UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, DC  20549

                               FORM 10-K

(Mark One)
[X]  ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended          December 31, 1998
                          --------------------------------------------
[   ]  TRANSITION  REPORT  PURSUANT TO SECTION  13  OR  15(D)  OF  THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________________ to _________________

Commission file number                 0-14645
                       -----------------------------------------------
                     DIVERSIFIED HISTORIC INVESTORS II
----------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)

           Pennsylvania                                  23-2361261
--------------------------------                   -------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                     Identification No.)

        1609 WALNUT STREET,  PHILADELPHIA,  PA  19103
-----------------------------------------------------------------------
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code  (215) 557-9800

Securities registered pursuant to Section 12(b) of the Act:    NONE

Securities registered pursuant to Section 12(g) of the Act: 20,593.3 Units

                UNITS OF LIMITED PARTNERSHIP INTEREST
-----------------------------------------------------------------------
                           (Title of Class)

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

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

Aggregate  market  value  of  Units  held  by  non-affiliates  of  the
Registrant: Not Applicable*

*  Securities  not  quoted  in  any  trading  market  to  Registrant's
knowledge.
<PAGE>
                                PART I

Item 1.        Business

               a.   General Development of Business

                Diversified Historic Investors II ("Registrant") is  a
limited  partnership  formed in 1984 under Pennsylvania  law.   As  of
December  31,  1998,  Registrant  had outstanding  20,593.3  units  of
limited partnership interest (the "Units").

                Registrant  is presently in its operating  stage.   It
originally  owned four properties or interests therein.  Its  interest
in  one property has been lost through foreclosure.  It currently owns
three properties or interests therein.  See Item 2. Properties, for  a
description  thereof.   For  a discussion of  the  operations  of  the
Registrant, see Part II, Item 7. Management's Discussion and  Analysis
of Financial Conditions and Results of Operations.

               b.   Financial Information about Industry Segments

                    The Registrant operates in one industry segment.

               c.   Narrative Description of Business

                     Registrant  is  in  the  business  of  operating,
holding,  selling, exchanging and otherwise dealing in and  with  real
properties  containing  improvements  which  are  "Certified  Historic
Structures," as such term is defined in the Internal Revenue Code (the
"Code"),  or which are eligible for designation as such,  for  use  as
apartments,  offices, hotels and commercial spaces, or any combination
thereof, or low income housing eligible for the tax credit provided by
Section  42  of  the  Code, and such other uses  as  the  Registrant's
general partner may deem appropriate.

                      Since   the  Registrant's  inception,  all   the
properties  acquired  either  by  the Registrant,  or  the  subsidiary
partnerships in which it has an interest, have been rehabilitated  and
certified  as  historic  structures  and  have  received  the  related
investment  tax  credit. Two of the properties  are  held  for  rental
operations and one is operated as a hotel.  As of the date  hereof  it
is  anticipated that all the properties will continue to be  held  for
these  purposes.   At  such  time as real  property  values  begin  to
increase,  the  Registrant will re-evaluate  its  investment  strategy
regarding the properties.

                     As  of December 31, 1998, Registrant owned  three
properties  (or  interests therein), located  in  Pennsylvania  (one),
Maryland  (one),  and Georgia (one).  In total, the  three  properties
contain   269   apartment  units,  73,366  square   feet   ("sf")   of
commercial/retail space and 44 hotel rooms.  As of December 31,  1998,
264  of  the apartment units were under lease at monthly rental  rates
ranging  from $650 to $1,815 and approximately 64,729 sf of commercial
space was under lease at annual rental rates ranging from $5.33 per sf
to  $26.26  per  sf.   Throughout 1998, all of the  hotel  rooms  were
available  for  use.   During 1998, the hotel  maintained  an  average
nightly room rate of $128.06 and average occupancy of 75%.  Rental  of
the  apartments and commercial space is not expected to  be  seasonal.
However  the hotel does experience seasonal changes, with the  busiest
months  being  March, April and October and the slowest  months  being
January  and December.  For further discussion of the properties,  see
Item 2. Properties.

