effect on the Company; the Company
     does not anticipate making any capital expenditures for
     environmental control.

          (c)  Employees.
               ---------
               The Company has no employees.


     Item 2.   Description of Property
               -----------------------
          (a)  Investment Policies.
               -------------------
               On September 12, 1994, the Company's shareholders
     approved a modification of the Company's Bylaws which had the
     effect of permitting the Company to make equity investments in
     real property as well as invest in Notes secured by real
     property.  The Company has from its inception had the ability
     to invest in other REITs or partnerships primarily engaged in
     real estate investment activities.  The Company may not invest
     more than ten percent (10%) of its total assets in unimproved
     property or Notes secured by deeds of trust on unimproved
     property.  This restriction may not be changed without
     shareholder approval.  There are no other restrictions on the
     type of real estate in which the Company may invest or which
     may secure the Notes the Company acquires.  The Company may
     invest either primarily for capital gain or for income.  The
     Company's Board of Directors has not as yet made any new
     investments for the Company.

          (b)  Real Estate Owned.
               -----------------
               The Company's December 31, 1995 balance sheet lists
     real estate held for sale in the amount of $200,000.  That line
     item represents a property that the Company obtained through
     foreclosure on a trust deed in its Note portfolio.  The
     property is recorded at its estimated fair value less estimated
     selling costs which is lower than cost.  Costs of maintaining
     such foreclosed property are expensed as incurred.

               Such property consists of a two-story office building
     located at 11011 Crenshaw Boulevard in Inglewood, California,
     that has recently been repaired following a fire and which is
     currently uninsured.  The property is located in an

                               Page 4 of 65                   <PAGE>
     economically disadvantaged, inner-city area with a high level
     of commercial vacancies.  The property is currently vacant. 
     The Company is currently marketing it for sale.


     Item 3.   Legal Proceedings
               -----------------
               There are no material legal proceedings pending
     against the Company.  In the third quarter of 1995, the Company
     prevailed in its unlawful detainer action with respect to the
     Crenshaw Boulevard property and obtained possession of such
     property.  The Company filed a declaratory relief action on
     October 11, 1994 in the California Superior Court for the
     County of Los Angeles to recover approximately $57,000 in
     insurance proceeds resulting from a fire which damaged the
     Inglewood property in 1992.  The insurance carrier, Crusader
     Insurance Company, made its check payable not only to the
     Company but also to the former owner of the property and
     several former lienholders on the property and has refused to
     reissue the check in the Company's name alone without an
     assignment from each of the other payees or appropriate court
     order.  The Company has been unable to locate the other payees. 
     As a result, it was compelled to file an action for declaratory
     relief to confirm the Company's right to the insurance
     proceeds.


     Item 4.   Submission of Matters to a Vote of Security Holders
               ---------------------------------------------------
               The Company did not submit any matters to a vote of
     its security holders during the fourth quarter of 1995.


























                               Page 5 of 65                   <PAGE>
                                 PART II


     Item 5.   Market for Common Equity and Related Stockholder
               Matters
               ------------------------------------------------
               As of March 22, 1996, the Company's common stock was
     held by approximately 200 shareholders of record.  There is no
     established public trading market for that stock.

               There are no outstanding options or warrants to
     purchase shares of the Company's common stock issued by the
     Company, and there are no outstanding securities convertible
     into shares of the Company's common stock.

               The Company has declared the following dividends on
     shares of stock during the two most recent fiscal years.

     Declaration Date      Dividend Per Share            Amount
     ----------------      ------------------           --------
     March 21, 1994                $0.10                $ 70,792
     December 7, 1994              $1.40                $991,085

               During 1994, all of the distributions made by the
     Company represented a return of capital.

     FUTURE DIVIDEND POLICY
     ----------------------
               Future distributions, if any, and the timing and
     amount of such distributions by the Company will depend upon
     its operating expenses, cash flow from the sale of its
     remaining real estate asset and, if determined to be a viable
     alternative by the Board of Directors, its capital needs in
     connection with a recapitalization, as well as the proceeds of
     any such recapitalization.


     Item 6.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations
               -------------------------------------------------
          (a)  Liquidity.
               ---------
               The liquidity of the Company is a function of:
     (i) its collections of the principal and interest from its Note
     portfolio, (ii) proceeds from the sale of assets, (iii) its
     operating expenses and (iv) dividends declared.  During the
     fourth quarter of 1995, the Company sold one of its two
     remaining pieces of real property and received an early payoff
     on its sole remaining Note.  The Company is marketing for sale
     its sole remaining real property asset.  The Company's Board of
     Directors is currently exploring opportunities for
     recapitalizing the Company through, among other things, a
     public or private offering of the Company's common stock.  If
     the Company is not successful in raising new capital to fund
     its operations in 1996, the Company will be dependent upon its


                               Page 6 of 65                   <PAGE>
     reserves and its ability to sell or otherwise liquidate its
     remaining real property to meet its cash requirements.

               At December 31, 1995, the Company had cash of
     $262,055.  The cash held by the Company at year end was in
     excess of the amount required under Company policy to be held
     in cash reserves.  Company policy requires it to maintain cash
     reserves of at least 3% of its net asset value.  At
     December 31, 1995, the net asset value (Shareholders' Equity)
     was $436,868.

          (b)  Capital Resources.
               -----------------
               The Company has no plans or commitments for any
     future capital expenditures.

          (c)  Results of Operations.
               ---------------------
               The Company's income in 1995 decreased to $20,323
     from $215,946 in 1994, a decrease of $195,621, primarily as the
     result of the reduction in interest earned on the Company's
     Note portfolio of $151,821 which resulted from the liquidation
     of that portfolio.  Expenses in 1995 decreased to $304,781 from
     $457,627 in 1994, a decrease of $152,846, primarily as a result
     of a $201,730 decrease in operating expenses resulting
     primarily from a decrease in non-recurring legal fees and costs
     relating to the sale of the Company's assets.  Such decrease in
     operating expenses was partially offset by increases in the
     provisions for losses on notes receivable and real estate of
     $26,787 and $22,097, respectively, over 1994.  In 1995, the
     Company realized a net loss of $132,008 upon the sale of Notes
     receivable.  The Company also realized a net loss of $25,899 on
     the sale of real property located in Acton, California.  Such
     factors resulted in a net loss for 1995 of $310,357 compared to
     a net loss of $691,055 in 1994.  The Company's total operating
     expenses exceeded both two percent (2%) of the Company's
     average invested assets and twenty-five percent (25%) of its
     net income for 1995.  The Company's independent directors have
     determined that the Company's operating expenses for 1995 were
     justified in light of the continued liquidation of its assets.

               The Company's Board of Directors is exploring the
     Company's prospects for raising new capital and the
     opportunities currently available for investment in real estate
     structured either as equity or secured debt.  If the Board
     determines that it is in the best interests of the Company and
     its shareholders to raise new capital for further investment,
     it is not currently possible to project the overall effect of
     such activities on the Company's net income for 1996.  If the
     Board does not decide to raise new capital and resume
     investment activities, it will seek to sell or otherwise
     liquidate the Company's remaining asset and distribute the
     proceeds of such liquidation and all of the Company's reserves,
     after the payment of expenses, to the Company's shareholders.



                               Page 7 of 65                   <PAGE>
               The Company does not expect inflation to be a
     material factor in its operations in 1996.


     Item 7.   Financial Statements and Supplemental Data
               ------------------------------------------
               The following financial statements are furnished as
     part of this report:

               (a)  Balance Sheet as of December 31, 1995;

               (b)  Statements of Operations for the years ended
                    December 31, 1995 and 1994;

               (c)  Statements of Stockholders' Equity for the years
                    ended December 31, 1995 and 1994;

               (d)  Statements of Cash Flows for the years ended
                    December 31, 1995 and 1994; 

               (e)  Notes to Financial Statements; and

               (f)  Independent Auditor's Report.


     Item 8.   Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure
               ------------------------------------------------
               Not applicable.




























                               Page 8 of 65                   <PAGE>




                       INDEPENDENT AUDITORS' REPORT



     To the Board of Directors and Shareholders of
     Property Secured Investments, Inc.:

     We have audited the accompanying balance sheet of Property
     Secured Investments, Inc. (the "Company") as of December 31,
     1995 and the related statements of operations, stockholders'
     equity and cash flows for each of the two years in the period
     ended December 31, 1995.  These financial statements are the
     responsibility of the Company's management.  Our responsibility
     is to express an opinion on the financial statements based on
     our audits.

     We conducted our audits in accordance with generally accepted
     auditing standards.  Those standards require that we plan and
     perform our audits 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 the Company as
     of December 31, 1995, and the results of its operations and 
     its cash flows for each of the two years in the period ended 
     December 31, 1995, in conformity with generally accepted
     accounting principles.


     /s/ Deloitte & Touche LLP

     DELOITTE & TOUCHE LLP
     Los Angeles, California

     March 18, 1996










                               Page 9 of 65                   <PAGE>

                    Property Secured Investments, Inc.
                              BALANCE SHEET
                            December 31, 1995




                                  ASSETS


             Cash                                        $  262,055 
             Real estate held for sale                      200,000 
                                                          --------- 
                                                         $  462,055 
                                                          ========= 



                   LIABILITIES AND STOCKHOLDERS' EQUITY


             Accrued expenses and other liabilities      $   25,187 
                                                          --------- 
             Stockholders' Equity
                Common stock, 20,000,000 shares
                   authorized, 176,980 shares issued 
                   and outstanding                        6,298,479 
                Additional paid-in capital                    2,970 
                Distributions in excess of earnings      (5,864,581)
                                                          --------- 
                   Total Stockholders' Equity               436,868 
                                                          --------- 
                                                         $  462,055 
                                                          ========= 





















               The accompanying notes are an integral part
                      of these financial statements
                              Page 10 of 65                   <PAGE>
                    Property Secured Investments, Inc.
                         STATEMENTS OF OPERATIONS
                For the years ended December 31, 1995 and 1994




                                                1995       1994   

     Income
        Interest                             $  11,440  $ 163,261 
        Loan origination fees                    8,163     50,103 
        Other                                      720      2,582 
                                               -------    ------- 
           Total income                         20,323    215,946 

     Expenses
        Operating                              150,676    352,406 
        Provision for losses on notes
           receivable                          132,008    105,221 
        Provision for losses on real estate     22,097        -   
                                               -------    ------- 
           Total expenses                      304,781    457,627 
                                               -------    ------- 

     Net loss before loss on sale of 
       notes receivable and real estate       (284,458)  (241,681)

     Loss on sale of notes receivable -
        related party (note 2)                           (446,678)
     Loss on sale of real estate               (25,899)    (2,696)
                                               -------    ------- 
     Net loss                                $(310,357) $(691,055)
                                               =======    ======= 
     Per common share information:
        Net loss                             $   (1.75) $   (3.90)
                                               =======    ======= 
        Return of capital dividends          $    0.00  $    6.00 
                                               =======    ======= 

     Weighted average number of shares 
        outstanding                            176,980    176,980 
                                               =======    ======= 












               The accompanying notes are an integral part
                      of these financial statements
                              Page 11 of 65                   <PAGE>
     <TABLE>
                          Property Secured Investments, Inc.
                          STATEMENTS OF STOCKHOLDERS' EQUITY
                     For the years ended December 31, 1995 and 1994


     <CAPTION>

                             Common Stock     Additional  Distributions
                          -------------------   Paid-In     In Excess
                          Shares     Amount     Capital    of Earnings       Total   
                          -------   ---------   -------    -----------     --------- 
     <S>                  <C>      <C>         <C>         <C>            <C>
     Balance,
       January 1, 1994    176,980  $6,298,479  $  2,970    $(3,801,292)   $2,500,157 

     Net loss                                                 (691,055)     (691,055)

     Dividends                                              (1,061,877)   (1,061,877)
                          -------   ---------    ------      ---------     --------- 
     Balance,
       December 31, 1994  176,980   6,298,479     2,970     (5,554,224)      747,225 

     Net loss                                                 (310,357)     (310,357)
                          -------   ---------    ------      ---------     --------- 
     Balance,
      December 31, 1995   176,980  $6,298,479  $  2,970    $(5,864,581)   $  436,868 
                          =======   =========    ======      =========     ========= 

     </TABLE>























               The accompanying notes are an integral part
                      of these financial statements

                              Page 12 of 65                   <PAGE>

                       Property Secured Investments, Inc.
                            STATEMENTS OF CASH FLOWS
                 For the years ended December 31, 1995 and 1994



                                                      1995        1994   
                                                    --------    -------- 
     Cash flows from operating activities:
       Interest received                           $  13,936  $  193,042 
       Operating expenses paid                      (160,528)   (363,667)
       Other income received                             720       2,582 
                                                    --------   --------- 
     Net cash used in operating activities          (145,872)   (168,043)

     Cash flows from investing activities:
       Principal payments received on 
         notes receivable                            168,235     442,049 
       Proceeds from sale of notes receivable                    728,309 
       Proceeds from sale of real estate              69,369     303,797 
                                                    --------   --------- 
     Net cash provided by investing activities       237,604   1,474,155 

     Cash flows from financing activities:
       Cash distributions to stockholders                     (1,486,628)
       Payments on trust deed note payable                      (137,530)
                                                    --------   --------- 
     Net cash used in financing activities                    (1,624,158)
                                                    --------   --------- 
     Net increase (decrease) in cash                  91,732    (318,046)

     Cash, beginning of year                         170,323     488,369 
                                                    --------   --------- 
     Cash, end of year                             $ 262,055  $  170,323 
                                                    ========   ========= 
     Cash flows from operating activities:
       Net loss                                    $(310,357) $ (691,055)
       Adjustments to reconcile net loss
         to net cash used in operating 
         activities:
           Loss on sale of notes receivable                      446,678 
           Loss on sale of real estate                25,899       2,696 
           Amortization of loan fees                  (8,163)    (50,103)
           Provision for losses on notes 
            receivable and real estate               154,105     105,221 
           Decrease in accrued interest 
            receivable                                 2,496      29,781 
           Decrease in accrued expenses and 
            other liabilities                         (9,852)    (11,261)
                                                    --------   --------- 
     Net cash used in operating activities         $(145,872)  $(168,043)
                                                    ========   ========= 



               The accompanying notes are an integral part
                      of these financial statements
                              Page 13 of 65                   <PAGE>
     NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

          Organization
          ------------
          Property Secured Investments, Inc. (the "Company" or "PSI")
          was incorporated in 1986 and began operations in 1987.  The
          Company has elected to be taxed as a Real Estate Investment
          Trust ("REIT").  The Company had investments in promissory
          notes collateralized principally by deeds of trust on
          California real property.  In 1994, the Company obtained
          stockholder approval to convert to a perpetual life REIT.

