FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the Quarter Ended                               Commission File Number
June 30, 1997                                             0-13331


               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
             (Exact Name of Registrant as specified in its Charter)

   Delaware                                             16-1234990
--------------------                         -----------------------------------
(State of Formation)                         (IRS Employer Identification No.)

2350 North Forest Road
Suite 12-A
Getzville, New York  14068
(Address of Principal Executive Office)

Registrant's Telephone Number:      (716) 636-0280


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

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

As of June 30, 1997, the issuer had 15,551 units of limited partnership interest
outstanding.



<PAGE>


               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
               ---------------------------------------------------

                                      INDEX
                                      -----



                                                                     PAGE NO.
                                                                     --------
PART I:     FINANCIAL INFORMATION
-------     ---------------------

            Balance Sheets -
                  June 30, 1997 and December 31, 1996                   3

            Statements of Operations -
                  Three Months Ended June 30, 1997 and 1996             4

            Statements of Operations -
                  Six Months Ended June 30, 1997 and 1996               5

            Statements of Cash Flows -
                  Six Months Ended June 30, 1997 and 1996               6

            Statements of Partners' (Deficit) Capital -
                  Six Months Ended June 30, 1997 and 1996               7

            Notes to Financial Statements                             8 - 19


PART II:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
--------    FINANCIAL CONDITION AND RESULTS OF
            ----------------------------------
            OPERATIONS                                               20 - 21
            ----------














                                       -2-

<PAGE>
               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                                 BALANCE SHEETS
                       June 30, 1997 and December 31, 1996
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                          June 30,      December 31,
                                                            1997           1996
                                                            ----           ----
<S>                                                    <C>             <C>         
ASSETS

Property, at cost:
     Land                                              $    935,000    $    935,000
     Buildings and improvements                          10,032,459      10,032,459
     Furniture and fixtures                               1,481,974       1,481,974
                                                       ------------    ------------
                                                         12,449,433      12,449,433
     Less accumulated depreciation                        5,882,255       5,837,777
                                                       ------------    ------------
          Property, net                                   6,567,178       6,611,656

Investment in joint venture                                    --            25,156

Cash                                                      1,506,527       1,811,962
Cash - security deposits                                      5,335          56,086
Escrow deposits                                             717,970         267,943
Accounts receivable, net of allowance for doubtful
     accounts of $643,646 and $584,097, respectively          3,587              69
Mortgage costs, net of accumulated amortization
     of $109,763 and $215,272                               265,015          18,421
Other assets                                                 84,611          77,928
                                                       ------------    ------------

           Total Assets                                $  9,150,223    $  8,869,221
                                                       ============    ============


LIABILITIES AND PARTNERS' (DEFICIT)

Liabilities:
     Mortgages payable                                 $  6,772,701    $  5,431,000
     Accounts payable and accrued expenses                  459,813         713,233
     Accounts payable - affiliates                           83,697         208,156
     Accrued interest                                       155,008         100,327
     Security deposits and prepaid rents                    262,377         289,671
                                                       ------------    ------------
           Total Liabilities                              7,733,596       6,742,387
                                                       ------------    ------------

Deficit investment in joint venture                          30,323            --
                                                       ------------    ------------

Partners' (Deficit) Capital:
     General partners                                      (221,884)       (199,668)
     Limited partners                                     1,608,188       2,326,502
                                                       ------------    ------------
          Total Partners' (Deficit)                       1,386,304       2,126,834
                                                       ------------    ------------

          Total Liabilities and Partners' (Deficit)    $  9,150,223    $  8,869,221
                                                       ============    ============
</TABLE>



                        See notes to financial statements

                                       -3-


<PAGE>

               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                            STATEMENTS OF OPERATIONS
                    Three Months Ended June 30, 1997 and 1996
                                   (Unaudited)

                                                     Three Months   Three Months
                                                        Ended          Ended
                                                       June 30,       June 30,
                                                        1997           1996
                                                        ----           ----
Income:
     Rental                                          $   692,647    $ 1,019,899
     Interest and other income                            48,094         43,687
                                                     -----------    -----------
     Total income                                        740,741      1,063,586
                                                     -----------    -----------

Expenses:
     Property operations                                 242,686        594,105
     Interest:
          Paid to affiliates                              11,595         37,241
          Other                                          722,450        192,180
     Depreciation and amortization                        21,507        185,774
     Administrative:
          Paid to affiliates                              88,153         75,729
          Other                                           69,280        137,019
                                                     -----------    -----------
     Total expenses                                    1,155,671      1,222,048
                                                     -----------    -----------

Loss before allocated loss from joint venture           (414,930)      (158,462)

Allocated loss from joint venture                        (16,428)       (16,097)
                                                     -----------    -----------

Net loss                                             $  (431,358)   $  (174,559)
                                                     ===========    ===========

Loss per limited partnership unit                    $    (26.91)   $    (10.89)
                                                     ===========    ===========

Distributions per limited partnership unit           $      --      $      --
                                                     ===========    ===========

Weighted average number of
     limited partnership units
     outstanding                                          15,551         15,551
                                                     ===========    ===========