                     The Registrant is affected by and subject to  the
general competitive conditions of the residential and commercial  real
estate industry.  As a result of the overbuilding that occurred in the
1980's,  the  competition in the local markets where the  Registrant's
properties  are  located  is  generally  strong.   As  a  result,  the
Registrant  is  forced  to keep its rent levels competitively  low  in
order  to maintain moderate to high occupancy levels.  One residential
property  is located in the suburbs of Philadelphia and the  other  is
located in the Historic District of the Inner Harbor in Baltimore.  In
both  locations the competition for tenants remains stiff and  several
similar buildings exist.  The apartment market remains stable and  new
construction  remains virtually nonexistent although the  availability
of  favorable home financing has placed pressure on the rental  tenant
base.

                     The hotel is located in Savannah, Georgia and  is
one  of  several  historic buildings which have  been  converted  into
hotels and inns.  The hotel relies heavily on the tourist trade  which
is  on the upswing in Savannah.  The hotel is generally considered  to
be  a  market leader, due to its location on "River Street", the  main
shopping  and  entertainment area on the river, and the fact  that  it
provides  a  full  array  of hotel amenities,  not  just  a  "bed  and
breakfast" atmosphere.

                      Registrant   has  no  employees.    Registrant's
activities are overseen by Brandywine Construction & Management, Inc.,
("BCMI"), a real estate management firm.

                d.    Financial Information About Foreign and Domestic
Operations and Export Sales.

                    See Item 8. Financial Statements and Supplementary
Data.

Item 2.        Properties

                 As   of  the  date  hereof,  Registrant  owned  three
properties,  or  interests  therein.  A summary  description  of  each
property held at December 31, 1997 is given below.

                a.    Tindeco Wharf - consists of 240 apartment  units
and approximately 41,307 sf of commercial space located at 2809 Boston
Street  in  the  Fell's Point-Canton Historic District  of  Baltimore,
Maryland.   In  October  1985, Registrant was  admitted  with  an  85%
interest,  to  Tindeco Wharf Partnership ("TWP"), a  Maryland  general
partnership,  for  a  cash  contribution  of  $7,271,300.   Registrant
subsequently  increased  its ownership  interest  in  TWP  to  90%  by
purchasing  an additional 5% interest for $262,500.  TWP acquired  and
rehabilitated this Property at an approximate cost of $28,600,000 ($66
per  sf), funded by the equity contribution and mortgage financing  of
$21,869,600.  The mortgage financing is comprised of mortgage  revenue
bonds  and  a  Urban  Development Action Grant ("UDAG")  loan.   Other
financing  includes  a  loan  from the  developer  of  $2,300,000  and
operating deficit loans from both the property manager and D,  LTD  in
the  original principal amounts of $300,000 and $200,000 respectively.
The  excess of equity and mortgage financing over the acquisition  and
rehabilitation  costs was utilized to provide various escrow  deposits
and required reserves.

                     The  City  of  Baltimore issued mortgage  revenue
refunding bonds, Series 1992, (GNMA collateralized) for the purpose of
providing permanent financing for TWP. The bonds are backed by a  HUD-
insured  mortgage  ("the note").  The note, held by  GNMA  as  lender,
bears  interest at a rate of 9.75% per annum and is secured by a first
mortgage  on  the  property.  Principal and  interest  is  payable  in
monthly  installments  of $143,801.  The note matures  December  2028.
The  refunding issue bears interest at an average rate of 6.62%.   The
difference in the interest on the mortgage and the refunding bonds  is
returned to the Partnership for operations.

                    The principal balance of the bonds was $16,737,463
at December 31, 1998.  The bonds are comprised of both serial and term
bonds.  The serial bonds bear interest rates ranging from 4.6% to 6.1%
and  mature semi-annually from June 1999 through December  2006.   The
term bonds bear interest at rates ranging from 6.5% to 6.7% and mature
in  2012,  2024,  and 2028.  The UDAG loan (which  has  a  balance  of
$4,953,471  at  December 31, 1998) bore interest at 4% through  August
1994  and  at  7  1/2% thereafter.  This loan is  due  in  2004.   The
developer's  loan  (principal balance of $2,300,000  at  December  31,
1998) and the operating deficit loans (aggregate principal balance  of
$15,893 at December 31, 1998) all bear interest at 12% and are payable
on  a  pro-rata  basis  out  of  cash flow  from  the  property.   The
developer's  loan is due in 2005, or upon earlier sale or  refinancing
of the property.  The operating deficit loans are due in 2007, or upon
earlier sale or refinancing of the property.