          Estimates
          ---------
          In preparing financial statements in conformity with
          generally accepted auditing principles, management makes
          estimates and assumptions that affect the reported amounts
          of assets and liabilities and disclosures of contingent
          assets and liabilities at the date of the financial
          statements, as well as the reported amounts of revenues and
          expenses during the reporting period.  Actual results could
          differ from those estimates.

          Real Estate
          -----------
          Real Estate represents one property that the Company has
          obtained through foreclosure on a trust deed that was in its
          portfolio and is held for sale.  The property is recorded at
          its estimated fair value less estimated selling costs which
          is lower than cost.  Costs of maintaining the foreclosed
          property and preparing it for sale are expensed as incurred. 
          The property is located in Inglewood, California.

          Federal Income Taxes
          --------------------
          The Company qualifies as a REIT under the Internal Revenue
          Code and, accordingly, is not subject to Federal income
          taxes on amounts distributed to stockholders, providing it
          distributes at least 95% of its taxable income and meets
          certain other conditions.  The Company believes that it has
          met the requirements for continued qualification as a REIT
          for the years ended December 31, 1994 and 1995.

          Cash dividends paid or accrued to stockholders for Federal
          income tax purposes amounted to $1,061,877 for the year
          ended December 31, 1994.  These dividends were a return of
          capital to the stockholders.

          Net Loss Per Share
          ------------------
          Net loss per share is based on the weighted average number
          of common shares outstanding.





                              Page 14 of 65                   <PAGE>
          Stock Split
          -----------
          In July 1995, the Company effected a one-for-four reverse
          stock split of its common stock.  Pursuant to the terms of
          such stock split, in lieu of the issuance of any fractional
          shares that would otherwise result from the reverse stock
          split, the Company shall issue one additional share of
          common stock.  Note that the 176,980 outstanding share
          balance is subject to adjustments based on the actual 1 for
          4 reverse split calculation of each individual account, with
          the fractional share interest rounded up to the next full
          share.  The common stock outstanding and weighted average
          shares outstanding for all periods presented have been
          adjusted to reflect this stock split.

     NOTE 2 - RELATED PARTY TRANSACTIONS

          In 1995, certain expenses in the amount of $54,514 were
          incurred on behalf of the Company by an officer and were
          reimbursed by the Company.

          On September 12, 1994, the Company entered into an agreement
          to sell substantially all of its notes receivable and real
          estate portfolio.  The sale price was $728,309, which
          resulted in a $446,678 loss.  The notes and real estate
          portfolio were sold to a company owned by the current
          president and member of the board of directors of the
          Company, which was pursuant to an agreement approved by the
          board of directors and stockholders of the Company prior to
          this individual becoming an officer and a member of the
          board of directors of the Company.  The agreement was
          terminated by agreement of the parties effective as of March
          17, 1995.  By terminating the agreement, Jess Kent &
          Company's right to purchase the remaining assets of the
          Company was terminated.






















                              Page 15 of 65                   <PAGE>
                                  PART III


     Item 9.   Directors, Executive Officers, Promoters and Control
               Persons; Compliance with Section 16(a) of the Exchange
               Act
               ------------------------------------------------------
     Directors
     ---------
               The Company currently has four directors:  David A.
     Hilliard, Elbert R. Lewis, Andrew K. Proctor and Hubert
     Scheffy, Jr.  The Company's directors voted to approve a
     reduction of the number of directors from nine to five.  There is
     currently one vacancy on the Board.  The entire Board of
     Directors is elected on an annual basis.

          Elbert R. Lewis - Age: 85
          ---------------
               Mr. Lewis served as an independent director of the
     Company from June of 1986 to March of 1992.  He is currently
     serving as a member of the Board of Directors and Secretary of
     the Company.  He succeeded Irving Kellogg as Chairman of the
     Board of the Company on March 24, 1994, a position he held until
     September 26, 1994.  Between March 19, 1992 and April 12, 1994,
     Mr. Lewis served as the Treasurer of the Company, and from
     April 12, 1994 to September 26, 1994, he was President.  From
     1960 to his retirement in 1975, Mr. Lewis served as the Senior in
     Charge of the Condemnations Section, Los Angeles District,
     California Division of Highways.  He was responsible for hiring
     outside appraisers where required for litigation and for
     reviewing appraisals by the City of Los Angeles where the city
     sought state approval of city applications for federal funding.

          Andrew K. Proctor - Age: 39
          -----------------
               Mr. Proctor was elected to the Board of Directors at
     the Company's Annual Meeting on September 12, 1994 and is
     currently serving as a member of the Board of Directors,
     President and Treasurer.  Mr. Proctor is the Chief Executive
     Officer and sole shareholder of Jess Kent & Company ("JK&CO") and
     is the Managing Principal of its wholly-owned investment banking
     subsidiary, Jess Kent Capital Markets, Inc., a SEC registered
     broker/dealer and member of the National Association of
     Securities Dealers, Inc.  In 1994, the Company entered into that
     certain Purchase and Sale Agreement as of August 31, 1994 and
     amended September 12, 1994 ("Purchase Agreement") with JK&CO
     pursuant to which JK&CO purchased most of the Company's real
     estate assets for a total purchase price paid of $703,308.  The
     Purchase Agreement was terminated by agreement of JK&CO and the
     Company effective as of March 17, 1995.  JK&CO's principal
     offices are located at 445 South Figueroa Street, Suite 2600, Los
     Angeles, California, the same location as the Company's principal
     offices.  Mr. Proctor has managed JK&CO since 1990.  He is a
     graduate economist with a B.A. from the University of Southern
     California, an M.A. from the Peter F. Drucker Graduate Management
     Center at the Claremont Graduate School, and an M.B.A. from the

                              Page 16 of 65                   <PAGE>
     Anderson Graduate School of Management at UCLA.  From 1986 to
     1990, Mr. Proctor was a Vice President of Dominick & Dominick,
     Incorporated, a New York Stock Exchange member firm, where he was
     responsible for managing the western U.S. and Pacific Rim
     corporate finance group.  From 1979 to 1986, Mr. Proctor held
     various investment banking positions with New York Stock Exchange
     member firms.  He serves as Chairman of the Alumni Advisory
     Council at the Peter F. Drucker Graduate Management Center at the
     Claremont Graduate School.

          David A. Hilliard - Age: 44
          -----------------
               Mr. Hilliard was elected to the Board of Directors as
     an independent director at the Company's Annual Meeting on
     September 12, 1994 and was appointed chairman of the Investment
     Committee on September 26, 1994.  He is the Principal of Hilliard
     Properties, an institutional real estate advisory and development
     firm he founded in 1988.  Mr. Hilliard received a B.A. in
     Economics from Carnegie Mellon University, and a M.M. from the
     Kellogg School of Management at Northwestern University. 
     Mr. Hilliard began his banking and real estate career at
     Manufacturers Bank in 1970, where he eventually became an
     Assistant Vice President in the Bank's commercial construction
     group from 1976 to 1981.  In 1981 Mr. Hilliard joined Security
     Pacific National Bank.  At Security Pacific, he served as First
     Vice President and Regional Manager in the Real Estate Industries
     Group.  He subsequently founded Hilliard Properties in 1988. 
     Mr. Hilliard currently serves as the President of Sonhill, Inc.,
     a private property management company which manages the assets of
     Prairie Properties, a California limited partnership.  He is the
     President of Armacost Construction Corporation, the Treasurer of
     AJIA Consulting Group, Inc., a Director of Wolff Sesnon Buttery,
     and a Vice President of Maritz, Wolff and Company, all of which
     are real estate development and investment businesses.

          Hubert Scheffy, Jr. - Age: 55
          -------------------
               Mr. Scheffy was elected to the Board of Directors as an
     independent director at the Company's Annual Meeting on
     September 12, 1994, and was appointed chairman of the Company's
     Compensation/Audit Committee on September 26, 1994.  Mr. Scheffy
     is the Vice-President/Controller of Lewis Homes Management Corp.,
     a position he has held since 1985.  Mr. Scheffy received a B.A.
     from Harvard College, an M.B.A. from the Harvard Business School,
     and an AEMBA from the Peter F. Drucker Graduate Management Center
     at the Claremont Graduate School.  He became a Certified Public
     Accountant in 1965 while associated with Arthur Anderson & Co. 
     From 1970 to 1985, Mr. Scheffy held various financial and
     managerial positions with companies engaged in the mortgage
     lending, real estate, and manufacturing industries.

               Messrs. Proctor, Hilliard and Scheffy did not file a
     Form 3 with the Securities and Exchange Commission or the Company
     when they became directors and/or officers of the Company in
     1994.  Such Form 3s have subsequently been filed with the
     Securities and Exchange Commission and the Company.  To the

                              Page 17 of 65                   <PAGE>
     knowledge of the Company, based upon its review of such Forms,
     none of such individuals have ever owned any securities of the
     Company.

     Executive Officers
     ------------------
               Mr. Lewis served as the Treasurer of the Company
     between March 19, 1992 and April 12, 1994, as President from
     April 12, 1994 to September 26, 1994 and as Secretary from
     September 26, 1994 to the present.  Mr. Proctor has served as the
     President and Treasurer of the Company since September 26, 1994.

               The officers of the Company serve at the pleasure of
     the Board of Directors and may be removed from office at any
     time.  The Board of Directors generally considers the status of
     the officers at the organizational meeting of the Board following
     each annual meeting of Shareholders.  There are no family
     relations between any director or executive officer of the
     company.


     Item 10.  Executive Compensation
               ----------------------
               The Company's directors received no compensation during
     1995 and are not currently receiving any compensation.

               The following table shows, for the fiscal years ending
     December 31, 1995, 1994, and 1993, the compensation (Director's
     fees) paid by the Company to its executive officers for those
     years:



























                              Page 18 of 65                   <PAGE>
     <TABLE>
                                     SUMMARY COMPENSATION TABLE

     <CAPTION>

          Name and
         Principal                                             Long Term        All Other
          Position       Year   Salary    Bonus      Other    Compensation     Compensation
     -----------------   ----   ------    -----      -----    ------------     ------------
     <S>                 <C>    <C>       <C>       <C>       <C>              <C>

     Andrew K. Proctor   1995    -0-      -0-         -0-         -0-              -0-
     President and       1994    -0-      -0-         -0-         -0-              -0-
     Treasurer           1993    N/A      N/A         N/A         N/A              N/A

     Elbert R. Lewis     1995    -0-      -0-         -0-         -0-              -0-
     Secretary           1994    -0-      -0-       $11,000       -0-              -0-
                         1993    -0-      -0-       $12,000       -0-              -0-

     </TABLE>

     No director or officer of the Company received any compensation for
     services rendered to the Company in 1995, and no directors other than
     those listed received compensation for services rendered to the
     Company in 1994.
































                              Page 19 of 65                   <PAGE>
     Item 11.  Security Ownership of Certain Beneficial Owners and
               Management
               ---------------------------------------------------

               OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT

               The following table sets forth certain information, as of
     March 22, 1996, with respect to all those known by the Company to
     be beneficial owners of more than five percent (5%) of its outstanding
     stock, directors, and directors and officers of the Company as a
     group.  All share numbers reflect the Company's one-for-four reverse
     stock split effected on July 7, 1995.


                Name and Address             Amount and Nature  Percent
     Title of    of Beneficial                 of Beneficial      of 
      Class          Owner                      Ownership <F*>   Class 
     -------    ----------------             -----------------  -------

     Common     The Irving Kellogg           11,200 shares       6.4%
     stock      Individual Retirement        Evelyn Kellogg,
                Account                      Beneficiary
                821 Monte Leon Drive
                Beverly Hills, CA 90210

     Common     The Evelyn & Irving Kellogg  2,200 shares        1.2%
     stock      Foundation, Inc.,            Evelyn Kellogg,
                A Nonprofit Corporation      Director
                821 Monte Leon Drive
                Beverly Hills, CA 90210

     Common     Elbert R. Lewis              50 shares           <F**>%
     stock      410 North Citrus Avenue
                Los Angeles, CA 90036

     Common     All directors and            50 shares <F***>    <F**>%
     stock      officers as a group

     [FN]
     <F*>      Except as noted, the persons named in the table have sole
               voting power and investment power with respect to all shares
               of common stock shown as beneficially owned by them subject
               to community property laws where applicable.
     <F**>     The percentage of shares beneficially owned is less than 1%
               of the shares outstanding.
     <F***>    Comprised of the shares listed as owned by Elbert R. Lewis
               in this table.


     Item 12.  Certain Relationships and Related Transactions
               ----------------------------------------------
               See discussion in Item 1(a) and Item 9 under the description
     of Andrew K. Proctor.




                              Page 20 of 65                   <PAGE>
     Item 13.  Exhibits and Reports on Form 8-K
               --------------------------------
               (a)  Exhibits
                    --------
      No.      Description
     ----      -----------
     3.1       Articles of Incorporation of Property Secured Investments,
               Inc., as amended

     3.2       Restated Bylaws of Property Secured Investments, Inc.

     27        Financial Data Schedule

               (b)  No Form 8-K was filed during the fourth quarter of the
     fiscal year ended December 31, 1995.










































                              Page 21 of 65                   <PAGE>
                                   SIGNATURES

               In accordance with section 13 or 15(d) of the Exchange Act,
     the registrant caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.