                        See notes to financial statements

                                       -4-

<PAGE>


               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                            STATEMENTS OF OPERATIONS
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

                                                     Six Months      Six Months
                                                        Ended          Ended
                                                      June 30,        June 30,
                                                        1997            1996
                                                        ----            ----

Income:
     Rental                                          $ 1,416,594    $ 2,055,648
     Interest and other income                           111,209        138,490
                                                     -----------    -----------
     Total income                                      1,527,803      2,194,138
                                                     -----------    -----------

Expenses:
     Property operations                                 829,669      1,205,978
     Interest:
          Paid to affiliates                              38,005         72,828
          Other                                          964,419        564,730
     Depreciation and amortization                        47,611        372,676
     Administrative:
          Paid to affiliates                             162,094        145,110
          Other                                          171,056        259,100
                                                     -----------    -----------
     Total expenses                                    2,212,854      2,620,422
                                                     -----------    -----------

Loss before allocated loss from joint venture           (685,051)      (426,284)

Allocated loss from joint venture                        (55,479)       (19,622)
                                                     -----------    -----------

Net loss                                             $  (740,530)   $  (445,906)
                                                     ===========    ===========

Loss per limited partnership unit                    $    (46.19)   $    (27.81)
                                                     ===========    ===========

Distributions per limited partnership unit           $      --      $      --
                                                     ===========    ===========

Weighted average number of
     limited partnership units
     outstanding                                          15,551         15,551
                                                     ===========    ===========




                        See notes to financial statements

                                       -5-

<PAGE>
               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                            STATEMENTS OF CASH FLOWS
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)

                                                       Six Months    Six Months
                                                         Ended        Ended
                                                        June 30,      June 30,
                                                          1997          1996
                                                          ----          ----
Cash flow from operating activities:
     Net loss                                         $  (740,530)  $  (445,906)

Adjustments to  reconcile  net loss to net cash
 (used in) provided by operating activities:
     Depreciation and amortization                         47,611       372,676
     Loss from joint venture                               55,479        19,622
Changes in operating assets and liabilities:
     Cash - security deposits                              50,751          (811)
     Escrow deposits                                     (450,027)         --
     Accounts receivable                                   (3,518)       12,765
     Other assets                                          (6,683)     (130,293)
     Accounts payable and accrued expenses               (253,420)      194,966
     Accrued interest                                      54,681         6,191
     Security deposits and prepaid rent                   (27,294)       44,344
                                                      -----------   -----------
Net cash (used in) provided by operating activities    (1,272,950)       73,554
                                                      -----------   -----------
Cash flow from investing activities:
     Capital expenditures                                    --           5,975
     Distributions from joint venture                        --            --
                                                      -----------   -----------
Net cash provided by investing activities                    --           5,975
                                                      -----------   -----------
Cash flows from financing activities:
     Cash overdraft                                          --         104,378
     Accounts payable - affiliates                       (124,459)      (75,759)
     Principal payments on mortgages and notes           (101,236)     (108,148)
     Proceeds from mortgage refinancing                 1,331,162          --
     Mortgage costs                                      (137,952)         --
                                                      -----------   -----------
Net cash (used in) provided by financing activities       967,515       (79,529)
                                                      -----------   -----------

Increase (decrease) in cash                              (305,435)         --

Cash - beginning of period                              1,811,962          --
                                                      -----------   -----------

Cash - end of period                                  $ 1,506,527   $      --
                                                      ===========   ===========

Supplemental Disclosure of Cash Flow Information:
     Cash paid for interest                           $   909,738   $   558,539
                                                      ===========   ===========

                        See notes to financial statements

                                       -6-

<PAGE>


               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                    STATEMENTS OF PARTNERS' (DEFICIT) CAPITAL
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)


                                     General              Limited Partners
                                     Partners            --------------------
                                      Amount             Units         Amount
                                      ------             -----         ------

Balance, January 1, 1996           $  (427,399)          15,551     $   123,243

Net loss                               (13,377)            --          (432,529)
                                   -----------      -----------     -----------

Balance, June 30, 1996             $  (440,776)          15,551     $  (309,286)
                                   ===========      ===========     ===========


Balance, January 1, 1997           $  (199,668)          15,551     $ 2,326,502

Net loss                               (22,216)            --          (718,314)
                                   -----------      -----------     -----------

Balance, June 30, 1997             $  (221,884)          15,551     $ 1,608,188
                                   ===========      ===========     ===========






















                        See notes to financial statements



                                       -7-

<PAGE>

                         INDUCON JOINT VENTURE - AMHERST
                                 BALANCE SHEETS
                       June 30, 1997 and December 31, 1996
                                    <TABLE>
<CAPTION>

                                                            June 30,      December 31,
                                                              1997           1996
                                                              ----           ----
<S>                                                       <C>            <C>        
ASSETS