                     The  property is managed by BCMI.  As of December
31,  1998, 235 apartment units (98%) and 40,157 sf of commercial space
(97%)  were  under  lease.  Monthly rental rates range  from  $810  to
$1,815  for apartments and annual rental rates ranging from  $5.33  to
$25.34  per  sf  for  commercial space.  All  residential  leases  are
renewable,  one-year leases.  The occupancy for the residential  units
for  the  previous four years was 98% for 1997, 95% for 1996, 97%  for
1995   and   95%  for  1994.   The  monthly  rental  range  has   been
approximately  the same since 1994.  The occupancy for the  commercial
space  for  the previous four years has been 100% for 1997,  100%  for
1996,  85% for 1995 and 93% for 1994.  The range for annual rents  has
been $5.33 to $19.47 per sf for 1997, $5.33 to $19.47 per sf for 1996,
$5.33  to $18.54 per sf for 1995 and $10.30 to $22.39 per sf for 1994.
There  are  four tenants who each occupy ten percent or  more  of  the
commercial  rentable square footage.  They operate  principally  as  a
medical office, restaurant, a fitness club and a travel agency.

                     The following is a table showing commercial lease
expirations at Tindeco Wharf for the next five years.

                                                 Total annual        % of gross
               Number of       Total sf of      rental covered     annual rental
 Years      Leases expiring  Expiring leases  by expiring leases  from property

 1999             3               7,999            $165,831             4%
 2000             1               4,469              63,491             2%
 2001             2               6,139              93,547             2%
 2002             0                   0                   0             0%
 2003             0                   0                   0             0%
 Thereafter       2              21,550             251,999             6%

                     There are three leases which expire in 1999.  The
Registrant is currently negotiating a lease extension with the  tenant
who  occupies  5,105 sf.  Although there can be no assurances  that  a
lease will be finally executed, the negotiations currently contemplate
a  five-year  extension with for an increase in  the  rent  to  market
rates.   The  second lease for 950 sf expires April 30, 1999  and  the
tenant  has  notified the Registrant that they intend to vacate.   The
Registrant  is  actively marketing the space to  prospective  tenants.
The  third lease is for 1,944 sf and expires November 30,1999.   There
have  been  no negotiations but the Registrant expects the  tenant  to
renew at current market rates.

                     For tax purposes, this property has a federal tax
basis of $29,684,172 and is depreciated using the straight-line method
with  a  useful life of 27.5 years.  The annual real estate taxes  are
$420,795 which is based on an assessed value of $17,359,517, taxed  at
a  rate of $6.06 per $100.  It is the opinion of the management of the
Registrant that the property is adequately covered by insurance.

                b.    River Street Inn/Factor's Walk - consists of  44
hotel  rooms and 22,559 sf of commercial space located at 115 E. River
Street  in Savannah, Georgia.  In August 1985, Registrant was admitted
with  a  99%  interest  in Factor's Walk Partners  ("FWP")  a  Georgia
general  partnership, for $3,600,409.  FWP acquired and  rehabilitated
the Property for $8,900,409 ($127 per sf), including financing through
an  issuance  by  a  governmental agency of tax-exempt  bonds  in  the
principal  amount  of $5,800,000.  The excess of equity  and  mortgage
financing  over the acquisition and rehabilitation costs was  utilized
to  provide  working  capital reserves of $500,000.   The  bonds  bore
interest  at TENR (a rate based on yields of high quality,  short-term
tax  exempt  obligations) plus 0.5% until December 30, 1996  and  were
guaranteed by a private corporation.  On December 30, 1996,  both  the
bonds  and  the  guarantee were sold.  The new  holder  of  the  bonds
exercised  its  right to convert the interest rate from  the  variable
rate  to  14%  due  to  the credit rating of the new  guarantor.   The
principal balance of the bonds at December 31, 1998 was $5,920,572 and
are due in 2015.