                       PROPERTY SECURED INVESTMENTS, INC.
                       ----------------------------------


     By:  /s/ Andrew K. Proctor              Dated:  March 29, 1996
          --------------------------------
          Andrew K. Proctor, President &
               Treasurer



               In accordance with the Exchange Act, 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  /s/ Andrew K. Proctor               Dated:  March 29, 1996
         --------------------------------
         Andrew K. Proctor, President
         (principal executive officer),
         Treasurer (principal financial
         officer and principal accounting
         officer) and Director



     By  /s/ Hubert Scheffy                  Dated:  March 28, 1996
         --------------------------------
         Hubert Scheffy, Jr., Director



     By  /s/ David Hilliard                  Dated:  March 26, 1996
         --------------------------------
         David Hilliard, Director



     By  /s/ Elbert Lewis                    Dated:  March 22, 1996
         --------------------------------
         Elbert Lewis, Director









                              Page 22 of 65                   <PAGE>
                                  EXHIBIT INDEX
                                  -------------

       No.     Description                                          Page
     ------    -----------                                          ----
     3.1       Articles of Incorporation of Property 
               Secured Investments, Inc., as amended                 24

     3.2       Restated Bylaws of Property Secured 
               Investments, Inc.                                     30

     27        Financial Data Schedule                               65













































                              Page 23 of 65                   <PAGE>
                                 EXHIBIT 3.1
                                 -----------

                          ARTICLES OF INCORPORATION

                                      OF

                      PROPERTY SECURED INVESTMENTS, INC.



                                      I

            The name of this corporation is PROPERTY SECURED
       INVESTMENTS, INC.

                                      II

            The purpose of this corporation is to engage in any lawful
       act or activity for which a corporation may be organized under
       the General Corporation Law of California other than the
       banking business, the trust company business or the practice of
       a profession permitted to be incorporated by the California
       Corporations Code.

                                     III

            The name and address in the State of California of this
       corporation's initial agent for service of process is: 
       Mr. Stanley Glickman, 14724 Ventura Boulevard, Suite 918,
       Sherman Oaks, California 91403.

                                      IV

            This corporation is authorized to issue only one class of
       shares of stock; and the total number of shares which this
       corporation is authorized to issue is five million (5,000,000).

            This corporation may not issue:  (1) securities which are
       nonvoting or assessable, (2) securities which are redeemable at
       the option of the holders, or (3) warrants, options or similar
       evidences of a right to buy its securities, unless (a) issued
       to all of its shareholders ratably, (b) as part of a financing
       arrangement or (c) as part of a stock option plan to directors,
       officers or employees of this corporation which meets the
       conditions of Section 260.140.41 (or any successor section) of
       the Rules of the California Corporations Commissioner.

                                      V

            These articles may not be amended unless approved by the
       vote or written consent of the holders of a majority of the
       outstanding shares of this corporation; no amendment which
       would change any rights with respect to any outstanding
       securities of this corporation by reducing the amount payable

                                     -1-
                         Page 24 of 65                   <PAGE>
       thereon upon liquidation of this corporation, or by diminishing
       or eliminating any voting rights pertaining thereto, may be
       made unless also approved by the vote of the holders of two-
       thirds of the outstanding securities so affected.

                                      VI

            The existence of this corporation is limited to May 1,
       2006.

       Dated:  March 6, 1986.


                                     /s/ STANLEY GLICKMAN
                                     ---------------------------------
                                     STANLEY GLICKMAN
                                     Incorporator






































                                     -2-

                         Page 25 of 65                   <PAGE>
                           CERTIFICATE OF AMENDMENT
                                     OF
                          ARTICLES OF INCORPORATION




                 STANLEY GLICKMAN and ELLIOT FINE certify that:

                 1.   They are the President and the Secretary,
       respectively, of PROPERTY SECURED INVESTMENTS, INC., a
       California corporation.

                 2.   The Board of Directors of PROPERTY SECURED
       INVESTMENTS, INC. has approved the amendment of Article IV of
       the Articles of Incorporation of this corporation to read as
       follows:

                 "This corporation is authorized to issue only
            one class of shares of stock; and the total number of
            shares which this corporation is authorized to issue
            is Ten Million (10,000,000).  Upon the amendment of
            this Article to read as herein set forth, each
            outstanding share is split up and converted into two
            (2) shares.

                 This corporation may not issue:  (1) securities
            which are nonvoting or assessable, (2) securities
            which are redeemable at the option of the holders, or
            (3) warrants, options or similar evidences of a right
            to buy its securities, unless (a) issued to all of
            its shareholders ratably, (b) as part of a financing
            arrangement or (c) as part of a stock option plan to
            directors, officers or employees of this corporation
            which meets the conditions of Section 260.140.41 (or
            any successor section) of the Rules of the California
            Corporations Commissioner."

                 3.   The corporation has only one class of shares
       outstanding.  The amendment affects only a stock split, as that
       term is defined in Section 188 of the California Corporations
       Code, and is therefore an amendment which may be adopted by the
       Board alone pursuant to Section 902(c) of the California
       Corporations Code.


       Dated:  January 30, 1989      /s/ Stanley Glickman
                                     ---------------------------------
                                     Stanley Glickman, President

                                     /s/ Elliot Fine
                                     ---------------------------------
                                     Elliot Fine, Secretary


                                     -1-

                         Page 26 of 65                   <PAGE>
                 We further declare under penalty of perjury under the
       laws of the State of California that the matters set forth in
       this Certificate are true and correct of our own knowledge.


       Dated:  January 30, 1989      /s/ Stanley Glickman
                                     ---------------------------------
                                     Stanley Glickman, President

                                     /s/ Elliot Fine
                                     ---------------------------------
                                     Elliot Fine, Secretary











































                                     -2-

                         Page 27 of 65                   <PAGE>
                           CERTIFICATE OF AMENDMENT

                                      OF

                          ARTICLES OF INCORPORATION


            ANDREW K. PROCTOR and ELBERT R. LEWIS certify that:


            1.   They are the president and the secretary, respec-
                 tively, of PROPERTY SECURED INVESTMENTS, INC., a
                 California corporation.

            2.   Article IV of the articles of incorporation of this
                 corporation is amended to read as follows:

                 "This corporation is authorized to issue only one
                 class of shares of stock; and the total number of
                 shares which this corporation is authorized to issue
                 is Twenty Million (20,000,000).  Upon the amendment
                 of this Article to read as herein set forth, each
                 outstanding share will be changed into one-fourth
                 (1/4) of one share.  In lieu of the issuance of any
                 fractional shares that would otherwise result from
                 the reverse stock split effected by the preceding
                 sentence, the corporation shall issue to any
                 shareholder that would otherwise receive fractional
                 shares one additional share.

                 This corporation may not issue:  (1) securities which
                 are nonvoting or assessable, (2) securities which are
                 redeemable at the option of the holders, or (3)
                 warrants, options or similar evidences of a right to
                 buy its securities, unless (a) issued to all of its
                 shareholders ratably, (b) as part of a financing
                 arrangement or (c) as part of a stock option plan to
                 directors, officers or employees of this corporation
                 which meets the conditions of Section 260.140.41 (or
                 any successor section) of the Rules of the California
                 Corporations Commissioner."

            3.   Article VI of the articles of incorporation of this
                 Corporation is deleted in its entirety.

            4.   The foregoing amendments of articles of incorporation
                 have been duly approved by the board of directors.

            5.   The foregoing amendments of articles of incorporation
                 have been duly approved by the required vote of
                 shareholders in accordance with Section 902 of the
                 Corporations Code.  The total number of outstanding



                                     -1- 

                         Page 28 of 65                   <PAGE>
                 shares of the corporation is 707,918.  The number of
                 shares voting in favor of the amendment equaled or
                 exceeded the vote required.  The percentage vote
                 required was more than 50%.


                 We further declare under penalty of perjury under the
       laws of the State of California that the matters set forth in
       this certificate are true and correct of our own knowledge.


       Date: June 30, 1995


                               /s/ Andrew K. Proctor
                               --------------------------------------
                                    Andrew K. Proctor, President


                                /s/ Elbert R. Lewis
                                --------------------------------------
                                     Elbert R. Lewis, Secretary

































                                     -2- 

                         Page 29 of 65                   <PAGE>
                                  EXHIBIT 3.2
                                  -----------

                                    RESTATED
                                     BYLAWS
                                       OF
                       PROPERTY SECURED INVESTMENTS, INC.
                           (A California Corporation)

                                   ARTICLE I.
                         OFFICES, PURPOSES AND POWERS
                         ----------------------------
                 Section 1.  PRINCIPAL OFFICE.  The Board of Directors
       shall fix the location of the principal executive office of the
       corporation at any place within or outside the State of
       California.  If the principal executive office is located outside
       this state, and the corporation has one or more business offices
       in this state, the Board of Directors shall likewise fix and
       designate a principal business office in the State of California. 
       Unless and until redesignated by resolution of the Board of
       Directors, the principal executive office of the corporation
       shall be within the County of Los Angeles.

                 Section 2.  OTHER OFFICES. The Board of Directors may
       at any time establish branch or subordinate offices at any place
       or places where the corporation is qualified to do business. 

                 Section 3.  PURPOSES AND POWERS. The corporation shall
       have such general purposes as are now or may hereafter be set
       forth in the articles of incorporation and shall have and
       exercise such powers in furtherance of its purposes as are now or
       may hereafter be set forth in the articles of incorporation and
       in these bylaws.

                 The specific purpose of the corporation is to invest in
       fixed and variable rate promissory notes secured by deeds of
       trust on improved and unimproved California real property in
       order to provide its shareholders with as high a level of current
       income as is consistent with the preservation of capital.  The
       corporation also may invest in participating mortgages or deeds
       of trust (providing equity or interest enhancements) and in
       promissory notes which are themselves secured by other promissory
       notes which are secured by deeds of trust on improved and
       unimproved California real property.  The corporation will invest
       in promissory notes by making loans directly to borrowers and by
       purchasing existing promissory notes at discounts.  For
       administrative and liquidity purposes, the corporation will
       regularly hold some portion of its net assets in certain money
       market instruments on which it will receive additional interest
       income.

                 When engaging in activities related to its general or
       specific purposes, the corporation shall abide by the following
       restrictions on its investments.  The corporation shall not:

                                      -1-

                         Page 30 of 65                   <PAGE>
                      (1)  Invest in commodities or commodity futures
            contracts.

                      (2)  Make short sales of securities.

                      (3)  Borrow money on an unsecured basis if such
            borrowing will result in an asset coverage of less than
            300%.  "Asset coverage" as used herein means the ratio which
            the value of the total assets of the corporation, less all
            liabilities and indebtedness except indebtedness for
            unsecured borrowings, bears to the aggregate amount of all
            unsecured borrowings of the corporation.  If, for any
            reason, the aggregate amount borrowed by the corporation at
            any time results in an asset coverage of less than 300%, the
            corporation will, within three business days, reduce its
            borrowings below that percentage.

                      (4)  Engage in the underwriting of securities of
            other issuers or the agency distribution of securities.

                      (5)  Invest in contracts for the sale of real
            estate, other than the promissory notes and certain equity
            or interest enhancements described above.

                      (6)  Engage in trading, as compared with
            investment activities.

                      (7)  Acquire securities in any company holding
            investments or engaging in activities prohibited by
            Section 260.140.93 of the California Corporate Securities
            Rules.

                      (8)  Issue debt or other senior securities.

                      (9)  Offer securities on a deferred payment or
            other similar basis.

                      (10)  Repurchase or otherwise reacquire its shares
            or other securities.

                      (11)  Invest more than 10% of its total assets in
            unimproved real property or indebtedness secured by a deed
            of trust or mortgage loans on unimproved real property.

                      (12)  Incur any indebtedness which would result in
            an aggregate amount of indebtedness in excess of 300% of the
            adjusted net worth.  "Adjusted net worth" as used herein
            shall mean the amount obtained by subtracting the
            corporation's total liabilities from its total assets as
            adjusted.  The total asset figure used shall be calculated
            by deduction of any reasonable cash reserves but before
            provision for depreciation or non-cash reserves.  All



                                      -2-

                         Page 31 of 65                   <PAGE>
            figures used shall be as shown on the corporation's books in
            accordance with generally accepted accounting principles.

                      (13)  Elect to terminate the status of the Company
            as a "Real Estate Investment Trust" as defined in
            sections 856 through 860 of the Internal Revenue Code or
            engage in a course of activities causing revocation of such
            status.

                      (14)  Invest in a promissory note secured by a
            deed of trust unless an appraisal is obtained on the
            underlying property and all notes secured by deeds of trust,
            including construction loans, on such property do not exceed
            in the aggregate 85% of the appraised value of the property,
            unless substantial justification exists because of the
            presence of other underwriting criteria such as the net
            worth of the borrower, the credit rating of the borrower
            based on his historical financial performance, other
            collateral, or the assignment of rents under a lease to the
            property where a tenant or tenants have demonstrated through
            historical net worth and cash flow the ability to satisfy
            the terms of the lease.

                      (15)  Invest in any promissory note secured by a
            deed of trust unless a mortgagee's or owner's title
            insurance policy or commitment as to the priority of such
            deed of trust or the condition of the title is first
            obtained.

                      (16)  Invest in any promissory note secured by a
            deed of trust that is subordinate to any deed of trust or
            equity interest of the Advisor, any director or any other
            Affiliate of the corporation.

                      (17)  Issue options or warrants to purchase its
            shares to Property Mortgage Co., Inc., the Advisor, any
            director or any other Affiliate of the corporation except on
            the same terms as such options or warrants are sold to the
            general public and then not in an amount greater than 10% of
            the outstanding shares of the corporation on the date of
            grant of any such options or warrants.

                      (18)  Issue options or warrants to purchase the
            corporation's shares at exercise prices less than the fair
            market value of such securities on the date of grant or for
            consideration (which may include services) that in the
            judgment of the Independent Directors has a market value
            less than the value of such option or warrants on the date
            of grant.

                      (19)  Invest in the equity securities of any
            issuer affiliated with Property Mortgage Co., Inc., the



                                      -3-

                         Page 32 of 65                   <PAGE>
            Advisor or a director or an Affiliate thereof unless a
            majority of the Directors (including a majority of the
            Independent Directors) not otherwise interested in such
            transaction approve the transaction as being fair and
            reasonable to the corporation and such investment is on,
            substantially the same terms and conditions as those
            received by other investors in such issuer.