Property, at cost:
     Land                                                 $   177,709    $   177,709
     Land improvements                                        246,232        246,232
     Buildings and improvements                             3,080,843      3,074,733
     Equipment                                                  8,466          8,466
     Furniture and fixtures                                     2,101          2,101
                                                          -----------    -----------
                                                            3,515,351      3,509,241
     Less accumulated depreciation                          1,272,371      1,205,207
                                                          -----------    -----------
          Property, net                                     2,242,980      2,304,034

Deferred debt expense, net of accumulated
     amortization of $4,540 and $293,490, respectively        122,575         23,315
Other assets                                                   89,630         41,665
                                                          -----------    -----------

                 Total Assets                             $ 2,455,185    $ 2,369,014
                                                          ===========    ===========


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Cash overdraft                                       $   554,713    $    34,817
     Bonds payable                                               --        1,849,245
     Mortgage payable                                       1,871,873        260,450
     Accounts payable and accrued expenses                     43,988        128,072
     Accounts payable - affiliates                              9,820         63,240
                                                          -----------    -----------
                 Total Liabilities                          2,480,394      2,335,824
                                                          -----------    -----------

Partners' Capital:
     The Partnership                                          (30,323)        25,156
     Other joint venturer                                       5,114          8,034
                                                          -----------    -----------
                Total Partners' Capital                       (25,209)        33,190
                                                          -----------    -----------

                Total Liabilities and Partners' Capital   $ 2,455,185    $ 2,369,014
                                                          ===========    ===========
</TABLE>












                                      -13-


<PAGE>

                         INDUCON JOINT VENTURE - AMHERST
                            STATEMENTS OF OPERATIONS
                     Six Months Ended June 30, 1997 and 1996

                                                     Six Months      Six Months
                                                       Ended            Ended
                                                      June 30,         June 30,
                                                        1997             1996
                                                        ----             ----

Income:
     Rental                                          $ 240,069        $ 223,580
     Interest and other income                           4,192            4,942
                                                     ---------        ---------
     Total income                                      244,261          228,522
                                                     ---------        ---------

Expenses:
     Property operations                                92,823           49,415
     Interest                                           85,864           93,497
     Depreciation and amortization                      75,347           85,034
     Administrative                                     48,626           21,230
                                                     ---------        ---------
     Total expenses                                    302,660          249,176
                                                     ---------        ---------

Net loss                                             $ (58,399)       $ (20,654)
                                                     =========        =========


Allocation of net loss:

     The Partnership                                 $ (55,479)       $ (19,621)
     Other Joint Venturer                               (2,920)          (1,033)
                                                     ---------        ---------

                                                     $ (58,399)       $ (20,654)
                                                     =========        =========


A reconciliation  of the  Partnership's  investment in the joint venture for the
six month periods ended June 30, 1997 and 1996 is as follows:

                                                       1997             1996
                                                       ----             ----

Investment in joint venture - beginning of period    $ 167,321        $ 167,321
Allocated loss                                         (55,479)         (19,621)
                                                     ---------        ---------

Investment in joint venture - end of period          $ 111,842        $ 147,700
                                                     =========        =========





                                      -14-

<PAGE>


               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
                          NOTES TO FINANCIAL STATEMENTS
                     Six Months Ended June 30, 1997 and 1996
                                   (Unaudited)


1.   GENERAL PARTNER'S DISCLOSURE
     ----------------------------

     In the opinion of the  General  Partners  of  Realmark  Property  Investors
     Limited   Partnership   III,  all   adjustments   necessary  for  the  fair
     presentation  of  the   Partnership's   financial   position,   results  of
     operations,  and  changes in cash  flows for the six months  ended June 30,
     1997 and 1996 have been made in the  financial  statements.  The  financial
     statements are unaudited and subject to any year-end  adjustments which may
     be necessary.

2.   FORMATION AND OPERATION OF PARTNERSHIP
     --------------------------------------

     Realmark Property Investors Limited Partnership III (the "Partnership"),  a
     Delaware Limited Partnership,  was formed November 18, 1983, to invest in a
     diversified portfolio of income-producing real estate.

     In February 1984 the Partnership  commenced the public offering of units of
     limited partnership interest.  Other than matters relating to organization,
     it had no  business  activities  and,  accordingly,  had not  incurred  any
     expenses  or earned any income  until the first  interim  closing  (minimum
     closing) of the offering which occurred April 26, 1984. All items of income
     and expense arose subsequent to this date. On January 31, 1985 the offering
     was concluded,  at which time 15,551 units of limited partnership  interest
     were  outstanding.  The General Partners are Realmark  Properties,  Inc., a
     Delaware  corporation,  the corporate  General  Partner,  and Mr. Joseph M.
     Jayson,  the  individual  General  Partner.  Joseph  M.  Jayson is the sole
     shareholder of J.M. Jayson & Company,  Inc. (JMJ) and Realmark  Properties,
     Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc.

     Under the Partnership  agreement,  the General  Partners and affiliates can
     receive  compensation for services  rendered and reimbursement for expenses
     incurred on behalf of the Partnership.