                     The  property is managed by BCMI.  As of December
31,  1998, 16,652 sf of the commercial space (74%) was under lease  at
annual rental rates ranging from $7.11 to $26.26 per sf.  The Property
also maintains 44 operating hotel rooms at an average nightly rate  of
$128.06; average occupancy for 1998 was approximately 75%.  The  hotel
occupancy rate for the previous four years was 74% for 1997,  77%  for
1996,  78%  for  1995 and 74% for 1994.  The average room  rates  were
$106.06  for  1997, $100.92 for 1996, $94.54 for 1995 and  $90.18  for
1994.   The  occupancy for the commercial space was 96% for 1997,  97%
for  1996, 83% for 1995, 92% for 1994.  The range for annual rents was
$7.11  to  $25.82 per sf for 1997, $5.53 to $25.27 per  sf  for  1996,
$5.53  to $24.53 per sf for 1995 and  $1.58 to $23.12 per sf for 1994.
There  are  two  tenants who each occupy ten percent or  more  of  the
rentable square footage.  They operate principally as a restaurant and
a retail store.

                     The following is a table showing commercial lease
expirations at Factor's Walk for the next five years.

                                                  Total annual       % of gross
               Number of        Total sf of      rental covered    annual rental
 Years       Leases expiring  expiring leases  by expiring leases  from property

 1999              0                   0                  0               0%
 2000              3               3,096             53,244               3%
 2001              4               5,334             82,040               4%
 2002              1                 400              6,600              <1%
 2003              3               2,640             37,377               2%
 Thereafter        1               4,072             46,848               2%

                     For tax purposes, this property has a federal tax
basis  of $9,554,816 and is depreciated using the straight-line method
with  a  useful life of 27.5 years.  The annual real estate taxes  are
$67,506 which is based on an assessed value of $3,343,870, taxed at  a
rate  of $3.40 per $100.  It is the opinion of the management  of  the
Registrant that the property is adequately covered by insurance.

                c.    Washington  Square - consists  of  9,500  sf  of
commercial  space and 29 residential units located at  320  N.  Church
Street,  West  Chester,  Pennsylvania.  In  October  1985,  Registrant
acquired  and rehabilitated the Property for $2,750,000 ($79  per  sf;
such  amount  is  exclusive of $170,883 of capitalized  fees  incurred
which  were  funded  by Registrant's equity contributions),  including
mortgage  financing  of  $1,600,000.   The  mortgage  loan  (principal
balance  of  $1,080,615 at December 31, 1998) bears  interest  at  the
Federal  Reserve  Discount rate plus 2% with a minimum  of  7%  and  a
maximum of 15% (7% at December 31, 1998) and is due in October 2005.

                     The  property is managed by BCMI.  As of December
31,  1998,  7,920  sf of commercial space (83%) was rented  at  annual
rates  ranging  from $7.56 per sf to $12.60 per sf.  At  December  31,
1998,  all of the residential units (100%) were under lease at monthly
rental rates ranging from $650 to $1,100.  All residential leases  are
renewable,  one-year leases.  The occupancy for the residential  units
for  the previous four years was 86% for 1997, 100% for 1996, 97%  for
1995   and   98%  for  1994.   The  monthly  rental  range  has   been
approximately  the same since 1994.  The occupancy for the  commercial
space for the previous four years was 87% for 1997, 86% for 1996,  97%
for  1995,  and  100% for 1994.  The range for annual rents  has  been
$8.00  to  $13.00 per sf for 1997, $6.00 to $13.00 per  sf  for  1996,
$6.00 to $12.00 per sf for 1995 and $6.00 to $13.23 per sf for 1994.

                     The following is a table showing commercial lease
expirations at Washington Square for the next five years.

                                                 Total annual       % of gross
              Number of        Total sf of      rental covered     annual rental
 Years      Leases expiring  expiring leases  by expiring leases  from property

 1999             2                3,680            $34,714              9%
 2000             0                    0                  0              0%
 2001             1                1,330             16,772             15%
 2002             0                    0                  0              0%
 2003             0                    0                  0              0%
 Thereafter       1                2,910             32,000              9%

                     There  are  two  leases  which  expire  in  1999.
Although   no   firm  commitments  have  been  made,  the   Registrant
anticipates that the leases which are scheduled to expire in 1999 will
be  extended  for at least an additional year, due to the availability
of renewal options under the leases.