                 The term "Advisor" means any person or persons
       responsible for directing or performing the day-to-day business
       affairs of the corporation.

                 The term "Affiliate" means (i) any person directly or
       indirectly controlling, controlled by or under common control
       with another person, (ii) any person owning or controlling 10% or
       more of the outstanding voting securities or beneficial 
       interests of such other person, (iii) any officer, director,
       trustee or general partner of such person and (iv) if such other
       person is an officer, director, trustee. or partner of another
       entity, then the entity for which that person acts in any such
       capacity.

                 The term "Independent Director" shall mean a director
       of the corporation who is not affiliated, directly or indirectly,
       with an Advisor to the corporation, whether by ownership of,
       ownership interest in, employment by, any material business or
       professional relationship with, or serves as an officer or
       director of, the Advisor or any affiliated business entity of the
       Advisor.  A director shall not be considered independent if he or
       she is serving as a director for more than three real estate
       investment trusts organized by Property Mortgage Co., Inc.  No
       director shall be independent if he or she performs other
       services for the corporation, except as a director.  An indirect
       relationship shall include circumstances in which a member of the
       immediate family of a director has one of the foregoing
       relationships with an Advisor to the corporation or the
       corporation.  A director's immediate family shall include such
       person's spouse, parents, children, siblings, mothers and
       fathers-in-law, sons- and daughters-in-law, and brothers and
       sisters-in-law.


                                   ARTICLE II
                          MEETINGS OF SHAREHOLDERS
                          ------------------------
                 Section 1.  PLACE OF MEETINGS.  Meetings of
       shareholders shall be held at such place within or outside the
       State of California as designated by the Board of Directors.  In
       the absence of any such designation, shareholder meetings shall
       be held at the principal executive office of the corporation.





                                      -4-

                         Page 33 of 65                   <PAGE>
                 Section 2.  ANNUAL MEETING.  The annual meeting of
       shareholders shall be held each year on a date and at a time
       designated by the Board of Directors.  The location of the annual
       meeting shall be at a place convenient to the shareholders and
       the date of the annual meeting shall be a reasonable period of
       time following the distribution of the annual report referred to
       in Section 5 of Article VII of these bylaws.  At each annual
       meeting directors shall be elected and any other proper business
       may be transacted.

                 Section 3.  SPECIAL MEETINGS.  A special meeting of the
       shareholders may be called at any time by the Board of Directors,
       or by a majority of the Independent Directors, or by the chairman
       of the board, or by the president, or by one or more shareholders
       holding shares in the aggregate entitled to cast not less than
       10% of the votes at that meeting.

                 Section 4.  NOTICE OF SPECIAL MEETINGS.  If a special
       meeting is called by any person or persons other than the Board
       of Directors, the request shall be in writing, specifying the
       time of such meeting and the general nature of the business
       proposed to be transacted, and shall be delivered personally or
       sent by registered mail or by telegraphic or other facsimile
       transmission to the chairman of the board, the president, any
       vice president or the secretary of the corporation.  The officer
       receiving the request shall cause notice to be normally given to
       the shareholders entitled to vote, in accordance with the
       provisions of Sections 5 and 6 of this Article II, that a meeting
       will be held at the time requested by the person or persons
       calling the meeting, not less than thirty-five (35) nor more than
       sixty (60) days after the receipt of the request.  If the notice
       is not given within twenty (20) days after receipt of the
       request, the person or persons entitled to call the meeting may
       give the notice or the superior court of the proper county shall
       summarily order the giving of the notice.  Nothing contained in
       this Section 4 shall be construed as limiting, fixing or
       affecting the time when a meeting of shareholders called by
       action of the Board of Directors may be held.

                 Section 5.  NOTICE OF SHAREHOLDERS' MEETINGS.  All
       notices of meetings of shareholders shall be sent or otherwise
       given in accordance with Section 5 of this Article II not less
       than ten (10) (or, if sent by third class mail thirty (30)) nor
       more than sixty (60) days before the date of the meeting.  The
       notice shall specify the place, date and hour of the meeting and
       (i) in the case of a special meeting, the general nature of the
       business to be transacted and that no other business will be
       transacted, or (ii) in the case of the annual meeting, those
       matters which the Board of Directors, at the time of giving the
       notice, intends to present for action by the shareholders.  The
       notice of any meeting at which directors are to be elected shall




                                      -5-

                         Page 34 of 65                   <PAGE>
       include the names of the nominees intended at the time of the
       notice to be presented by the Board of Directors for election.

                 If action is proposed to be taken at any meeting for
       approval of (i) a contract or transaction in which a director has
       a direct or indirect financial interest, pursuant to Section 310
       of the California Corporations Code (the "Code"), (ii) an
       amendment of the articles of incorporation, pursuant to
       Section 902 of the Code, (iii) a reorganization of the
       corporation, pursuant to Section 1201 of the Code, (iv) a
       voluntary dissolution of the corporation, pursuant to Section
       1900 of the Code, or (v) a distribution in dissolution other than
       in accordance with the rights of outstanding preferred shares,
       pursuant to Section 2007 of the Code, the notice shall also state
       the general nature of that proposal.

                 Section 6.  MANNER OF GIVING NOTICE; AFFIDAVIT OF
       NOTICE.  Notice of any meeting of shareholders shall be given
       either personally or by  first-class mail or telegraphic or other
       written communication, charges prepaid, addressed to the
       shareholder at the address of that shareholder appearing on the
       books of the corporation or given by the shareholder to the
       corporation for the purpose of notice.  If no such address
       appears on the corporation's books or is given, notice shall be
       deemed to have been given if sent to that shareholder by
       first-class mail or telegraphic or other written communication to
       the corporation's principal executive office, or if published at
       least once in a newspaper of general circulation in the county
       where that office is located.  Notice shall be deemed to have
       been given at the time when delivered personally or deposited in
       the mail or sent by telegram or other means of written
       communication.

                 If any notice addressed to a shareholder at the address
       of that shareholder appearing on the books of the corporation is
       returned to the corporation by the United States Postal Service
       marked to indicate that the United States Postal Service is
       unable to deliver the notice to the shareholder at that address,
       all future notices or reports shall be deemed to have been duly
       given without further mailing if these shall be available to the
       shareholder on written demand of the shareholder at the principal
       executive office of the corporation for a period of one year from
       the date of the giving of the notice.

                 An affidavit of the mailing or other means of giving
       any notice of any shareholders' meeting shall be executed by the
       secretary, assistant secretary or any transfer agent of the
       corporation giving the notice, and shall be filed and maintained
       in the minute book of the corporation.

                 Section 7.  QUORUM.  The presence in person or by proxy
       of the holders of a majority of the shares entitled to vote at



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       any meeting of shareholders shall constitute a quorum for the
       transaction of business.  The shareholders present at a duly
       called or held meeting at which a quorum is present may continue
       to do business until adjournment, notwithstanding the withdrawal
       of enough shareholders to leave less than a quorum, if any action
       taken (other than adjournment) is approved by at least a majority
       of the shares required to constitute a quorum.

                 Section 8.  ADJOURNED MEETING; NOTICE.  Any
       shareholders' meeting, annual or special, whether or not a quorum
       is present, may be adjourned from time to time by the vote of the
       majority of the shares represented at that meeting, either in
       person or by proxy, but in the absence of a quorum, no other
       business may be transacted at that meeting, except as provided in
       Section 7 of this Article II.

                 When any meeting of shareholders, either annual or
       special, is adjourned to another time or place, notice need not
       be given of the adjourned meeting if the time and place are
       announced at a meeting at which the adjournment is taken, unless
       a new record date for the adjourned meeting is fixed, or unless
       the adjournment is for more than forty-five (45) days from the
       date set for the original meeting, in which case the Board of
       Directors shall set a new record date.  Notice of any such
       adjourned meeting shall be given to each shareholder of record
       entitled to vote at the adjourned meeting in accordance with the
       provisions of Sections 5 and 6 of this Article II.  At any
       adjourned meeting the corporation may transact any business which
       might have been transacted at the original meeting.

                 Section 9.  VOTING.  The shareholders entitled to vote
       at any meeting of shareholders shall be determined in accordance
       with the provisions of Section 12 of this Article II, subject to
       the provisions of sections 702 to 704, inclusive, of the
       California Corporations Code (relating to voting shares held by a
       fiduciary, in the name of a corporation, or in joint ownership). 
       The shareholders' vote may be by voice vote or by ballot;
       provided, however, that any election for directors must be by
       ballot if demanded by any shareholder before the voting has
       begun.  On any matter other than elections of directors, any
       shareholder may vote part of the shares in favor of the proposal
       and refrain from voting the remaining shares or vote them against
       the proposal, but, if the shareholder fails to specify the number
       of shares which the shareholder is voting affirmatively, it will
       be conclusively presumed that the shareholder's approving vote is
       with respect to all shares that the shareholder is entitled to
       vote.  If a quorum is present, the affirmative vote of the
       majority of the shares represented at the meeting and entitled to
       vote on any matter (other than the election of directors) shall
       be the act of the shareholders, unless the vote of a greater
       number or voting by classes is required by the Code, by the
       articles of incorporation, or these bylaws.



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                 At a shareholders' meeting at which directors are to be
       elected, no shareholder shall be entitled to cumulate votes
       (i.e., cast for any candidate a number of votes greater than the
       number of votes which such shareholder normally is entitled to
       cast) unless such candidate or candidates' names have been placed
       in nomination prior to commencement of the voting and the
       shareholder has given notice prior to commencement of the voting
       of the shareholder's intention to cumulate votes.  If any one
       shareholder has given such notice, all shareholders entitled to
       vote may cumulate votes for candidates in nomination and give one
       candidate a number of votes equal to the number of directors to
       be elected multiplied by the number of votes to which that
       shareholder's shares are entitled, or distribute the
       shareholder's votes on the same principle among any or all of the
       candidates, as the shareholder thinks fit.  The candidates
       receiving the highest number of affirmative votes, up to the
       number of directors to be elected, shall be elected.

                 Section 10.  WAIVER OF NOTICE OR CONSENT BY ABSENT
       SHAREHOLDERS.  The transactions of any meeting of shareholders,
       either annual or special, however called and noticed, and
       wherever held, shall be as valid as though had at a meeting duly
       held after regular call and notice, if a quorum is present in
       person or by proxy, and if, either before or after the meeting,
       each person entitled to vote who was not present in person or by
       proxy signs a written waiver of notice or a consent to a holding
       of the meeting or an approval of the minutes.  The waiver of
       notice or consent need not specify either the business to be
       transacted or the purpose of any annual or special meeting of
       shareholders, except that if action is taken or proposed to be
       taken for approval of any of those matters specified in the
       second paragraph of Section 5 of this Article II, the waiver of
       notice or consent shall state the general nature of the proposal. 
       All such waivers, consents or approvals shall be filed with the
       corporate records or made   part of the minutes of the meeting.

                 Attendance of a person at a meeting shall also
       constitute a waiver of notice of that meeting and presence at
       such meeting, except when the person objects, at the beginning of
       the meeting, to the transaction of any business because the
       meeting is not lawfully called or convened, and except that
       attendance at a meeting is not a waiver of any right to object to
       the consideration of matters not included in the notice of the
       meeting if that objection is expressly made at the meeting.

                 Section 11.  SHAREHOLDER ACTION BY WRITTEN CONSENT
       WITHOUT A MEETING.  Any action which may be taken at any annual
       or special meeting of shareholders may be taken without a meeting
       and without prior notice, if a consent in writing, setting forth
       the action so taken, is signed by the holders of outstanding
       shares having not less than the minimum number of votes that



                                      -8-


                         Page 37 of 65                   <PAGE>
       would be necessary to authorize or take such action at a meeting
       at which all shares entitled to vote thereon were present and
       voted.  In the case of election of directors, such a consent
       shall be effective only if signed by the holders of all
       outstanding shares entitled to vote for the election of
       directors; provided, however, that a director may be elected at
       any time to fill a vacancy on the Board of Directors that has not
       been filled by the directors, by the written consent of the
       holders of a majority of the outstanding shares entitled to vote
       for the election of directors.  All such consents shall be filed
       with the secretary of the corporation and shall be maintained in
       the corporate records.  Any shareholder giving a written consent,
       or the shareholder's proxy holders, or a transferee of the shares
       or a personal representative of the shareholder or their
       respective proxy holders, may revoke the consent by a writing
       received by the secretary of the corporation before written
       consents of the number of shares required to authorize the
       proposed action have been filed with the secretary but may not do
       so thereafter.

                 If the consents of all shareholders entitled to vote
       have been solicited in writing, and if the unanimous written
       consent of all such shareholders shall not have been received,
       the secretary shall give prompt notice of the corporate action
       approved by the shareholders without a meeting.  This notice
       shall be given in the manner specified in Section 6 of this
       Article II.  In the case of approval of (i) contracts or
       transactions in which a director has a direct or indirect
       financial interest, pursuant to Section 310 of the Code,
       (ii) indemnification of agents of the corporation, pursuant to
       Section 317 of the Code, (iii) a reorganization of the
       corporation, pursuant to Section 1201 of the Code, and (iv) a
       distribution in dissolution other than in accordance with the
       rights of outstanding preferred shares, pursuant to Section 2007
       of the Code, the notice shall be given at least ten (10) days
       before the consummation of any action authorized by that
       approval.

                 Section 12.  RECORD DATE FOR SHAREHOLDER NOTICE, VOTING
       AND GIVING CONSENTS.     For purposes of determining the
       shareholders entitled to notice of any meeting or to vote or
       entitled to give consent to corporate action without a meeting,
       the Board of Directors may fix, in advance, a record date, which
       shall not be more than sixty (60) days nor less than ten
       (10) days before the date of any such meeting nor more than sixty
       (60) days before any such action without a meeting, and in this
       event only shareholders of record on the date so fixed are
       entitled to notice and to vote or to give consents, as the case
       may be, notwithstanding any transfer of any shares on the books
       of the corporation after the record date, except as otherwise
       provided in the California Corporations Code.