                                       -8-

<PAGE>

     FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
     --------------------------------------------------

     Net  income  or  loss  arising  from  the  sale  or  refinancing  shall  be
     distributed  first to the limited partners in an amount  equivalent to a 7%
     return on the average of their adjusted capital  contributions,  then in an
     amount  equal to their  capital  contributions,  then an amount equal to an
     additional 5% of the average of their adjusted capital  contributions after
     the general  partners receive a disposition fee, then to all partners in an
     amount equal to their respective positive capital balances, and finally, in
     the ratio of 87% to the limited partners and 13% to the general partners.

     Partnership  income or loss not arising from sale or  refinancing  shall be
     allocated 97% to the limited partners and 3% to the general partners.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     Cash
     ----

     For purposes of reporting  cash flows,  cash includes the following  items:
     cash on hand; cash in checking; and money market savings.

     Cash - security deposits
     ------------------------

     Cash - security  deposits  represents  cash on deposit in  accordance  with
     terms  of  a  U.S.  Department  of  Housing  and  Urban  Development  (HUD)
     regulatory  agreement  for  multi-family  housing  projects  under  Section
     223(f).

     Property and depreciation
     -------------------------

     Depreciation is provided using the straight-line  method over the estimated
     useful lives of the respective  assets.  Expenditures  for  maintenance and
     repairs are expensed as incurred,  and major renewals and  betterments  are
     capitalized.  The  Accelerated  Cost Recovery  System are used to calculate
     depreciation expense for tax purposes.

     Rental income
     -------------

     Leases  for  residential  properties  have  terms  of  one  year  or  less.
     Commercial leases generally have terms of one to five years.  Rental income
     is recognized on the straight-line method over the term of the lease.








                                       -9-

<PAGE>

     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------

     Investment in Joint Venture
     ---------------------------

     The interest in joint venture is accounted for on the equity method.

4.   ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
     ----------------------------------------------

     In August 1984 the Partnership  acquired a 112 unit apartment complex (Bryn
     Mawr) located in Ypsilanti,  Michigan for a purchase  price of  $1,833,554,
     which included  $134,857 in acquisition  fees. In 1985 the acquisition fees
     related  to  the  purchase  of  Bryn  Mawr  were  reduced  by  $18,600  and
     reallocated to properties by the Partnership that year.

     In August 1986 the Bryn Mawr Apartments  were sold for $3,110,000.  The net
     cash proceeds of  approximately  $667,000 from the sale were distributed to
     the investors on a pro rata basis.  The  Partnership  recognized a gain for
     financial  statement purposes of $1,475,313.  For income tax purposes,  the
     gain will be recognized under the installment sale method.

     In February  1985 the  Partnership  acquired a 190 unit  apartment  complex
     (Castle Dore) in Indianapolis,  Indiana for a purchase price of $4,601,233,
     which included acquisition fees of $414,279.

     In February  1985 the  Partnership  acquired a 208 unit  apartment  complex
     (Parc  Bordeaux)  in   Indianapolis,   Indiana  for  a  purchase  price  of
     $2,845,064, which included acquisition fees of $371,233.

     In December 1988 the Partnership  sold Parc Bordeaux  Apartments for a sale
     price  of  $5,300,000  which  generated  a total  net  gain  for  financial
     statement purposes of $2,338,067. For income tax purposes, the gain will be
     recognized under the installment sale method.

     In  June  1985  the  Partnership  acquired  a 200  unit  apartment  complex
     (Williamsburg South Apartments) in Atlanta, Georgia for a purchase price of
     $5,138,745, which included acquisition fees of $368,745.

     In August 1985 the Partnership acquired a 38,500 square foot office complex
     (Perrymont) in Pittsburgh, Pennsylvania for a purchase price of $2,078,697,
     which included acquisition fees of $168,697.











                                      -10-

<PAGE>

     ACQUISITION AND DISPOSITION OF RENTAL PROPERTY (CONTINUED)
     ----------------------------------------------------------

     In  October  1985 the  Partnership  acquired a 130 unit  apartment  complex
     (Pleasant  Run) in  Cincinnati,  Ohio for a purchase  price of  $3,434,728,
     which included acquisition fees of $267,228.

     In December  1985 the  Partnership  acquired a 280 unit  apartment  complex
     (Ambassador Towers, formerly Cedar Ridge) in Monroeville,  Pennsylvania for
     a  purchase  price  of  $6,766,424,  which  included  acquisition  fees  of
     $646,424.

     In December 1996, the Partnership  sold the  Williamsburg  South Apartments
     and  Pleasant  Run Farms  Apartments  for a sales price of  $4,831,000  and
     $3,350,000, respectively, less related fees of $93,000. The sales generated
     a total net gain of $3,501,323 for financial statement purposes.

5.   INVESTMENT IN JOINT VENTURES
     ----------------------------

     In April 1985 the  Partnership  entered  into an  agreement  and formed the
     Inducon  Joint  Venture - Amherst  (the  Joint  Venture),  for the  primary
     purpose of constructing office/warehouse buildings in Erie County, New York
     as income producing property. The site is part of the Amherst Foreign Trade
     Zone.  This is U.S.  Customs  Territory  under federal  supervision,  where
     foreign and domestic  merchandise  is brought for  storage,  manufacturing,
     salvage,  repair, exhibit,  repacking,  relabeling or re-export.  Under the
     terms of the joint venture agreement,  the Partnership supplied $545,000 of
     capital to acquire the land and undertake  initial  development  of Phase I
     and $275,000 for Phase II. The other Joint Venturer delivered and completed
     on behalf of the Joint Venture all plans,  specifications,  maps,  surveys,
     accounting pro-formas for construction, initial leasing and operations, and
     cost estimates with respect to development.