                     For  tax purposes, this property has federal  tax
basis  of $2,926,808 and is depreciated using the straight-line method
with  a  useful life of 27.5 years.  The annual real estate taxes  are
$29,059  which is based on an assessed value of $119,610  taxed  at  a
rate of $24.295 per $100.  It is the opinion of the management of  the
Registrant that the property is adequately covered by insurance.

Item 3.        Legal Proceedings

                a.    For a description of legal proceedings involving
Registrant's   properties,  see  Part  II,  Item   7.   River   Street
Inn/Factor's Walk Partners.

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

               No matter was submitted during the fiscal years covered
by this report to a vote of security holders.

                                PART II

Item  5.         Market  for  Registrant's Common Equity  and  Related
Stockholder Matters

                a.   There is no established public trading market for
the  Units.   Registrant  does not anticipate  any  such  market  will
develop.    Trading  in  the  Units  occurs  solely  through   private
transactions.   The  Registrant is not aware of the  prices  at  which
trades  occur.  Registrant's records indicate that 34 Units of  record
were sold or exchanged in 1998.

                b.    As  of December 31, 1998, there are 2,565 record
holders of Units.

                c.   Registrant did not declare any cash dividends  in
1998 or 1997

Item 6.        Selected Financial Data

                The following selected financial data are for the five
years ended December 31, 1998.  The data should be read in conjunction
with  the consolidated financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.

                       1998        1997        1996        1995        1994

 Rental income     $ 4,623,527 $ 4,463,462 $ 4,303,963 $ 4,103,099 $ 3,950,879
 Hotel revenues      1,582,824   1,282,525   1,282,662   1,230,057   1,108,942
 Interest income        35,575      29,639      18,654      28,988       9,219
 Net loss           (3,457,494) (2,262,184) (2,426,416) (2,869,321) (2,980,282)
 Net loss per Unit     (143.27)    (166.22)    (108.75)    (116.65)    (137.94)
 Total assets(net   26,503,288  27,143,753  28,633,916  29,418,648  30,742,909
 of depreciation
 and amortization)
 Debt obligations   32,808,014  32,712,165  33,087,679  33,161,299  33,527,230

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

               (1)  Liquidity

                     At  December  31, 1998, Registrant  had  cash  of
$219,254.   Cash generated from operations is used primarily  to  fund
operating  expenses  and  debt service.  If cash  flow  proves  to  be
insufficient,   the   Registrant  will  attempt  to   negotiate   loan
modifications with the various lenders in order to remain  current  on
all obligations and to defer administrative costs.  The Registrant  is
not aware of any additional sources of liquidity.

                    As of December 31, 1998, Registrant had restricted
cash  of  $1,095,373 consisting primarily of funds  held  as  security
deposits,   replacement  reserves  and  escrows  for  taxes.    As   a
consequence of these restrictions as to use, Registrant does not  deem
these funds to be a source of liquidity.

                     In  recent  years  the  Registrant  has  realized
significant losses, including the foreclosure of one property, due  to
the  properties'  inability to generate sufficient cash  flow  to  pay
their  operating expenses and debt service.  At the present time,  all
three  remaining  properties are able to pay their operating  expenses
and debt service but it is unlikely that any cash will be available to
the Registrant to pay its general and administrative expenses.  In the
legal  proceeding  involving the Morrison Clark Inn (see  "Results  of
Operations"  below in this Item 7), a property formerly owned  by  the
Registrant, if Capital Bank executes upon its $1,800,000 judgment with
respect  to the Registrant, it is expected to have significant adverse
impact on the Registrant since there is insufficient available cash to
pay the judgment.  Any such execution could result in a forced sale of
the Registrant's remaining properties.  However, the Registrant has in
the  past,  been able to obtain forbearance on execution  for  several
years  upon  payment  of  a $20,000 fee to the judgment  creditor  and
believes  it may be able to do so when the current forbearance  period
ends in July 1999.

                     It  is the Registrant's intention to continue  to
hold  the  properties until they can no longer meet the  debt  service
requirements and the properties are foreclosed, or the market value of
the  properties increases to a point where they can be sold at a price
which  is  sufficient to repay the underlying indebtedness  (principal
plus accrued interest).