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                         Page 38 of 65                   <PAGE>
                 If the Board of Directors does not so fix a record
       date:

                 (a)  The record date for determining shareholders
       entitled to notice of or to vote at a meeting of shareholders
       shall be at the close of business on the business day next
       preceding the day on which notice is given or, if notice is
       waived, at the close of business on the business day next
       preceding the day on which the meeting is held.

                 (b)  The record date for determining shareholders
       entitled to give consent to corporate action in writing without a
       meeting (i) when no prior action by the Board of Directors has
       been taken shall be the day on which the first written consent is
       given, or (ii) when prior action of the board has been taken,
       shall be at the close of business on the day on which the board
       adopts the resolution relating to that action, or the sixtieth
       (60th) day before the date of such other action, whichever is
       later.

                 Section 13.  PROXIES.  Every person entitled to vote
       for directors or on any other matter shall have the right to do
       so either in person or by one or more agents authorized by a
       written proxy signed by the person and filed with the secretary
       of the corporation.  A proxy shall be deemed signed if the
       shareholder's name is placed on the proxy (whether by manual
       signature, typewriting, telegraphic transmission or otherwise) by
       the shareholder or the shareholder's attorney in fact.  A validly
       executed proxy which does not state that it is irrevocable shall
       continue in full force and effect unless (i) revoked by the
       person executing it, before its next exercise, by a writing
       delivered to the corporation stating that the proxy is revoked,
       or by a subsequent proxy executed by, or attendance at the
       meeting and voting in person by, the person executing the proxy;
       or (ii) written notice of the death or incapacity of the maker of
       that proxy is received by the corporation before the vote
       pursuant to that proxy is counted; provided, however, that no
       proxy shall be valid after the expiration of eleven (11) months
       from the date of the proxy, unless otherwise provided in the
       proxy.  The revocability of a proxy that states on its face that
       it is irrevocable shall be governed by the provisions of
       Sections 705(e) and 705(f) of the Code.

                 Section 14.  INSPECTORS OF ELECTION.  Before any
       meeting of shareholders, the board of directors may appoint any
       persons other than nominees for office to act as inspectors of
       election at the meeting or its adjournment.  If no inspectors of
       election are so appointed, the chairman of the meeting may, and
       on the request of any shareholder or a shareholder's proxy shall
       appoint inspectors of election at the meeting.  The number of
       inspectors shall be either one (1) or three (3).  If inspectors
       are appointed at a meeting on the request of one or more



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       shareholders or proxies, the holders of a majority of shares or
       their proxies present at the meeting shall determine whether
       one (1) or three (3) inspectors are to be appointed.  If any
       person appointed as inspector fails to appear or fails or refuses
       to act, the chairman of the meeting may, and upon the request of
       any shareholder or a shareholder's proxy shall, appoint a person
       to fill that vacancy.

                 These inspectors shall:

                 (a)  Determine the number of shares outstanding and the
       voting power of each, the shares represented at the meeting, the
       existence of a quorum and the authenticity, validity and effect
       of proxies;

                 (b)  Receive votes, ballots or consents;

                 (c)  Hear and determine all challenges and questions in
       any way arising in connection with the right to vote;

                 (d)  Count and tabulate all votes or consents;

                 (e)  Determine when the polls shall close;

                 (f)  Determine the result; and

                 (g)  Do any other acts that may be proper to conduct
       the election or vote with fairness to all shareholders.


                                  ARTICLE III

                                   DIRECTORS
                                   ---------
                 Section 1.  POWERS.  Subject to the provisions of the
       California Corporations Code and any limitations in the articles
       of incorporation and these bylaws relating to action required to
       be approved by the shareholders or by the outstanding shares, the
       business and affairs of the corporation shall be managed and all
       corporate powers shall be exercised by or under the direction of
       the Board of Directors.  The Board of Directors shall, among
       other things, monitor the administrative procedures, investment
       operations and performance of the corporation and the Advisor to
       assure that the corporation's policies on investment and
       borrowing are followed.  The Independent Directors shall review
       the investment policies of the corporation at least annually to
       determine that the policies being followed by the corporation are
       in the best interests of its shareholders.  Any such
       determination and the basis therefor shall be set forth in the
       minutes of the Board of Directors.





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                         Page 40 of 65                   <PAGE>
                 The Board of Directors shall also review the aggregate
       borrowings of the corporation at least quarterly to ensure their
       reasonableness in relation to the adjusted net worth of the
       corporation.  The Board of Directors may delegate the day-to-day
       operation of the business to a management company or other person
       provided that the business and affairs of the corporation shall
       be managed and all corporate powers shall be exercised under the
       ultimate direction of the Board of Directors.

                 Without prejudice to such general powers, but subject
       to the same limitations, it is hereby expressly declared that the
       directors shall have the power and authority to:

                 (a)  Select and remove all officers, agents, and
       employees of the corporation, prescribe such powers and duties
       for them as may not be inconsistent with law, with the articles
       of incorporation or these bylaws, fix their compensation, and
       require from them security for faithful service.

                 (b)  Change the principal executive office or the
       principal business office in the State of California from one
       location to another; cause the corporation to be qualified to do
       business in any other state, territory, dependency, or foreign
       country and conduct business within or outside the State of
       California; designate any place within or without the State of
       California for the holding of any shareholders' meeting, or
       meetings, including annual meetings; adopt, make and use a
       corporate seal, and prescribe the forms of certificates of stock,
       and alter the form of such seal and of such certificates from
       time to time as in their judgment they may deem best, provided
       that such forms shall at all times comply with the provisions of
       law.

                 (c)  Authorize the issuance of shares of stock of the
       corporation from time to time, upon such terms as may be lawful,
       in consideration of money paid, labor done or services actually
       rendered, debts or securities cancelled or tangible or intangible
       property actually received.

                 (d)  Borrow money and incur indebtedness for the
       purposes of the corporation, and cause to be executed and
       delivered therefor, in the corporate name, promissory notes,
       bonds, debentures, deeds of trust, mortgages, pledges,
       hypothecations, or other evidences of debt and securities
       therefor.

                 (e)  Subject to the approval and review process set
       forth in Section 16 of this Article III, engage one or more
       investment advisors to provide investment advisory services.

                 Section 2.  NUMBER AND QUALIFICATION OF DIRECTORS.    
       The authorized number of directors shall be not less than



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                         Page 41 of 65                   <PAGE>
       five (5) nor more than nine (9).  The exact number of directors
       within such limits shall be fixed by the Board of Directors by
       vote or written consent.  If the Board of Directors has not so
       fixed the exact number of directors, the number of directors
       shall be eight (8).  Any amendment to these Bylaws reducing the
       then authorized number of directors to a number less than
       five (5) cannot be adopted if the votes cast against its adoption
       at a meeting, or the shares not consenting in the case of action
       by written consent, are equal to more than 16-2/3% of the
       outstanding shares entitled to vote.  Directors need not be
       shareholders of the corporation.  No one may be elected to the
       Board of Directors if after such election one-half or more of the
       total number of directors on the Board of Directors are not
       independent directors.  A director shall have had at least
       three (3) years of relevant experience demonstrating the
       knowledge and experience required to successfully acquire and
       manage the type of assets to be acquired by the corporation.  At
       least one of the Independent Directors shall have three (3) years
       of relevant real estate experience.  For purposes of this
       Section, the term "relevant real estate experience" shall mean
       actual direct experience by the director in acquiring or managing
       the type of real estate or trust deed notes to be acquired by the
       corporation for his or her own account or as an agent.

                 Section 3.  ELECTION AND TERM OF OFFICE OF DIRECTORS. 
       Directors shall be elected at each annual meeting of the
       shareholders to hold office until the next annual meeting.  Each
       director, including a director elected to fill a vacancy, shall
       hold office until the expiration of the term for which elected
       and until a successor has been elected and qualified.

                 Section 4.  REMOVAL OF DIRECTORS.  Any director may be
       removed from office with or without cause, at a meeting called
       expressly for that purpose, by the vote or written consent of the
       holders of a majority of the outstanding shares of the
       corporation.  No director shall be removed if the number of votes
       cast against his removal would be sufficient to elect him at an
       annual meeting of the shareholders.

                 Section 5.  VACANCIES.  Vacancies in the Board of
       Directors may be filled by approval of the Board of Directors or,
       if the number of directors then in office is less than a quorum,
       by (a) the unanimous written consent of the directors then in
       office, (b) the affirmative vote of a majority of the remaining
       directors at a meeting of the Board of Directors held in
       accordance with these bylaws or (c) a sole remaining director;
       provided that a vacancy in the Board of Directors may be filled
       by approval of the Board of Directors only if the replacement
       Director is nominated for approval by the Board of Directors by
       an Independent Director; and provided further that a vacancy
       created by the removal of a director by the vote or written
       consent of the shareholders or by court order may be filled only



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       by the vote of a majority of the shares entitled to vote
       represented at a duly held meeting at which a quorum is present,
       or by the written consent of shareholders of a majority of the
       outstanding shares entitled to vote.  Each director so elected
       shall hold office until the next annual meeting of the
       shareholders and until a successor has been elected.

                 A vacancy or vacancies in the Board of Directors shall
       be deemed to exist in the event of the death, resignation or
       removal of any director, or if the Board of Directors by
       resolution declares vacant the office of a director who has been
       declared of unsound mind by an order of court or convicted of a
       felony, or if the authorized number of directors is increased, or
       if the shareholders fail, at any meeting of shareholders at which
       any director or directors are elected, to elect the number of
       directors to be voted for at that meeting.

                 The shareholders may elect a director or directors at
       any time to fill any vacancy or vacancies not filled by the
       directors, but any such election by written consent other than to
       fill a vacancy created by removal shall require the consent of a
       majority of the outstanding shares entitled to vote.

                 Any director may resign effective on giving written
       notice to the chairman of the Board of Directors, the president,
       the secretary or the Board of Directors, unless the notice
       specifies a later time for that resignation to become effective. 
       If the resignation of a director is effective at a future time,
       the Board of Directors may elect a successor to take office when
       the resignation becomes effective.

                 No reduction of the authorized number of directors
       shall have the effect of removing any director before that
       director's term of office expires.  Except as provided in
       Sections 302, 303 and 304 of the Code, a director may not be
       removed prior to the expiration of such director's term of
       office.

                 Each director shall comply with the written conflict of
       interest policy which is adopted by the corporation pursuant to a
       resolution of the Board of Directors.

                 Section 6.  PLACE OF MEETINGS AND MEETINGS BY
       TELEPHONE.  Regular meetings of the Board of Directors may be
       held at any place within or outside the State of California that
       has been designated in the notice of the meeting, or, if not
       stated in the notice or there is no notice, designated in these
       bylaws or from time to time by resolution of the Board of
       Directors.  In the absence of such a designation, regular
       meetings shall be held at the principal executive office of the
       corporation.  Special meetings of the board shall be held at any
       place within or outside the State of California that has been



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                         Page 43 of 65                   <PAGE>
       designated in the notice of the meeting or, if not stated in the
       notice or there is no notice, at the principal executive office
       of the corporation.  Any meeting, regular or special, may be held
       by conference telephone or similar communication equipment, so
       long as all directors participating in the meeting can hear one
       another, and all such directors shall be deemed to be present in
       person at the meeting.

                 Section 7.  ANNUAL MEETING.  Immediately following each
       annual meeting of shareholders, the Board of Directors shall hold
       a regular meeting for the purpose of organization, any desired
       election of officers and the transaction of other business. 
       Notice of this meeting shall not be required.

                 Section 8.  OTHER REGULAR MEETINGS.  Other regular
       meetings of the Board of Directors shall be held without call at
       such time as shall from time to time be fixed by the Board of
       Directors.  Such regular meetings may be held without notice. 
       Meetings of the Board of Directors (whether regular or special)
       shall be held as often as necessary but not less than annually.

                 Section 9.  SPECIAL MEETINGS AND NOTICE THEREOF. 
       Special meetings of the Board of Directors for any purpose or
       purposes may be called at any time by the chairman of the board
       or the president or any vice president or the secretary or any
       two directors.

                 Notice of the time and place of special meetings shall
       be delivered personally or by telephone to each director or sent
       by first-class mail or telegram, charges prepaid, addressed to
       each director at that director's address as it is shown on the
       records of the corporation.  In case the notice is mailed, it
       shall be deposited in the United States mail at least four (4)
       days before the time of the holding of the meeting.  In case the
       notice is delivered personally, or by telephone or telegram, it
       shall be delivered personally or by telephone or to the telegraph
       company at least forty-eight (48) hours before the time of the
       holding of the meeting.  Any oral notice given personally or by
       telephone may be communicated either to the director or to a
       person at the office of the director who the person giving the
       notice has reason to believe will promptly communicate it to the
       director.  The notice need not specify the purpose of the meeting
       nor the place if the meeting is to be held at the principal
       executive office of the corporation.

                 Section 10.  QUORUM.  A majority of the authorized
       number of directors shall constitute a quorum for the transaction
       of business, except to adjourn as provided in Section 12 of this
       Article III.  Every act or decision done or made by a majority  
       of the directors present at a meeting duly held at which a quorum
       is present shall be regarded as the act of the Board of
       Directors, subject to the provisions of Section 310 of the Code



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       (as to approval of contracts or transactions in which a director
       has a direct or indirect material financial interest),
       Section 311 of the Code (as to appointment of committees), and
       Section 317(e) of the Code (as to indemnification of directors). 
       A meeting at which a quorum is initially present may continue to
       transact business notwithstanding the withdrawal of directors, if
       any action taken is approved by at least a majority of the
       required quorum for that meeting.

                 Section 11.  WAIVER OF NOTICE.  The transactions of any
       meeting of the Board of Directors, however called and noticed or
       wherever held, shall be as valid as though had at a meeting duly
       held after regular call and notice if a quorum is present and if,
       either before or after the meeting, each of the directors not
       present signs a written waiver of notice, a consent to holding
       the meeting or an approval of the minutes.  The waiver of notice
       or consent need not specify the purpose of the meeting.  All such
       waivers, consents and approvals shall be filed with the corporate
       records or made a part of the minutes of the meeting.  Notice of
       a meeting need not be or have been given to any director who
       attends the meeting without protesting before or at its
       commencement, the lack of notice to that director.

