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

                                   FORM 10-Q


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

               For the Quarterly Period Ended September 30, 1998

                                      or

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

For the transition period from                    to                   


                           Commission File #0-16783


                    Inland Mortgage Investors Fund, L.P.-II
            (Exact name of registrant as specified in its charter)



         Delaware                                     #36-3495248
  (State or other jurisdiction      (I.R.S. Employer Identification Number) 
of incorporation or organization)



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


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


                                   N/A                        
                (Former name, former address and former fiscal
                      year, if changed since last report)


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






                                      -1-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                                Balance  Sheets

                   September 30, 1998 and December 31, 1997
                                  (unaudited)

                                    Assets
                                    ------
                                                       1998           1997
                                                       ----           ----
Cash and cash equivalents (Note 1)................ $    69,982       169,895
Accrued interest receivable.......................      34,201        35,419
Mortgage loans receivable (Note 3)................   2,190,917     2,664,745
Miscellaneous receivable..........................      96,065          -
                                                   ------------  ------------
    Total assets.................................. $ 2,391,165     2,870,059
                                                   ============  ============

                       Liabilities and Partners' Capital
                       ---------------------------------
Liabilities:
  Accounts payable................................ $       500          -
  Due to affiliates (Note 2)......................       5,068         1,544
  Unearned income (Note 1)........................         183         1,044
                                                   ------------  ------------
    Total liabilities.............................       5,751         2,588
                                                   ------------  ------------
Partners' capital (Notes 1 and 2):
  General Partner:
    Capital contribution..........................         500           500
    Cumulative net income.........................     253,027       251,346
    Supplemental Capital Contribution.............     102,528        77,871
    Supplemental distributions to Limited Partners    (102,528)      (77,871)
    Cumulative cash distributions.................    (244,958)     (244,958)
                                                   ------------  ------------
                                                         8,569         6,888
  Limited Partners:                                ------------  ------------
    Units of $500. Authorized 40,000
      Units, 18,776.32 outstanding (net of
      offering costs of $1,072,632, of which
      $89,040 was paid to Affiliates).............   8,315,526     8,315,526
    Cumulative net income.........................   5,765,689     5,599,307
    Supplemental Capital Contributions from
      General Partner.............................     102,528        77,871
    Cumulative cash distributions................. (11,806,898)  (11,132,121)
                                                   ------------  ------------
                                                     2,376,845     2,860,583
                                                   ------------  ------------
    Total Partners' capital.......................   2,385,414     2,867,471
                                                   ------------  ------------
Total liabilities and Partners' capital........... $ 2,391,165     2,870,059
                                                   ============  ============


                See accompanying notes to financial statements.

                                      -2-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                           Statements of Operations

        For the three and nine months ended September 30, 1998 and 1997
                                  (unaudited)

                                         Three months           Nine months
                                            ended                 ended
                                         September 30,         September 30,
                                         -------------         -------------
                                       1998       1997       1998       1997
Income:                                ----       ----       ----       ----
  Interest and fees on mortgage
    loans receivable (Note 3)...... $  57,722     65,948    186,234    198,818
  Interest on investments..........     5,061      3,452     13,249     10,334
  Other income.....................     1,152      3,836     15,002     12,102
                                    ---------- ---------- ---------- ----------
                                       63,935     73,236    214,485    221,254
                                    ---------- ---------- ---------- ----------
Expenses:
  Professional services to
    Affiliates.....................     1,672      2,270      4,067      6,014
  Professional services to
    non-affiliates.................       500      1,100     21,730     22,848
  General and administrative
    expenses to Affiliates.........     5,738      7,560     15,196     26,610
  General and administrative
    expenses to non-affiliates.....       801      1,537      5,429      6,464
                                    ---------- ---------- ---------- ----------
                                        8,711     12,467     46,422     61,936
                                    ---------- ---------- ---------- ----------
    Net income..................... $  55,224     60,769    168,063    159,318
                                    ========== ========== ========== ==========

Net income allocated to:
  General Partner..................       553        608      1,681      1,593
  Limited Partners.................    54,671     60,161    166,382    157,725
                                    ---------- ---------- ---------- ----------
    Net income..................... $  55,224     60,769    168,063    159,318
                                    ========== ========== ========== ==========

Net income allocated to the one
  General Partner Unit............. $     553        608      1,681      1,593
                                    ========== ========== ========== ==========

Net income per Unit, basic and 
  diluted, allocated to Limited
  Partners per Limited Partnership
  Units of 18,776.32............... $    2.91       3.24       8.86       8.40
                                    ========== ========== ========== ==========



                See accompanying notes to financial statements.