               (2)  Capital Resources

                     Any  capital  expenditures needed  are  generally
replacement  items  and  are funded out of  cash  from  operations  or
replacement  reserves, if any.  The Registrant is  not  aware  of  any
factors  which would cause historical capital expenditures levels  not
to   be  indicative  of  capital  requirements  in  the  future   and,
accordingly,  does  not believe that it will have to  commit  material
resources to capital investment for the foreseeable future.

               (3)  Results of Operations

                     During  1998, Registrant incurred a net  loss  of
$2,980,282 ($143.27 per limited partnership unit), compared to  a  net
loss of $3,457,494 ($166.22 per limited partnership unit), in 1997 and
a  net  loss of $2,262,184 ($108.75 per limited partnership unit),  in
1996.

                     Rental and hotel income increased from $5,586,625
in 1996 and to $5,745,987 in 1997 to $6,206,351 in 1998.  The increase
from  1997 to 1998 is due to an increase in residential rental  income
at  both Washington Square and Tindeco Wharf due to an increase in the
average rental rates combined with an increase in hotel income due  to
an  increase in the average nightly rate ($106.06 to $128.06)  at  the
River Street Inn.  The increase from 1996 to 1997 was the result of an
increase in residential rental income due to increases in the  average
rental  rates  at  both  Washington Square and Tindeco  Wharf  and  an
increase  in  the  average  rental rates in the  commercial  space  at
Factor's Walk.

                     Interest income increased from $18,654 in 1996 to
$29,639  in 1997 and to $35,575 in 1998.  The increases from  1997  to
1998  and from 1996 to 1997 were the result of changes in the balances
of the restricted cash which generated the interest income.

                      Rental   operations  expenses   increased   from
$1,684,209  in 1996 to $1,858,157 in 1997 and decreased to  $1,850,883
in  1998.   The  decrease  from 1997 to 1998 resulted  mainly  from  a
decrease  in maintenance expense due to a lower turnover of  apartment
units  in 1998 as compared to 1997 at Washington Square and a decrease
in legal fees at Tindeco Wharf due to fees incurred in connection with
a  review  of the underlying loan documents in 1997 with no comparable
fees  in  1998.  The increase from 1996 to 1997 was due to an increase
in  legal  expense at Tindeco Wharf as a result of legal fees incurred
in  connection with a review of the loan documents pertaining  to  the
financing  of the property partially offset by a decrease in utilities
expense  due to a decrease in the average consumption at both  Tindeco
Wharf and Washington Square.

                    Hotel operations expense increased from $1,317,387
n 1996 to $1,385,410 in 1997 to $1,423,018 in 1998.  The increase from
1997 to 1998 is due to an increase in legal fees partially offset by a
decrease in administrative expenses.  Legal fees increased due to fees
paid  in  connection  with a settlement agreement  with  the  previous
guarantor  in  1998.   Administrative  expense  increased  due  to   a
misapplication of payments on a note payable where the payments should
have  been  classified as administrative expenses.  The increase  from
1996  to  1997 is the result of an increase in administration expenses
partially  offset  by a decrease in rent and management  fee  expense.
Administrative expense increased due to a misapplication  of  payments
on  a  note payable where the payments should have been classified  as
administrative expenses.  Rent expense decreased due to the assignment
of  a  lease  with respect to the adjacent property to another  entity
which  will develop that property (see below).  Management fee expense
decreased due to a change in the management contract which allows  for
a management fee based on a fixed percentage of revenues.

                    Interest expense increased from $3,198,970 in 1996
to  $3,975,462 in 1997 to $4,007,500 in 1998.  The increase from  1997
to 1998 is due to an increase in interest expense at Tindeco Wharf due
to  the  accrual of interest on a higher average balance on the second
mortgage.  The balance increased due to the capitalization of interest
accrued  but  not  paid  on certain loans, as  described  below.   The
increase  from  1996  to  1997 is due to an increase  in  the  average
interest  rate at Factor's Walk combined with an increase in  interest
expense  at Tindeco Wharf due to the accrual of interest on  a  higher
average balance on the second mortgage.  The balance increased due  to
the  capitalization of interest accrued but not paid on certain loans,
as described below.