     Ownership of the Joint Venture is divided  equally  between the Partnership
     and the other Joint Venturer. The Joint Venture agreement provides that the
     Partnership will be allocated 95% of any income or loss.

     Net cash flow from the Joint Venture is to be distributed as follows:

     To the  Partnership  until  has  received  a return  of 7% per annum on its
     underwritten  syndicated  equity. To the extent a 7% return is not received
     from year to year, it will accrue and be paid from the next  available cash
     flow.











                                      -11-

<PAGE>

     INVESTMENT IN JOINT VENTURES (CONTINUED)
     ----------------------------------------

     To the  other  Joint  Venturer  in an  amount  equal  to  that  paid to the
     Partnership. No amount will accumulate in favor of the other investor.

     Any remaining amount will be divided equally.

     To the extent there are net proceeds  from any sale or  refinancing  of the
     subject  property,  the  proceeds  will be paid in the  following  order of
     priority:

     To  the  Partnership  to  the  extent  the 7%  per  annum  returned  on its
     underwritten equity is unpaid.

     Next to the  Partnership  until it has  received  an overall 9%  cumulative
     return on its underwritten equity.

     Next to the Partnership  until it has received an amount equal to its total
     underwritten  equity,  reduced by any prior distribution of sale, financing
     or refinancing proceeds.

     Next to the  Partnership  until it has received a  cumulative  20% per year
     return on its total underwritten equity.

     Thereafter   any  remaining  net  proceeds  will  be  divided  50%  to  the
     Partnership and 50% to the other joint venturer.

     A summary of the assets, liabilities and capital of the joint venture as of
     June 30, 1996 and December 31, 1995 and the results of its  operations  for
     the six months ended June 30, 1996 and 1995 is as follows:






















                                      -12-

<PAGE>

                         INDUCON JOINT VENTURE - AMHERST
                                 BALANCE SHEETS
                       June 30, 1997 and December 31, 1996
                                    <TABLE>
<CAPTION>

                                                            June 30,      December 31,
                                                              1997           1996
                                                              ----           ----
<S>                                                       <C>            <C>        
ASSETS

Property, at cost:
     Land                                                 $   177,709    $   177,709
     Land improvements                                        246,232        246,232
     Buildings and improvements                             3,080,843      3,074,733
     Equipment                                                  8,466          8,466
     Furniture and fixtures                                     2,101          2,101
                                                          -----------    -----------
                                                            3,515,351      3,509,241
     Less accumulated depreciation                          1,272,371      1,205,207
                                                          -----------    -----------
          Property, net                                     2,242,980      2,304,034

Deferred debt expense, net of accumulated
     amortization of $4,540 and $293,490, respectively        122,575         23,315
Other assets                                                   89,630         41,665
                                                          -----------    -----------

                 Total Assets                             $ 2,455,185    $ 2,369,014
                                                          ===========    ===========


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Cash overdraft                                       $   554,713    $    34,817
     Bonds payable                                               --        1,849,245
     Mortgage payable                                       1,871,873        260,450
     Accounts payable and accrued expenses                     43,988        128,072
     Accounts payable - affiliates                              9,820         63,240
                                                          -----------    -----------
                 Total Liabilities                          2,480,394      2,335,824
                                                          -----------    -----------

Partners' Capital:
     The Partnership                                          (30,323)        25,156
     Other joint venturer                                       5,114          8,034
                                                          -----------    -----------
                Total Partners' Capital                       (25,209)        33,190
                                                          -----------    -----------

                Total Liabilities and Partners' Capital   $ 2,455,185    $ 2,369,014
                                                          ===========    ===========
</TABLE>











                                      -13-


<PAGE>

                         INDUCON JOINT VENTURE - AMHERST
                            STATEMENTS OF OPERATIONS
                     Six Months Ended June 30, 1997 and 1996

                                                     Six Months      Six Months
                                                       Ended            Ended
                                                      June 30,         June 30,
                                                        1997             1996
                                                        ----             ----

Income:
     Rental                                          $ 240,069        $ 223,580
     Interest and other income                           4,192            4,942
                                                     ---------        ---------
     Total income                                      244,261          228,522
                                                     ---------        ---------

Expenses:
     Property operations                                92,823           49,415
     Interest                                           85,864           93,497
     Depreciation and amortization                      75,347           85,034
     Administrative                                     48,626           21,230
                                                     ---------        ---------
     Total expenses                                    302,660          249,176
                                                     ---------        ---------

Net loss                                             $ (58,399)       $ (20,654)
                                                     =========        =========


Allocation of net loss:

     The Partnership                                 $ (55,479)       $ (19,621)
     Other Joint Venturer                               (2,920)          (1,033)
                                                     ---------        ---------