                                      -3-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                           Statements of Cash Flows

             For the nine months ended September 30, 1998 and 1997
                                  (unaudited)



                                                       1998          1997
                                                       ----          ----
Cash flows from operating activities:
  Net income...................................... $   168,063       159,318
  Adjustments to reconcile net income to net cash
      provided by operating activities:
    Changes in assets and liabilities:
      Accrued interest receivable.................       1,218         2,687
      Accounts payable............................         500          -
      Due to Affiliates...........................       3,524         6,899
      Unearned income.............................        (861)         (860)
                                                   ------------  ------------
Net cash provided by operating activities.........     172,444       168,044
                                                   ------------  ------------
Cash flows from investing activities:
  Miscellaneous receivables.......................     (96,065)         -
  Principal payments collected....................     473,828        55,900
                                                   ------------  ------------
Net cash provided by investing activities.........     377,763        55,900
                                                   ------------  ------------
Cash flows from financing activities:
  Supplemental capital contribution...............      24,657        24,864
  Distributions paid..............................    (674,777)     (271,451)
                                                   ------------  ------------
Net cash used in financing activities.............    (650,120)     (246,587)
                                                   ------------  ------------
Net decrease in cash and cash equivalents.........     (99,913)      (22,643)
Cash and cash equivalents at beginning of period..     169,895       177,482
                                                   ------------  ------------
Cash and cash equivalents at end of period........ $    69,982       154,839
                                                   ============  ============














                See accompanying notes to financial statements.


                                      -4-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                         Notes to Financial Statements

                              September 30, 1998
                                  (unaudited)



Readers of this  Quarterly  Report  should  refer  to the Partnership's audited
financial statements for the  fiscal  year  ended  December 31, 1997, which are
included  in  the  Partnership's  1997   Annual  Report,  as  certain  footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.

(1) Organization and Basis of Accounting

Inland Mortgage Investors  Fund,  L.P.-II  (the  "Partnership"),  was formed on
December 24, 1986 pursuant to  the Delaware Revised Uniform Limited Partnership
Act to make or acquire  loans  collateralized  by mortgages on improved, income
producing properties.   On  February  10,  1987,  the  Partnership commenced an
Offering of 40,000 Limited Partnership  Units  (the  "Units") at $500 per Unit,
pursuant to a Registration Statement on  Form  S-11 under the Securities Act of
1933.   The  Offering  terminated  on  August  10,  1988,  with  total sales of
18,776.32 Units, resulting in gross offering proceeds of $9,388,158, which does
not include the General Partner's contribution of  $500.  All of the holders of
these Units were admitted to  the  Partnership.   Inland Real Estate Investment
Corporation is the General Partner.

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

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

Loan assumption fees received  are  deferred  as  unearned income and amortized
over the remaining life of the related loan.

The Partnership  considers  all  highly  liquid  investments  purchased with an
original maturity of three months or less to be cash equivalents.

The Partnership sold participations in mortgage receivables which may yield the
Partnership a return which  is  greater  than  the  return  based on the stated
interest rate of the instrument.   The differential between the stated rate and
the interest rate paid to the participant is recognized as income over the term
of the mortgage loan.







                                      -5-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1998
                                  (unaudited)


Interest income on  mortgage  loans  receivable  is  accrued  when earned.  The
accrual of interest, on loans that are in default, is discontinued when, in the
opinion of the General Partner, the  borrower  has not complied with loan work-
out arrangements. Once a loan has been placed on a non-accrual status, all cash
received is applied against the outstanding loan balance until such time as the
borrower has demonstrated an ability  to  make  payments under the terms of the
original or renegotiated loan  agreement.    The  General Partner evaluates the
collectibility of the mortgage  loans  on  a  quarterly basis.  This evaluation
includes determining the valuation of the underlying operating property subject
to the mortgage.  Should a  portion  of  the  principal of the mortgage loan be
considered unrecoverable either through  collection or foreclosure, a provision
would be made  to  reduce  the  carrying  amount  of  the  mortgage loans.  The
Partnership intends to pursue collection of  all amounts currently due from the
borrowers. 

The Partnership believes that the  interest  rates associated with the mortgage
receivable approximate the market  interest  rates,  and  as such, the carrying
amount of the mortgages receivable approximate their fair value.

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

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

In  the  opinion  of  management,  the  financial  statements  contain  all the
adjustments necessary, which  are  of  a  normal  recurring  nature, to present
fairly the financial position and  results  of operations.  Interim periods are
not necessarily indicative of results to be expected for the year.


(2) Transactions with Affiliates

The General  Partner  and  its  Affiliates  are  entitled  to reimbursement for
salaries and expenses of employees  of  the  General Partner and its Affiliates
relating to the administration of the  Partnership.  Such costs are included in
professional services to Affiliates and  general and administrative expenses to
Affiliates, of which $5,068 and  $1,544  remained  unpaid at September 30, 1998
and December 31, 1997, respectively.