                 Section 12.  ADJOURNMENT.  A majority of the directors
       present, whether or not constituting a quorum, may adjourn any
       meeting to another time and place.

                 Section 13.  NOTICE OF ADJOURNMENT.  Notice of the time
       and place of holding an adjourned meeting need not be given,
       unless the meeting is adjourned for more than twenty-four hours,
       in which case notice of the time and place shall be given before
       the time of the adjourned meeting, in the manner specified in
       Section 9 of this Article III, to the directors who were not
       present at the time of the adjournment.

                 Section 14.  ACTION WITHOUT MEETING.  Any action
       required or permitted to be taken by the Board of Directors may
       be taken without a meeting, if all members of the board shall
       individually or collectively consent in writing to that action. 
       Such action by written consent shall have the same force and
       effect as a unanimous vote of the Board of Directors.  Such
       written consent or consents shall be filed with the minutes of
       the proceedings of the board.

                 Section 15.  FEES AND COMPENSATION OF DIRECTORS. 
       Directors and members of committees may receive such
       compensation, if any, for their services, and such reimbursements
       of expenses, as may be fixed or determined by resolution of the
       Board of Directors.  This Section 15 shall not be construed to
       preclude any director from serving the corporation in any other
       capacity as an officer, agent, employee or otherwise, and
       receiving compensation for those services.



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                 Section 16.  SPECIAL APPROVAL FOR INVESTMENT ADVISORY
       SERVICES.  It is the duty of the Board of Directors to supervise
       the relationship of the corporation to the Advisor and to
       evaluate the performance of the Advisor before entering into or
       renewing an advisory contract.  The criteria used in such
       evaluation shall be reflected in the minutes of the Board of
       Directors' meeting at which such evaluation is made.  Each
       contract for the services of an Advisor entered into by the Board
       of Directors shall have a term of no more than one year.  Each
       advisory contract shall be terminable by a majority of the
       Independent Directors.  Each advisory contract shall be
       terminable by the advisor.  Termination may be without cause.  At
       least sixty (60) days written notice shall be given by the party
       wishing to terminate the contract.  In the event of the
       termination of such contract, the Advisor will cooperate with the
       corporation and take all reasonable steps requested to assist the
       Board of Directors making an orderly transition of the advisory
       function.  The qualifications of the advisor shall be set forth
       in the prospectus relating to the initial public offering of the
       shares and the Board of Directors shall determine that any
       successor advisor possesses sufficient qualifications (a) to
       perform the advisory function for the corporation, and (b) to
       justify the compensation provided for in its contract with the
       corporation.

                 The Independent Directors shall determine at least
       annually that the compensation which the corporation contracts to
       pay to the Advisor is reasonable in relation to the nature and
       quality of services performed and that such compensation is
       within limits prescribed by applicable law.  The Independent
       Directors shall also supervise the performance of the Advisor and
       the compensation paid to it by the corporation to determine that
       the provisions of such contract are being carried out.  Each such
       determination shall be based on the factors set forth below and
       all other factors such Independent Directors may deem relevant
       and the findings of such directors on each of such factors shall
       be recorded in the minutes of the Board of Directors:

                 (a)  The size of the advisory fee in relation to the
       size, composition and profitability of the portfolio of the
       corporation;

                 (b)  The success of the Advisor in generating
       opportunities that meet the investment objectives of the
       corporation;

                 (c)  The rates charged to other real estate investment
       trusts and to investors other than real estate investment trusts
       by advisors performing similar services;





                                      -17-


                         Page 46 of 65                   <PAGE>
                 (d)  Additional revenues realized by the Advisor and 
       its Affiliates through their relationship with the corporation,
       including note servicing, loan, brokerage, and other fees,
       whether paid by the corporation or by others with whom the
       corporation does business;

                 (e)  The quality and extent of service and advice
       furnished by the Advisor;

                 (f)  The performance of the investment portfolio of the
       corporation, including income conservation, frequency of problem
       investments and competence in dealing with distressed situations;
       and

                 (g)  The quality of the portfolio of the corporation in
       relationship to the investments generated by the Advisor for its
       own account.

                 Section 17.  TRANSACTIONS WITH AFFILIATES.  The
       corporation shall not:

                 (a)  Purchase property from any Advisor or director or
       any Affiliate of any such person at a price to the corporation
       greater than the cost to such Advisor or director or Affiliate of
       such person unless there is found to be substantial justification
       for such excess by a majority of the directors (including a
       majority of the Independent Directors) not otherwise interested
       in and not affiliated with the Advisor or director or Affiliate
       thereof who is a party to such transaction.

                 (b)  Sell property to Property Mortgage Co., Inc., any
       other Advisor, or any director or any Affiliate of any such
       person except pursuant to an obligation on the part of Property
       Mortgage Co., Inc. or another Advisor to repurchase a promissory
       note from the corporation which does not comply with the
       corporation's investment criteria.

                 (c)  Make loans to or borrow money from Property
       Mortgage Co., Inc., any other Advisor or any director or any
       Affiliate of any such person.

                 (d)  Invest in joint ventures with Property Mortgage
       Co., Inc., any other Advisor, or any director or any Affiliate of
       any such person.

                 (e)  Engage in any transactions with Property Mortgage
       Co., Inc., any other Advisor or any director, officer or any
       Affiliate of any such person, except to the extent that each such
       transaction has, after disclosure of such affiliation, been
       approved or ratified by the affirmative vote of a majority of the
       directors (including a majority of the Independent Directors) not




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       otherwise interested in and not affiliated with the person who is
       a party to the transaction and:

                      (1)  The transaction is fair and reasonable to the
            corporation and its shareholders.

                      (2)  The terms of such transaction are at least as
            favorable as the terms of any
            comparable transactions made on arms length basis and known
            to the directors.

                      (3)  The total consideration is not in excess of
            the appraised value of the property being acquired, if an
            acquisition is involved.

                      (4)  Payments to the investment advisor, its
            affiliates and the directors for services rendered in a
            capacity other than that as investment advisor or directors
            may only be made upon a determination that:

                           (i)  The compensation is not in excess of
                 their compensation paid for any comparable services;
                 and

                          (ii)  The compensation is not greater than the
                 charges for comparable services available from others
                 who are competent and not affiliated with any of the
                 parties involved.

       If an Advisor, director or Affiliate of either provides a
       substantial amount of the services in the effort to sell real
       estate acquired by the corporation upon foreclosure of a deed of
       trust securing a note held by the corporation, such person may
       receive up to one-half of the brokerage commission paid in
       connection with such sale but in no event more than 3% of the
       contracted for sales price.  The amount paid when added to the
       sums paid to unaffiliated parties in such a capacity must be
       comparable, reasonable, customary and competitive in light of the
       size, type and location of such property and in no event shall it
       exceed 6% of the contracted for sales price.

                 Section 18.  TOTAL EXPENSES.  It shall be the
       responsibility of the Independent Directors to determine at least
       annually the total fees and expenses of the corporation are
       reasonable in light of the investment experience of the
       corporation, its net assets, its net income and the fees and
       expenses of other comparable advisors.  Each such determination
       shall be reflected in the minutes of the meeting of the Board of
       Directors at which such determination is made.  The total of all
       Acquisition Fees and Expenses paid by the corporation in
       connection with the acquisition of a promissory note by the
       corporation shall be reasonable and shall in no event exceed an



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       amount equal to 6% of the funds advanced by the corporation for 
       that note, unless a majority of the Board of Directors (including
       a majority of the Independent Directors) not otherwise interested
       in the transaction approve the transaction as being commercially
       competitive, fair and, reasonable to the corporation.  For
       purposes of this section, the term "Acquisition Fees and
       Expenses" shall not be limited to all fees and commissions paid
       by any party in connection with the making or investing in
       promissory notes by the corporation (including any loan or
       brokerage fee paid to the Advisor), legal fees and expenses,
       travel and communication expenses, costs of appraisal, accounting
       fees and expenses, title insurance and miscellaneous expenses
       related to selection and acquisition of notes, whether or not
       acquired.  The Independent Directors shall also have the
       fiduciary responsibility of limiting the total operating expenses
       of the corporation to amounts that do not exceed in any fiscal
       year the greater of 2% of the average invested assets of the
       corporation or 25% of its net income for that year unless such
       Independent Directors shall have made a finding that, based on
       such unusual and non-recurring factors as they deem sufficient, a
       higher level of expenses is justified for such year.  Any such
       finding and the reasons in support thereof shall be reflected in
       the minutes of the meeting of the Board of Directors at which
       shall finding was made.  Within 60 days after the end of any
       fiscal quarter of the corporation for which total operating
       expenses (for the 12 months then ended) exceed 2% of average
       invested assets or 25% of net income, whichever is greater, there
       shall be sent to the shareholders of the corporation a written
       disclosure of such fact, together with an explanation of the
       factors the Independent Directors considered in arriving at the
       conclusion that such higher operating expenses were justified. 
       All agreements entered into by the corporation with an Advisor
       shall require at the end of any year for which the Independent
       Directors do not determine that expenses in excess of 2% of
       average invested assets or 25% of net income, whichever is
       greater, are not justified the Advisor shall return to the
       corporation or waive any servicing fee paid or have reduced any
       servicing fee otherwise due to such Advisor with respect to such
       year to the extent necessary to reduce such expenses within such
       limit.


                                  ARTICLE IV

                                  COMMITTEES
                                  ----------
                 Section 1.  COMMITTEES OF DIRECTORS.  Committees are of
       two kinds, those having legal authority to act for the
       corporation and advisory committees.  Except as otherwise
       specifically provided in these bylaws, all committees of
       directors shall meet as often as necessary, but at least
       annually.  The Board of Directors may, by resolution adopted by  



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       a majority of the authorized number of directors, designate one
       or more committees having legal authority to act for the
       corporation, each consisting of two or more directors, to serve
       at the pleasure of the board, provided that a majority of the
       members of each such committee be Independent Directors.  The
       board may designate one or more directors as alternate members of
       any such committee, who may replace any absent member at any
       meeting of the committee.  Any committee having legal authority
       to act for the corporation, to the extent provided in the
       resolution of the board, shall have all authority of the board,
       except with respect to:

                 (a)  The approval of any action which, under the
       California Corporations Code, also requires shareholders'
       approval or approval of the outstanding shares;

                 (b)  The filling of vacancies on the board of directors
       or in any committee;

                 (c)  The fixing of compensation of the directors for
       serving on the Board of Directors or on any committee;

                 (d)  The amendment or repeal of bylaws or the adoption
       of new bylaws;

                 (e)  The amendment or repeal of any resolution of the
       Board of Directors which by its express terms is not so amendable
       or repealable;

                 (f)  A distribution except at a rate or in a periodic
       amount or within a price range set forth in the articles or
       determined by the Board of Directors; or

                 (g)  The appointment of any other committees of the
       Board of Directors or the members of these committees.

                 Section 2.     MEETINGS AND ACTIONS OF COMMITTEES WITH
       AUTHORITY.  Meetings and actions of committees having legal
       authority to act for the corporation shall be governed by, and
       held and taken in accordance with, the provisions of Article III
       of these bylaws, Section 6 (place of meetings), 8 (regular
       meetings), 9 (special meetings and notice), 10 (quorum), 11
       (waiver of notice), 12 (adjournment), 13 (notice of adjournment),
       and 14 (action without meeting), with such changes in the context
       of those bylaws as are necessary to substitute the committee and
       its members for the Board of Directors and its members, except
       that the time of regular meetings of committees may be determined
       either by resolution of the Board of Directors or by resolution
       of the committee; special meetings of committees may also be
       called by resolution of the Board of Directors; and notice of
       special meetings of committees shall also be given to all
       alternate members, who shall have the right to attend all



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       meetings of the committee.  The Board of Directors may adopt
       rules for the government of any committee not inconsistent with
       the provisions of these bylaws.

                 Section 3.  ADVISORY COMMITTEES.  The Board of
       Directors may appoint one or more advisory committees.  Advisory
       Committee membership may consist of directors only or both
       directors and nondirectors or nondirectors only, and also may
       include nonvoting members and alternate members.  The chairman
       and members of advisory committees shall be appointed by the
       chairman of the board or the directors of the corporation. 
       Advisory Committees have no legal authority to act for the
       corporation, but shall report their findings and recommendations
       to the Board of Directors.  Members of Advisory Committees shall
       receive such compensation, if any, as may be established by
       resolution of the Board of Directors.


                                   ARTICLE V

                                   OFFICERS
                                   --------
                 Section 1.  OFFICERS.  The officers of the corporation
       shall be a president, a vice president, a secretary, and a chief
       financial officer.  The corporation may also have, at the
       discretion of the Board of Directors, a chairman of the board,
       one or more additional vice presidents, one or more assistant
       secretaries, one or more assistant treasurers, and such other
       officers as may be appointed in accordance with the provisions of
       Section 3 of this Article V. Any number of offices may be held by
       the same person.

                 Section 2.  APPOINTMENT OF OFFICERS.  The officers of
       the corporation, except such officers as may be appointed in
       accordance with the provisions of Section 3 or Section 5 of this
       Article V, shall be appointed by the Board of Directors, and each
       shall serve at the pleasure of the board, subject to the rights,
       if any, of an officer under any contract of employment.

                 (a)  Any officer appointed by the Board of Directors
       may be removed from office at any time by the Board of Directors,
       with or without cause or prior notice.  Any officer not appointed
       by the Board of Directors may be removed from office at any time
       by the officer by whom appointed or by the Board of Directors
       with or without cause or prior notice.

                 (b)  When authorized by the Board of Directors, any
       officer may be appointed for a specified term under a contract of
       employment.  Notwithstanding that such officer is appointed for a
       specified term or under the contract of employment, any such
       officer may be removed from office at any time pursuant to
       paragraph (a) above and shall have no claim against the



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       corporation on account of such removal other than for such
       monetary compensation as the officer may be entitled to under the
       terms of the contract of employment.