                                                     $ (58,399)       $ (20,654)
                                                     =========        =========


A reconciliation  of the  Partnership's  investment in the joint venture for the
six month periods ended June 30, 1997 and 1996 is as follows:

                                                       1997             1996
                                                       ----             ----

Investment in joint venture - beginning of period    $ 167,321        $ 167,321
Allocated loss                                         (55,479)         (19,621)
                                                     ---------        ---------

Investment in joint venture - end of period          $ 111,842        $ 147,700
                                                     =========        =========





                                      -14-

<PAGE>

6.   MORTGAGES AND NOTES PAYABLE
     ---------------------------

     Castle Dore
     -----------

     A mortgage  with a balance of  $2,550,000  at June 30, 1997,  providing for
     monthly  interest  payments  only,  bearing  interest at 9.1875%.  The note
     matures June 1999.

     A mortgage of $0 and  $,1556,102  at June 30, 1997 and 1996,  respectively,
     bearing interest at 7.50%.  The mortgage  provides for annual principal and
     interest payments of $216,026 payable in equal monthly installments through
     September 1, 2014.  The mortgage was fully paid off in May of 1997 when the
     mortgage was refinanced.

     Williamsburg South
     ------------------

     A 12.85% mortgage which provides for annual principal and interest payments
     of $341,602  payable in equal monthly  installments  through December 1999.
     The mortgage had a balance of $0 and  $2,412,875 at June 30, 1997 and 1996,
     respectively.   This  property  was  sold  in  December  of  1996  and  the
     outstanding balance of the mortgage was paid in full.

     Perrymont
     ---------

     A mortgage  which  provides  for  interest  rates and monthly  installments
     through December 1998 as follows:

             Year            Rate         Payment
             ----            ----         -------

             1996 - 1998     7.875%       $   9,660  (Principal and interest)

     The  outstanding  balance  at June  30,  1997  and  1996  respectively  was
     $1,259,701 and  $1,265,185.  Currently  payments are not being made on this
     mortgage.

     Pleasant Run
     ------------

     A 10%  mortgage  with a balance of $0 and  $2,211,259  at June 30, 1997 and
     1996,  respectively providing for annual principal and interest payments of
     $245,349 payable in equal monthly installments,  with the remaining balance
     due August 1, 1998.  This  property  was sold in  December  of 1996 and the
     outstanding balance of the mortgage was paid in full.






                                      -15-

<PAGE>

     MORTGAGES AND NOTES PAYABLE (CONTINUED)
     ---------------------------------------

     Ambassador Towers (formerly Cedar Ridge)
     ----------------------------------------

     A mortgage  with a balance of  $2,963,000  at June 30, 1997,  providing for
     monthly interest payments only for the first two years of the mortgage at a
     rate of  8.275%.  Principal  payments  will  begin in the third year of the
     mortgage. The note matures February 2004.

     A mortgage  with a balance of $0 and  $494,542  at June 30,  1997 and 1996,
     respectively,  bearing interest at 7.75%. The mortgage provides for monthly
     principal  and  interest  payments  of $8,980  through  April 1, 2002.  The
     mortgage  was  fully  paid  off  in May  of  1997  when  the  mortgage  was
     refinanced.

     A mortgage with a balance of $ 0 and  $1,232,902 at June 30, 1997 and 1996,
     respectively,  bearing interest at 8.75%. The mortgage provides for monthly
     principal and interest  payments of $20,455  through  October 1, 2003.  The
     mortgage  was  fully  paid  off  in May  of  1997  when  the  mortgage  was
     refinanced.

     A mortgage  with a balance of $0 and  $995,235  at June 30,  1997 and 1996,
     respectively  which  provides for  interest  payments at prime rate plus 2%
     (10.25% at June 30,  1996).  The mortgage was  originally  due in September
     1994,  but in September  1995 the General  Partner  negotiated an extension
     until May 1996.  The  mortgage  was fully  paid off in May of 1997 when the
     mortgage was refinanced.

     The  aggregate  maturities of the mortgages for each of the next five years
     and thereafter are as follows:

             Year                         Amount

             1997                         $   1,259,701
             1998                                  -
             1999                             2,631,284
             2000                                94,603
             2001                                91,498
             Thereafter                       2,695,615
                                          -------------

             TOTAL                        $   6,772,701
                                          =============








                                      -16-

<PAGE>


7.   RELATED PARTY TRANSACTIONS
     --------------------------

     Management fees for the management of Partnership's  properties are paid to
     an affiliate of the General Partner.  The management agreement provides for
     5% of gross monthly  rental  receipts of the complex to be paid as fees for
     administering  the operations of the property.  These fees totaled  $78,802
     and $112,800 for the six months ended June 30, 1997 and 1996, respectively.

     According to the terms of the Partnership  agreement,  the general partners
     are  entitled to receive a  Partnership  management  fee equal to 7% of net
     cash  flow  (as  defined  in the  Partnership  agreement),  2% of  which is
     subordinated to the limited  partners having received an annual cash return
     equal to 7% of their adjusted capital  contributions.  No such fee has been
     paid or accrued by the  Partnership  for the six months ended June 30, 1997
     and 1996.