                                      -6-



                    INLAND MORTGAGE INVESTORS FUND, L.P.-II
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

                              September 30, 1998
                                  (unaudited)

Inland Mortgage Servicing  Corporation,  a  subsidiary  of the General Partner,
services the Partnership's  mortgage  loans  receivable.   Its services include
processing mortgage collections  and  escrow  deposits  and maintaining related
records.  For these services, the  Partnership  is  obligated to pay fees at an
annual rate equal to 1/4  of  1%  of the outstanding mortgage loans receivables
balance of the Partnership.  Such fees of $4,774 and $5,041 for the nine months
ended September 30, 1998 and 1997, respectively, have been incurred and paid to
the subsidiary of the  General  Partner  and  are included in the Partnership's
general and administrative expenses to Affiliates.

The General Partner is required  to make Supplemental Capital Contributions, if
necessary, from time to time in  sufficient amounts to allow the Partnership to
make distributions to the Limited Partners  amounting  to at least 7% per annum
on their Invested Capital.  The  cumulative amount of such Supplemental Capital
Contributions at September 30, 1998 is $102,528, all of which has been received
from the General Partner.

(3) Mortgage Loans Receivable

Mortgage loans  receivable  are  collateralized  by  first  mortgages  and wrap
mortgages on multi-family residential  properties  located in Chicago, Illinois
or its surrounding metropolitan  area,  except  for the Evanston, Illinois loan
which is collateralized  by  a  multi-use  retail  and  office building and the
Richton Park, Illinois loan which  is  collateralized  by  a shopping mall.  As
additional collateral, the Partnership holds assignments of rents and leases or
personal guarantees  of  the  borrowers.    Generally,  the  mortgage notes are
payable in equal  monthly  installments  based  on  20  or 30 year amortization
periods.

On May 12, 1998, the  loan  collateralized  by  the property located at 7409-13
Seeley, Chicago, Illinois was  prepaid  by  the  borrower.   The total proceeds
received were $428,285, which  represented  the  loan balance, accrued interest
and accrued  late  charges.    The  proceeds  were  distributed  to the Limited
Partners in July 1998.

(4) Subsequent Events

On October  1,  1998,  an  Affiliate  of  the  Partnership  purchased  the loan
collateralized by the  property  located  at  7432  Washington  for 100% of its
outstanding principal  amount  including  accrued  interest.    The Partnership
received $50,300, its proportionate share of the payoff.

In October 1998, the Partnership paid  a distribution of $124,338, all of which
was distributed to Limited  Partners,  including  $66,217 of repayment proceeds
and $58,121 of operating cash flow contribution.



                                      -7-



Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

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

Liquidity and Capital Resources

On February 10, 1987, the  Partnership  commenced an Offering of 40,000 Limited
Partnership Units, pursuant to a Registration  Statement on Form S-11 under the
Securities Act of 1933.   The  Offering  terminated  on August 10, 1988, with a
total of 18,776.32 Units being sold to the public at $500 per Unit resulting in
$9,388,158 gross offering  proceeds,  which  were  received by the Partnership,
which  does  not  include  the   General  Partner's  $500  contribution.    The
Partnership funded fifteen loans between  December 1987 and June 1992 utilizing
$8,131,884 of  capital  proceeds  collected,  net  of  participations.    As of
September  30,  1998,  cumulative  distributions  to  Limited  Partners totaled
$11,806,898.  A total of $6,913,464  of mortgage receivables has been repaid by
borrowers, of which $966,160  was  reloaned,  $5,940,967 was repayment proceeds
and principal amortization distributed to Limited Partners and $6,337 was added
to working capital reserve.

At  September  30,  1998,  the   Partnership  had  cash  and  cash  equivalents
aggregating  $69,982,  which  will  be  utilized  for  future  distributions to
partners and for working capital requirements.   The source of future liquidity
and distributions is expected to be through cash generated by earnings from the
Partnership's  mortgage  investments   and   through   the  repayment  of  such
investments.  To the extent that cash  flow is insufficient to meet the minimum
7% annualized distribution to investors, as  well as any other financial needs,
the Partnership may rely on Supplemental Capital Contributions from the General
Partner, advances from Affiliates  of  the  General Partner or other short-term
financing.

At September 30,  1998,  the  Partnership  had  four  mortgage loans receivable
totaling $2,190,917.  The maturity dates range from October 1997 to July 2001.

In October 1997, the loan  collateralized  by the property located at 1549-1571
Sherman Avenue was extended on  a  month  to  month basis to allow the borrower
time to  proceed  with  refinancing.    In  October  1997,  Inland  Real Estate
Investment  Corporation,  the  General  Partner,  purchased  the  participating
interest in the loan  from  an  unaffiliated  third  party and has accepted the
terms of the month to month extension.  All other terms remain the same.  As of
September 30, 1998, the principal  balances  of  the loan and the participating
interest were $2,418,028 and $864,107, respectively.