                 Section 3.  SUBORDINATE OFFICERS.  The Board of
       Directors may appoint, and may empower the president to appoint,
       such other officers as the business of the corporation may
       require, each of whom shall hold office for such period, have
       such authority and perform such duties as are provided in the
       bylaws or as the Board of Directors may from time to time
       determine.

                 Section 4.  REMOVAL AND RESIGNATION OF OFFICERS. 
       Subject to the rights, if any, of an officer under any contract
       of employment, any officer may be removed, either with or without
       cause, by the Board of Directors, at any regular or special
       meeting of the board, or, except in case of an officer chosen by
       the Board of Directors, by any officer upon whom such power of
       removal may be conferred by the Board of Directors.

                 Any officer may resign at any time by giving written
       notice to the corporation.  Any resignation shall take effect at
       the date of the receipt of that notice or at any later time
       specified in that notice; and, unless otherwise specified in that
       notice, the acceptance of the resignation shall not be necessary
       to make it effective.  Any resignation is without prejudice to
       the rights, if any, of the corporation under any contract to
       which the officer is a party.

                 Section 5.  VACANCIES IN OFFICES.  A vacancy in any
       office because of death, resignation, removal, disqualification
       or any other cause shall be filled in the manner prescribed in
       these bylaws for regular appointments to that office.

                 Section 6.  CHAIRMAN OF THE BOARD.  The chairman of the
       board, if there shall be such an officer, shall, if present,
       preside at meetings of the Board of Directors and exercise and
       perform such other powers and duties as may be assigned to him
       from time to time by the Board of Directors or prescribed by the
       bylaws.  If there is no president, the chairman of the board
       shall in addition be the chief executive officer of the
       corporation and shall have the powers and duties prescribed in
       Section 7 of this Article V.

                 Section 7.  PRESIDENT.  Subject to such supervisory
       powers, if any, as may be given by the Board of Directors to the
       chairman of the board, if there be such an officer, the president
       shall be the chief executive officer of the corporation and
       shall, subject to the control of the Board of Directors, have
       general supervision, direction and control of the business and
       the officers of the corporation.  He shall preside at all
       meetings of the shareholders and, in the absence of the chairman



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       of the board, or if there be none, at all meetings of the Board
       of Directors.  He shall have the general powers and duties of
       management usually vested in the office of president of a
       corporation, and shall have such other powers and duties as may
       be prescribed by the Board of Directors or the bylaws.

                 Section 8.  VICE PRESIDENTS.  In the absence or
       disability of the president, the vice president, if any, in order
       of their rank as fixed by the Board of Directors or, if not
       ranked, a vice president designated by the Board of Directors,
       shall perform all the duties of the president, and when so acting
       shall have all the powers of, and be subject to all the
       restrictions upon, the president.  The vice presidents shall have
       such other powers and perform such other duties as from time to
       time may be prescribed for them respectively by the Board of
       Directors or the bylaws, and the president, or the chairman of
       the board.

                 Section 9.  SECRETARY.  The secretary shall keep or
       cause to be kept, at the principal executive office or such other
       place as the Board of Directors may direct, a book of minutes of
       all meetings and actions of directors, committees of directors,
       and shareholders, with the time and place of holding, whether
       regular or special, and, if special, how authorized, the notice
       given, the names of those present at directors' meetings or
       committee meetings, the number of shares present or represented
       at shareholders' meetings, and a summary of the proceedings.

                 The secretary shall keep, or cause to be kept, at the
       principal executive office or at the office of the corporation's
       transfer agent or registrar, as determined by resolution of the
       Board of Directors, a share register, or a duplicate share
       register, showing the names of all shareholders and their
       addresses, the number and classes of shares held by each, the
       number and date of certificates issued for the same, and the
       number and date of cancellation of every certificate surrendered
       for cancellation.

                 The secretary shall give, or cause to be given, notice
       of all meetings of the shareholders and of the Board of Directors
       required by the bylaws or by law to be given, and he shall keep
       the seal of the corporation if one be adopted, in safe custody,
       and shall have such other powers and perform such other duties as
       may be prescribed by the Board of Directors or by the bylaws.

                 Section 10.  CHIEF FINANCIAL OFFICER.  The chief
       financial officer shall keep and maintain, or cause to be kept
       and maintained, adequate and correct books and records of
       accounts of the properties and business transactions of the
       corporation, including accounts of its assets, liabilities,
       receipts, disbursements, gains, losses, capital, retained
       earnings and shares.  The books of account shall at all



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       reasonable times be open to inspection by any director and as
       provided in Article VII of these bylaws.

                 The chief financial officer shall deposit all moneys
       and other valuables in the name and to the credit of the
       corporation with such depositaries as may be designated by the
       Board of Directors.  He shall disburse the funds of the
       corporation as may be ordered by the Board of Directors, shall
       render to the president and directors, whenever they request it,
       an account of all of his transactions as chief financial officer
       and of the financial condition of the corporation, and shall have
       such other powers and perform such other duties as may be
       prescribed by the Board of Directors or the bylaws.  The chief
       financial officer may also be known as the treasurer.

                 Section 11.  REIMBURSEMENT OF CORPORATION.  Any
       payments made to an officer of the corporation such as a salary,
       commission, bonus, interest, or rent, or entertainment expense
       incurred by him, which shall be disallowed in whole or in part as
       a deductible expense by the Internal Revenue Service, shall be
       reimbursed by such officer to the corporation to the full extent
       of such disallowance.  It shall be the duty of the board to
       enforce payment of each such amount disallowed.  In lieu of
       payment by the officer, subject to the determination of the
       board, proportionate amounts may be withheld from his future
       compensation payments until the amount owed to the corporation
       has been recovered.


                                   ARTICLE VI

                    INDEMNIFICATION OF DIRECTORS, OFFICERS,
                          EMPLOYEES AND OTHER AGENTS
                    ---------------------------------------
                 Section 1.  AGENTS, PROCEEDINGS AND EXPENSES.  For the
       purposes of this Article, "agent" means any person who is or was
       a director, officer, employee or other agent of the corporation,
       or is or was serving at the request of the corporation as a
       director, officer, employee or agent of another foreign or
       domestic corporation, partnership, joint venture, trust or other
       enterprise, or was a director, officer, employee or agent of a
       foreign or domestic corporation which was a predecessor
       corporation of the corporation or of another enterprise at the
       request of such predecessor corporation; "proceeding" means any
       threatened, pending or completed action or proceeding, whether
       civil, criminal, administrative or investigative; and "expenses"
       includes, without limitation, attorneys' fees and any expenses of
       establishing a right to indemnification under Section 4 or
       Section 5(c) of this Article.

                 Section 2.  ACTIONS OTHER THAN BY THE CORPORATION.  The
       corporation shall indemnify any person who was party, or is



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       threatened to be made a party, to any proceeding (other than an 
       action by or in the right of the corporation to procure a
       judgment in its favor) by reason of the fact that such person is
       or was an agent of the corporation, against expenses, judgments,
       fines, settlements and other amounts actually and reasonably
       incurred in connection with such proceeding if such person acted
       in good faith and in a manner such person reasonably believed to
       be in the best interests of the corporation and, in the case of a
       criminal proceeding, had no reasonable cause to believe the
       conduct of such person was unlawful and, if such person is a
       Director or Advisor, such expenses, judgments, fines, settlements
       or other amounts were not the result of negligence or misconduct
       by such person.  The termination of any proceeding by judgment,
       order, settlement, conviction or upon a plea of nolo contenders
       or its equivalent shall not, of itself, create a presumption that
       the person did not act in good faith and in a manner which the
       person reasonably believed to be in the best interests of the
       corporation or that the person had reasonable cause to believe
       that the person's conduct was unlawful.

                 Section 3.  ACTIONS BY THE CORPORATION.  The
       corporation shall indemnify any person who was or is a party, or
       is threatened to be made a party, to any threatened, pending or
       completed action by or in the right of the corporation to procure
       a judgment in its favor by reason of the fact that such person is
       or was an agent of the corporation, against expenses actually and
       reasonably incurred by such person in connection  with the
       defense or settlement of such action if such person acted in good
       faith, in a manner such person believed to be in the best
       interests of the corporation and with such care, including
       reasonable inquiry, as an ordinarily prudent person in a like
       position would use under similar circumstances and, if such
       person is a Director or Advisor, such expenses were not the
       result of negligence or misconduct by such person.  No
       indemnification shall be made under this Section 3:

                 (a)  In respect of any claim, issue or matter as to
       which such person shall have been adjudged to be liable to the
       corporation in the performance of such person's duty to the
       corporation, unless and only to the extent that the court in
       which such proceeding is or was pending shall determine upon
       application that, in view of all the circumstances of the case,
       such person is fairly and reasonably entitled to indemnity for
       the expenses which such court shall determine;

                 (b)  Of amounts paid in settling or otherwise disposing
       of a threatened or pending action, with or without court
       approval; or

                 (c)  Of expenses incurred in defending a threatened or
       pending action which is settled or otherwise disposed of without
       court approval.



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                 Section 4.  SUCCESSFUL DEFENSE BY AGENT.  To the extent
       that an agent of the corporation has been successful on the
       merits in defense of any proceeding referred to in Sections 2
       or 3 of this Article, or in defense of any claim, issue or matter
       therein, the agent shall be indemnified against expenses actually
       and reasonably incurred by the agent in connection therewith.

                 Section 5.  REQUIRED APPROVAL.  Except as provided in
       Section 4 of this Article, any indemnification under this Article
       shall be made by the corporation only if authorized in the
       specific case, upon a determination that indemnification of the
       agent is proper in the circumstances because the agent has met
       the applicable standard of conduct set forth in Sections 2 or 3
       of this Article, by:

                 (a)  A majority vote of a quorum consisting of
       directors who are not parties to such proceeding;

                 (b)  Approval by the affirmative vote of a majority of
       the shares of the corporation entitled to vote represented at a
       duly held meeting at which a quorum is present or by the written
       consent of holders of a majority of the outstanding shares
       entitled to vote.  For such purpose, the shares owned by the
       person to be indemnified shall not be considered outstanding or
       entitled to vote thereon; or

                 (c)  The court in which such proceeding is or was
       pending, upon application made by the corporation or the agent or
       the attorney or other person rendering services in connection
       with the defense, whether or not such application by the agent,
       attorney or other person is opposed by the corporation.

                 Section 6.  ADVANCE OF EXPENSES.  Expenses incurred in
       defending any proceeding may be advanced by the corporation prior
       to the final disposition of such proceeding upon receipt of an
       undertaking by or on behalf of the agent to repay such amount
       unless it shall be determined ultimately that the agent is
       entitled to be indemnified as authorized in this Article.

                 Section 7.  OTHER CONTRACTUAL RIGHTS.  Nothing
       contained in this Article shall affect any right to
       indemnification to which person other than directors and officers
       and Advisors of the corporation or any subsidiary hereof may be
       entitled by contract or otherwise.

                 Section 8.  LIMITATIONS.  No indemnification or advance
       shall be made under this Article, except as provided in section 4
       or Section 5(c), in any circumstance where it appears:

                 (a)  That it would be inconsistent with a provision of
       the articles, a resolution of the shareholders or an agreement 



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                         Page 56 of 65                   <PAGE>
       in effect at the time of the accrual of the alleged cause of
       action asserted in the proceeding in which the expenses were
       incurred or other amounts were paid, which prohibits or otherwise
       limits indemnification; or

                 (b)  That it would be inconsistent with any condition
       expressly imposed by a court in approving a settlement.

       Moreover, no indemnification shall be made for any liability
       imposed by judgment, or for the costs associated therewith,
       including attorneys fees, arising from or out of a violation of
       state or federal securities laws associated with the offer and
       sale of the corporation's shares.  Indemnification for
       settlements and related expenses of lawsuits alleging securities
       law violations, and for expenses incurred in successfully
       defending such lawsuits, may be indemnified only if a court
       either approves the settlement and finds that indemnification of
       the settlement and related costs should be made or approves
       indemnification of litigation costs if a successful defense is
       made.

                 Section 9.  INSURANCE.  Upon and in the event of a
       determination by the Board of Directors of the corporation to
       purchase such insurance, the corporation shall purchase and
       maintain insurance on behalf of any agent of the corporation
       against any liability asserted against or incurred by the agent
       in such capacity or arising out of the agent's status as such
       whether or not the corporation would have the power to indemnify
       the agent against such liability under the provisions of this
       section.

                 Section 10.  FIDUCIARIES OF CORPORATE EMPLOYEE BENEFIT
       PLAN.     This Article does not apply to any proceeding against
       any trustee, investment manager or other fiduciary of an employee
       benefit plan in such person's capacity as such, even though such
       person may also be an agent of the corporation as defined in
       Section 1 of this Article.  Nothing contained in this Article
       shall limit any right to indemnification to which such a trustee,
       investment manager or other fiduciary may be entitled by contract
       or otherwise, which shall be enforceable to the extent permitted
       by applicable law.


                                  ARTICLE VII

                              RECORDS AND REPORTS
                              -------------------
                 Section 1.  MAINTENANCE AND INSPECTION OF SHARE
       REGISTER.  The corporation shall keep at its principal executive
       office, or at the office of its transfer agent or registrar, if
       either be appointed and as determined by resolution of the Board
       of Directors, a record of its shareholders, giving the names and



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       addresses of all shareholders and the number and class of shares
       held by each shareholder.