     The general partners are also allowed to collect property  disposition fees
     upon sale of acquired  properties.  This fee is not to exceed the lesser of
     50% of amounts customarily  charged in arm's-length  transactions by others
     rendering similar services for comparable  properties or 2.75% of the sales
     price.  The  property  disposition  fee is  subordinate  to payments to the
     limited partners of a cumulative annual return (not compounded) equal to 7%
     of their average  adjusted capital balances and to repayment to the limited
     partners of an amount equal to their capital contributions.

     The general  partners have not to date  received a  disposition  fee on the
     sale of Bryn  Mawr or Parc  Bordeaux,  as the  limited  partners  have  not
     received a return of 7% on their average adjusted capital or their original
     capital as defined in the Partnership agreement.  Once the limited partners
     receive their original  capital and a 7% return,  the general partners will
     be entitled to disposition fees of 2.75%.

     Accounts  payable - affiliates  amounted to $83,697 and  $1,182,484 at June
     30, 1997 and 1996,  respectively.  The payable  represents  fees due to the
     general partner or to affiliates of the general  partner.  Interest charged
     on amounts due  affiliates  totaled  $38,005 for the six month period ended
     June 30, 1997.
















                                      -17-

<PAGE>

     RELATED PARTY TRANSACTIONS (CONTINUED)
     --------------------------------------

     Pursuant to the terms of the Partnership  agreement,  the corporate general
     partner  charges the  Partnership  for  reimbursement  of certain costs and
     expenses  incurred by the corporate  general  partner and its affiliates in
     connection with the  administration of the Partnership.  These charges were
     for the  Partnership's  allocated  share  of  costs  and  expenses  such as
     payroll, travel and communication, costs related to partnership accounting,
     and partner's communication and relations.

     Computer  service  charges  for the  Partnership  are paid or accrued to an
     affiliate  of the  General  Partner.  The fee is based  upon the  number of
     apartment  units and totaled  $7,020 for the six months ended June 30, 1997
     and 1996.

8.   INCOME TAXES
     ------------

     No provision has been made for income taxes since the income or loss of the
     Partnership  is to be  included  in  the  tax  returns  of  the  individual
     partners.

     The tax returns of the  Partnership  are subject to  examination by federal
     and state  taxing  authorities.  Under  federal and state  income tax laws,
     regulations  and rulings,  certain  types of  transactions  may be accorded
     varying  interpretations  and,  accordingly,  reported  Partnership amounts
     could be changed as a result of any such examination.

     The  reconciliation  of net loss for the six month  periods  ended June 30,
     1997 and 1996 as reported in the statements of operations,  and as would be
     reported for tax purposes respectively, is as follows:

                                                  June 30,        June 30,
                                                    1997             1996
                                                    ----             ----

      Net loss -
           Statement of operations              $  (740,530)      $ (445,906)
      (Add to)  deduct from:
           Difference in depreciation              ( 50,000)        (  42,882)
           Difference in amortization                32,862            32,862
           Non-deductible expenses                  124,000           125,792
           Difference in loss of joint venture       17,000             3,224
                                                -----------        ----------

      Net loss for tax purposes                 $  (616,668)       $  (326,910)
                                                ===========        ===========








                                      -18-

<PAGE>

     INCOME TAXES (CONTINUED)
     ------------------------

     The  reconciliation  of  partner's  (deficit)  capital at June 30, 1997 and
     December  31, 1996 as reported in the balance  sheets,  and as reported for
     tax purposes, is as follows:

                                       June 30,       December 31,
                                         1997                       1996

      Partner's Capital -
       balance sheet                            $  1,386,304     $  2,126,834
       Add to (deduct from):
            Accumulated difference in
            depreciation                          (4,284,796)      (4,234,796)
            Accumulated difference in
            amortization                             110,280           77,418
            Syndication fees and selling
            expenses                               1,842,060        1,842,060
            Gain on sale of property                 149,545          149,545
            Other non-deductible expenses            684,087          560,087
            Difference in book and tax
            depreciable cost basis                   915,085          915,085
            Difference in book and tax
            basis of investments                    (692,573)        (709,573)
            Other                                   ( 69,286)        ( 69,286)
                                                ------------     ------------

      Partner's Capital (Deficit) -
       tax return                               $     40,706     $ (2,283,190)
                                                ============     ============























                                      -19-

<PAGE>


PART II:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            -------------------------------------------------
            CONDITION AND RESULTS OF OPERATIONS
            -----------------------------------

Liquidity and Capital Resources
-------------------------------

Although the Partnership  showed a significant  cash shortfall for the first six
months of 1997, the shortfall was primarily due to replacement and repair escrow
accounts  which were set up as a result of the  refinancing of two properties in
the  Partnership.  These  accounts  will  be  used  to  fund  necessary  capital
improvement work at the properties.  Management is optimistic that expenses will
decrease as continued  control is being exercised over  expenditures;  with more
control over  spending now in place,  management is focusing on ways to increase
operating revenue through means such as offering rental  concessions to increase
occupancies.