                                      -8-



On October  1,  1998,  an  Affiliate  of  the  Partnership  purchased  the loan
collateralized by the  property  located  at  7432  Washington  for 100% of its
outstanding principal amount of $174,400, of which $49,829 is the Partnership's
proportionate share.  When and  as  the Partnership receives Repayment Proceeds
as a result of the sale  or  repayment  of a loan, the Repayment Proceeds which
are available for distribution  will  be  distributed  to the Limited Partners.
When the loans are repaid,  cash  flows from operating activities will decrease
as a result of the decrease in interest income earned by the Partnership.


Results of Operations

Interest and fee income on mortgage loans receivable decreased slightly for the
three and nine months ended September  30,  1998,  as compared to the three and
nine months ended September 30, 1997.   This is due primarily to the prepayment
of the mortgage loan receivable collateralized by the property located at 7409-
13 Seeley, Chicago, Illinois and the  partial paydowns throughout 1997 and 1998
on  the mortgage loan receivable collateralized by the property located at 7432
Washington, Forest Park, Illinois.

The increase in other income for  the  nine months ended September 30, 1998, as
compared to the nine months ended September  30, 1997, is due to an increase in
late charge income collected on mortgage loans receivable.

Professional services to Affiliates  decreased  for  the  three and nine months
ended September 30,  1998,  as  compared  to  the  three  and nine months ended
September 30, 1997, due to decreases  in legal and accounting services required
by the Partnership. 

General and administrative expenses to  Affiliates  decreased for the three and
nine months ended September 30, 1998, as  compared to the three and nine months
ended September 30, 1997, due  primarily  to  a decrease in data processing and
investor service expenses.


Year 2000 Issues

GENERAL

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











                                      -9-



STATE OF READINESS

The  Partnership  has  identified  the  following  two  areas  for  "Year-2000"
compliance efforts:

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

Borrowers and  Suppliers:  The  Partnership  is  in  the  process  of surveying
borrowers, suppliers  and  other  parties  with  whom  the  Partnership  does a
significant amount of business to identify the Partnership's potential exposure
in the event such parties are not year 2000 compliant in a timely manner. Since
this area involves some parties over which the Partnership has no control, such
as public utility companies, it is  difficult,  at best, to judge the status of
the outside companies' year 2000 compliance. The Partnership is working closely
with all suppliers of goods and services in an effort to minimize the impact of
the failure of any supplier to become year 2000 compliant by December 31, 1999.
The Partnership's investigations and  assessments  of possible year 2000 issues
are in a preliminary stage, and  currently  the Partnership is not aware of any
material impact on its business, operations  or financial condition due to year
2000 non-compliance by any of the Partnership's borrowers or suppliers. 

YEAR 2000 COSTS

The Partnership's General Partner  and  its  Affiliates  estimate that costs to
achieve  year  2000  compliance   will   not   exceed  $50,000.  However,  only
approximately 1% of these costs will  be  directly allocated to and paid by the
Partnership. The balance of the  year 2000 compliance costs, approximately 99%,
will be paid by  the  General  Partner  and  its  Affiliates.   Total year 2000
compliance  costs  incurred  through  September   30,  1998  are  estimated  at
approximately $5,000.

YEAR 2000 RISKS

The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of  its  business computer systems would be the
inability to access information  which  could  result  in  the failure to issue
financial reports.  The  most  reasonable  likely  worst  case scenario for the
Partnership with respect to the  year  2000  non-compliance of its borrowers is
failure to receive  mortgage  payments  which  could  result in the Partnership
being unable to meet cash requirements for monthly expenses.



                                     -10-



CONTINGENCY PLAN

The Partnership is in the process  of formulating a contingency plan which will
be developed by July of 1999.




                          PART II - Other Information

Items 1 through 6(b) are  omitted  because  of  the absence of conditions under
which they are required.

Item 7.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         (27) Financial Data Schedule

     (b) Reports on Form 8-K:

         None



































                                     -11-



                                  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.



                            INLAND MORTGAGE INVESTORS FUND, L.P.-II

                            By:   Inland Real Estate Investment Corporation
                                  General Partner


                                  /S/ ROBERT D. PARKS

                            By:   Robert D. Parks
                                  Chairman
                            Date: November 12, 1998


                                  /S/ MARK ZALATORIS

                            By:   Mark Zalatoris
                                  Vice President
                            Date: November 12, 1998


                                  /S/ KELLY TUCEK

                            By:   Kelly Tucek
                                  Principal Financial Officer and 
                                  Principal Accounting Officer
                            Date: November 12, 1998





















                                     -12-