                 A shareholder or shareholders, of the corporation
       holding at least five percent (5%) in the aggregate of the
       outstanding voting shares of the corporation or who hold at least
       one percent (1%) of such voting shares and have filed a Schedule
       14B with the United States Securities and Exchange Commission
       shall have an absolute right to do either or both of the
       following: (i) inspect and copy the records of shareholders'
       names and addresses and shareholdings during usual business hours
       on five (5) days prior written demand on the corporation, and
       (ii) obtain from the transfer agent of the corporation, on
       written demand and on the tender of such transfer agent's usual
       charges for such list, a list of the names and addresses of the
       shareholders who are entitled to vote for the election of
       directors, and their shareholdings, as of the most recent record
       date for which that list has been compiled or as of a date
       specified by the shareholder subsequent to the date of demand. 
       This list shall be made available to any such shareholder by the
       transfer agent on or before the later of five (5) business days
       after the demand is received or the date specified in the demand
       as the date as of which the list is to be compiled.  The record
       of shareholders shall also be open to inspection on the written
       demand of any shareholder or holder of a voting trust
       certificate, at any time during usual business hours for a
       purpose reasonably related to the holder's interests as a
       shareholder or as the holder of a voting trust certificate.  Any
       inspection and copying under this section 1 may be made in person
       or by an agent or attorney of the shareholder or holder of a
       voting trust certificate making the demand.

                 Section 2.  MAINTENANCE AND INSPECTION OF BYLAWS.  The
       corporation shall keep at its principal executive office the
       original or a copy of the bylaws as amended to date, which shall
       be open to inspection by the shareholders at all reasonable times
       during office hours.  If the principal executive office of the
       corporation is outside the State of California and the
       corporation has no principal business office in this state, the
       Secretary shall, upon the written request of any shareholder,
       furnish to that shareholder a copy of the bylaws as amended to
       date.

                 Section 3.  MAINTENANCE AND INSPECTION OF OTHER
       CORPORATE RECORDS.  The accounting books and records of
       proceedings of the shareholders and the Board of Directors and
       any committee or committees of the Board of Directors shall be
       kept at such place or places designated by the Board of
       Directors, or, in the absence of such designation, at the
       principal executive office of the corporation.  The minutes shall
       be kept in written form and the accounting books and records
       shall be kept either in written form or in any other form capable



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       of being converted into written form.  The minutes and accounting
       books and records shall be open to inspection upon the written
       demand of any shareholder or holder of a voting trust
       certificate, at any reasonable time during usual business hours,
       for a purpose reasonably related to the holder's interests as a
       shareholder or as the holder of a voting trust certificate.  The
       inspection may be made in person or by an agent or attorney, and
       shall include the right to copy and make extracts.  These rights
       of inspection shall extend to the records of each subsidiary
       corporation of the corporation.

                 Section 4.  INSPECTION BY DIRECTORS.  Every director
       shall have the absolute right at any reasonable time to inspect
       all books, records and documents of every kind and the physical
       properties of the corporation and each of its subsidiary
       corporations.  This inspection by a director may be made in
       person or by an agent or attorney and the right of inspection
       includes the right to copy and make extracts of documents.

                 Section 5.  ANNUAL REPORT TO SHAREHOLDERS.  The Board
       of Directors shall cause an annual report to be sent to the
       shareholders not later than one hundred twenty (120) days after
       the close of the fiscal year adopted by the corporation.  Such
       report shall be sent at least thirty (30) days prior to the
       annual meeting of shareholders to be held during the next fiscal
       year and in the manner specified in Section 5 of Article II of
       these bylaws for giving notice to shareholders of the
       corporation.  The annual report shall comply with California
       Corporations Code Section 1501, as amended from time to time, and
       shall contain a balance sheet as of the end of such fiscal year
       and an income statement and statement of changes in financial
       position for such fiscal year, all prepared in accordance with
       generally accepted accounting principles and accompanied by a
       report thereon of independent certified public accountants.  The
       annual report shall also contain: (1) the ratio of the cost of
       raising capital during the year to the capital raised; (2) the
       aggregate amount of advisory fees and the aggregate amount of
       other fees paid to the Advisor and all Affiliates of the Advisor
       by the corporation and including fees or charges paid to the
       Advisor and all Affiliates of the Advisor by third parties doing
       business with the corporation during the year; (3) full
       disclosure of all material terms, factors and circumstances
       surrounding any and all transactions involving the corporation
       and Property Mortgage Co., Inc., any other Advisor, or any
       director or any Affiliate of any such person occurring during 
       the year, accompanied by a report of the Independent Directors on
       the fairness of such transactions; and (4) a discussion of the
       effect of reinvesting distributions under the corporation's
       dividend reinvestment plan, including the tax consequences
       thereof.





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                 Section 6.  FINANCIAL STATEMENTS.  A copy of any annual
       financial statement and any income statement of the corporation
       for each quarterly period of each fiscal year, and any
       accompanying balance sheet of the corporation as of the end of
       each such period, that has been prepared by the corporation shall
       be kept on file in the principal executive office of the
       corporation for twelve (12) months and each such statement shall
       be exhibited at all reasonable times to any shareholder demanding
       an examination of any such statement or a copy shall be mailed to
       any such shareholder.

                 If a shareholder or shareholders holding at least five
       percent (5%) of the outstanding shares of any class of stock of
       the corporation makes a written request to the corporation for an
       income statement of the corporation for the three-month,
       six-month or nine-month period of the then current fiscal year
       ended more than thirty (30) days before the date of the request,
       and a balance sheet of the corporation as of the end of such
       period, the chief financial officer shall cause that statement to
       be prepared, if not already prepared, and shall deliver
       personally or mail that statement or statements to the person
       making the request within thirty (30) days after the receipt of
       the request.  If the corporation has not sent to the shareholders
       its annual report for the last fiscal year, this report shall
       likewise be delivered or mailed to the shareholder or
       shareholders within thirty (30) days after the request.

                 The corporation shall also, on the written request of
       any shareholder, mail to the shareholder a copy of the last
       annual, semi-annual or quarterly income statement which it has
       prepared, and a balance sheet as of the end of that period.

                 The quarterly income statements and balance sheets
       referred to in this section shall be accompanied by the report,
       if any, of any independent accountants engaged by the corporation
       or the certificate of an authorized officer of the corporation
       that the financial statements were prepared without audit from
       the books and records of the corporation.

                 Section 7.  ANNUAL STATEMENT OF GENERAL INFORMATION. 
       The corporation shall file annually with the Secretary of State
       of the State of California, on the prescribed form, a statement
       setting forth the authorized number of directors, the names and
       complete business or residence addresses of all incumbent
       directors, the names and complete business or residence addresses
       of the chief executive officer, secretary, and chief financial
       officer, the street address of its principal executive office or
       principal business office in this state, and the general type of
       business constituting the principal business activity of the
       corporation, together with a designation of the agent of the
       corporation for the purpose of service of process, all in
       compliance with Section 1502 of the California Corporations Code.



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                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS
                            -------------------------
                 Section  1.  RECORD DATE FOR PURPOSES OTHER THAN NOTICE
       AND VOTING.    For purposes of determining shareholders entitled
       to receive payment of any dividend or other distribution or
       allotment of any rights, or entitled to exercise any rights in
       respect of any other lawful action (other than action by
       shareholders by written consent without a meeting), the Board of
       Directors may fix, in advance, a record date, which shall not be
       more than sixty (60) days before any such action, and in that
       case only shareholders of record on the date so fixed are
       entitled to receive the dividends, distribution or allotment of
       rights or to exercise the rights, as the case may be,
       notwithstanding any transfer of any shares on the books of the
       corporation after the record date so fixed, except as otherwise
       provided in the Code.

                 If the Board of Directors does not so fix a record
       date, the record date for determining shareholders for any such
       purpose shall be at the close of business on the day on which the
       board adopts the applicable resolution or the sixtieth (60th) day
       before the date of that action, whichever is later.

                 Section 2.  CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. 
       All checks, drafts, or other orders for payment of money, notes,
       or other evidences of indebtedness, issued in the name of or
       payable to the corporation, shall be signed or endorsed by such
       person or persons and in such manner as, from time to time, shall
       be determined by resolution of the Board of Directors.

                 Section 3. CORPORATE CONTRACTS AND INSTRUMENTS; HOW
       EXECUTED.  The Board of Directors, except as otherwise provided
       in these bylaws, may authorize any officer or officers, agent or
       agents, to enter into any contract or execute any instrument in
       the name of and on behalf of the corporation, and this authority
       may be general or confined to specific instances; and, unless so
       authorized or ratified by the Board of Directors or within the
       agency power of an officer, no officer, agent, or employee shall
       have any power or authority to bind the corporation by any
       contract or engagement or to pledge its credit or to render it
       liable for any purpose or for any amount.

                 Section 4.  CERTIFICATES FOR SHARES.  A certificate or
       certificates for shares of the capital stock of the corporation
       shall be issued to each shareholder when any of these shares are
       fully paid, and the Board of Directors may authorize the issuance
       of certificates or shares as partly paid provided that these
       certificates shall state the amount of the consideration to be



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       paid for them and the amount paid.  All certificates shall be
       signed in the name of the corporation by the chairman of the
       board or vice chairman of the board or the president or a vice
       president and by the chief financial officer or an assistant
       treasurer or the secretary or any assistant secretary, certifying
       the number of shares and the class or series of shares owned by
       the shareholder.  Any or all of the signatures on the certificate
       may be facsimile.  In case any officer, transfer agent or
       registrar who has signed or whose facsimile signature has been
       placed on a certificate shall have ceased to be such officer,
       transfer agent, or registrar before such certificate is issued,
       it may be issued by the corporation with the same effect as if
       that person were an officer, transfer agent or registrar at the
       date of issue.  The Board of Directors may refuse to transfer
       shares of the capital stock of the corporation when the transfer
       would result in five or fewer shareholders owning more than 50
       percent of such shares or such shares being owned by fewer than
       100 shareholders.

                 Section 5.  LOST CERTIFICATES.  Except as provided in
       this Section 5, no new certificates for shares shall be issued to
       replace an old certificate unless the latter is surrendered to
       the corporation and cancelled at the same time.  The Board of
       Directors may, in case any share certificate or certificate for
       any other security is lost, stolen or destroyed, authorize the
       issuance of a replacement certificate on such terms and
       conditions as the board may require, including provision for
       indemnification of the corporation secured by a bond or other
       adequate security sufficient to protect the Corporation against
       any claim that may be made against it, including any expense or
       liability, on account of the alleged loss, theft or destruction
       of the certificate or the issuance of the replacement
       certificate.

                 Section 6.  REPRESENTATION OF SHARES OF OTHER
       CORPORATIONS.  The chairman of the board, the president, or any
       vice president, or any other person authorized by resolution of
       the Board of Directors or by any of the foregoing designated
       officers, is authorized to vote on behalf of the corporation any
       and all shares of any other corporation or corporations, foreign
       or domestic, standing in the name of the corporation.  The
       authority granted to these officers to vote or represent on
       behalf of the corporation any and all shares held by the
       corporation in any other corporation or corporations may be
       exercised by any of these officers in person or by any person
       authorized to do so by a proxy duly executed by these officers.

                 Section 7.  CONSTRUCTION AND DEFINITIONS.  Unless the
       context requires otherwise, the general provisions, rules of
       construction, and definitions in the California Corporations Code
       shall govern the construction of these bylaws.  The singular, and




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       the term "person" includes both a corporation and a natural
       person.


                                   ARTICLE IX

                         DISTRIBUTIONS TO SHAREHOLDERS
                         -----------------------------
                 The corporation shall distribute quarterly to its
       shareholders substantially all of the corporation's net
       investment income; provided, however, that the Board of directors
       may, in its sole discretion, elect to make such distributions
       each month.  Each distribution will include all previously
       undistributed income, prepayment and late payment charges, and
       that portion of any repayment of principal on a note made prior
       to the determination date for the distribution which is
       attributable to the discount obtained upon the acquisition of
       that note by the corporation.  Each distribution will be reduced
       by the corporation's quarterly operating expenses plus any losses
       realized by the corporation.  All gains realized upon foreclosure
       upon and subsequent sale of property subject to a deed of trust
       or the sale of money market instruments, or otherwise will be
       distributed annually following the close of the last quarter of
       the corporation's fiscal year.  Any distribution to shareholders
       of the corporation's fiscal year.  Any distribution to
       shareholders of the corporation of income or capital assets of
       the corporation shall be accompanied by a written statement
       disclosing the source of the funds distributed.  If, at the time
       of distribution, this information is not available, a written
       explanation of the relevant circumstances shall accompany the
       distribution and the written statement disclosing the source of
       the funds distributed shall be sent to the shareholders not later
       than sixty (60) days after the close of the fiscal year in which
       the distribution was made.


                                   ARTICLE X

                                  AMENDMENTS
                                  ----------
                 Section 1.  REVIEW OF BYLAWS.  The bylaws of the
       corporation shall be reviewed by the Board of Directors at least
       every two years and revised as necessary and pursuant to the
       limitations set forth below.

                 Section 2.  AMENDMENT BY SHAREHOLDERS.  New bylaws may
       be adopted or these bylaws may be amended or repealed by the vote
       or written consent of holders of a majority of the outstanding
       shares entitled to vote; provided, however, that (a) no amendment
       which would change any rights with respect to any outstanding
       class of securities of the corporation, by reducing the amount
       payable thereon upon liquidation of the corporation, or by



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       diminishing or eliminating any voting rights pertaining thereto,
       may be made unless approved by the vote or written consent of the
       holders of two-thirds (2/3) of the outstanding securities of such
       class and (b) if the articles of incorporation of the corporation
       set forth the number of authorized directors of the corporation,
       the authorized number of directors may be changed only by an
       amendment of the articles of incorporation.

                 Section 3.  AMENDMENT BY DIRECTORS.  Subject to the
       rights of the shareholders as provided in Section 2 of this
       Article X, bylaws, other than a bylaw or an amendment of a bylaw
       changing the authorized number of directors, may be adopted,
       amended or repealed by the Board of Directors; provided that the
       Board of Directors may not adopt any amendment which would
       change:  (a) any of the specific restrictions set forth in
       Section 3 of Article I of these bylaws; (b) any provision of
       Sections 2 through 5 of Article II, Sections 1 through 5 or 16
       through 18 of Article III, Section I of Article IV, Section 2, 3,
       7 or 8 of Article VI, Section 5 or 6 of Article VII, Article IX,
       or Section 2 or 3 of Article X of these bylaws; or (c) any rights
       with respect to any outstanding class of securities of the
       corporation, by reducing the amount payable thereon on
       liquidation of the corporation, or by diminishing or eliminating
       any voting rights pertaining thereto.































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