The Partnership successfully refinanced two mortgages thus far during 1997. This
resulted in lower debt service payments and reduced  interest rates.  Management
believes that the effect of the refinancings will be increased cash flow.

There were no  distributions  for the six month  periods ended June 30, 1997 and
1996. The  Partnership is currently using the cash generated from operations and
the sales which took place in 1996 to complete  necessary  capital  improvements
and  maintenance  at the remaining  properties in the  Partnership.  The General
Partner hopes to resume distributions in the near future.

Results of Operations:
----------------------

For the quarter ended June 30, 1997, the  Partnership's net loss was $431,358 or
$26.91 per limited  partnership  unit.  Net loss for the quarter  ended June 30,
1996  amounted to $174,559 or $10.89 per unit.  For the six month  period  ended
June 30, 1997, the net loss was $740,530 or $46.19 per limited  partnership unit
as compared to $445,906 or $27.81 per limited partnership unit for the six month
period ended June 30, 1996.

Partnership  revenue for the quarter  ended June 30, 1997  totaled  $740,741,  a
decrease of  approximately  $323,000 from the 1996 amount of  $1,063,586.  Total
rental  revenue  dropped  over  $327,000,  which makes up all of the decrease in
total  revenue.  The majority of the decrease can be  attributed to the sales of
Williamsburg South Apartments and Pleasant Run Farms Apartments in December 1996
(i.e.,  there are two less  complexes in the  Partnership  from which revenue is
generated).  Although  occupancy  levels at Ambassador  Towers  (formerly  Cedar
Ridge) continue to climb during 1997,  continued  vacancies at Perrymont  Office
Building  have  hurt the  Partnership  financially.  Management  has hired a new
manager to oversee the leasing of Perrymont  with the hope that the vacant space
will be occupied and revenue producing by the end of 1997.







                                      -20-

<PAGE>

Results of Operations  (continued):
-----------------------------------

For  the  quarter  ended  June  30,  1997,   Partnership  expenses  amounted  to
$1,155,671,  decreasing just over $66,000 from the same 1996 quarter amount. For
the six month period ended June 30, 1997, Partnership expenses decreased by over
$407,000  from the same  period in 1996.  Once  again,  a large  portion  of the
decrease can be attributed to the sale of both Williamsburg South Apartments and
Pleasant  Run Farms  Apartments  in  December  1996.  Additionally,  Castle Dore
Apartments  saw slight  decreases in payroll and related  expenses,  repairs and
maintenance and contracted service expenses  (resulting from an increased amount
of maintenance work being performed by in-house/on-site personnel).  Castle Dore
also saw increased  utility  costs,  primarily gas and electric.  Administrative
costs for Castle Dore remained  virtually  unchanged from those incurred  during
the same six month  period in 1996.  Ambassador  Towers  also  benefited  from a
decrease of almost $11,000 in payroll and related expenses and an almost $10,000
decrease in contracted  service costs.  Ambassador Towers did,  however,  see an
increase  in  its   repairs  and   maintenance   expenditures   resulting   from
improvements,  such as new  carpeting,  fresh  paint  and new  appliances  being
completed through much of the property. Few significant changes in expenses were
noted at the Perrymont  Office Building between the six month periods ended June
30, 1997 and 1996; slight decreases were found in both contracted  service costs
and utility expenses.

Inducon  Joint  Venture - Amherst  generated  a net loss of $58,399  for the six
month  period  ended June 30,  1997 with  $55,479 of the loss  allocated  to the
Partnership.  For the six months ended June 30, 1996, the Joint Venture loss was
$20,654.

On a tax basis,  the  partnership  had a loss of  $616,668 or $38.46 per limited
partner  unit for the six month  period ended June 30, 1997 versus a tax loss of
$326,910 or $20.39 per unit for the six month period ended June 30, 1996.























                                      -21-

<PAGE>

               REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP III
               ---------------------------------------------------


                                     PART II
                                     -------

                                OTHER INFORMATION
                                -----------------


Item 1 - Legal Proceedings
--------------------------

The Partnership is not a party to, nor are any of the  Partnership's  properties
subject to any material pending legal proceedings  other than ordinary,  routine
litigation incidental to the Partnership's business.

Items 2, 3, 4 and 5
-------------------

Not applicable.

Item 6 - Exhibits and reports on Form 8-K
-----------------------------------------

None.




























                                      -22-

<PAGE>

                                   SIGNATURES
                                   ----------


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP III


By:   /s/Joseph M. Jayson                       August 18, 1997 
      ------------------------------            ------------------------
      Joseph M. Jayson,                         Date
      Individual General Partner



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


By:   REALMARK PROPERTIES, INC.
      Corporate General Partner

      /s/Joseph M. Jayson                       August 18, 1997  
      ------------------------------            ------------------------
      Joseph M. Jayson,                         Date
      President and Director



      /s/Michael J. Colmerauer                  August 18, 1997  
      ------------------------------            ------------------------
      Michael J. Colmerauer                     Date
      Secretary