                      Depreciation  and  amortization  increased  from
$1,707,209  in 1996 to $1,714,090 in 1997 and increased to  $1,742,807
in  1998.  The increase from 1997 to 1998 and from 1996 to 1997 is due
to an increase at Tindeco Wharf due to the depreciation of fixed asset
additions.

                    In 1998, losses of $2,456,000 were incurred at the
Registrant's  three  properties compared to  $2,711,000  in  1997  and
$1,772,000  in  1996.   A discussion of property operations/activities
follows:

                     In  1998,  Tindeco  Wharf  sustained  a  loss  of
$1,559,000  including  $1,201,000  of  depreciation  and  amortization
expense  and  $1,094,000  of  deferred interest  (reflecting  interest
accrued  but not paid on the developer's and operating deficit  loans)
compared  to a loss of $1,642,000 including $1,175,000 of depreciation
and amortization expense and $708,000 of deferred interest in 1997 and
a  loss  of  $1,544,000,  including  $1,162,000  of  depreciation  and
amortization expense and $846,000 of deferred interest in  1996.   The
decrease in the loss from 1997 to 1998 is the result of an increase in
residential rental income and interest income combined with a decrease
in  legal  fees  partially  offset by  an  increase  in  interest  and
depreciation expense.  Residential rental income increased due  to  an
increase in the average rental rates and interest income increased due
an  increase in the balance of the restricted cash which generates the
interest  income.   Legal  fees decreased  due  to  fees  incurred  in
connection  with  a  review of the loan documents  pertaining  to  the
financing  of  the property in 1997 with no comparable fees  in  1998.
Interest expense increased due to an increase in the principal balance
upon which interest is calculated.  Depreciation expense increased due
to  the  depreciation of fixed asset additions.  The increase  in  the
loss  from  1996  to  1997 is the result of an increase  in  interest,
depreciation  and  legal expense partially offset by  an  increase  in
residential rental income and interest income combined with a decrease
in  utilities  expense  due to a decrease in the average  consumption.
Interest expense increased due to an increase in the principal balance
upon  which  interest  is  calculated due  to  the  capitalization  of
interest  accrued  but not paid on certain loans, as described  above.
Depreciation expense increased due to the depreciation of fixed  asset
additions  and legal fees increased due to fees incurred in connection
with a review of the loan documents pertaining to the financing of the
property.   Residential rental income increased due to an increase  in
the average rental rates and interest income increased due an increase
in  the  balance of the restricted cash which generates  the  interest
income.

                     In  1998,  River Street Inn sustained a  loss  of
$907,000  including $371,000 of depreciation and amortization  expense
compared  to  a loss of $1,038,000 including $372,000 of  depreciation
and  amortization  expense in 1997 and a loss of  $199,000,  including
$381,000  of depreciation expense in 1996.  The decrease in  the  loss
from  1997 to 1998 is due to an increase in hotel income combined with
a  decrease in administrative expenses partially offset by an increase
in  legal  fees.   Hotel income increased due to an  increase  in  the
average  nightly  rate  ($106.06 to $128.06).  Administrative  expense
increased due to a misapplication of payments on a note payable  where
the  payments should have been classified as administrative  expenses.
Legal  fees increased due to fees paid in connection with a settlement
agreement in with the previous guarantor in 1998.  The increased  loss
from  1996  to  1997  is  the result of an increase  in  interest  and
administration  expenses partially offset by  an  increase  in  rental
income  and  a decrease in rent and management fee expense.   Interest
expense  increased  due  to  an increase  in  the  interest  rate  and
administrative expense increased due to a misapplication  of  payments
on  a  note payable where the payments should have been classified  as
administrative expenses.  Rental income increased due to  an  increase
in  the  average rental rates in the commercial space  of  the  hotel.
Rent  expense decreased due to the assignment of a lease with  respect
to  the  adjacent property to another entity which will  develop  that
property  (see  below).  Management fee expense  decreased  due  to  a
change  in  the management contract which allows for a management  fee
based on a fixed percentage of revenues.

                     FWP  is  involved  in  one  legal  proceeding  as
discussed below:

                      J.   A.  Jones  Construction  Company  ("Jones")
contracted  with  FWP  for the renovation of  what  was  originally  a
warehouse,   into   the  River  Street  Inn/Factor's   Walk.    During
construction,  numerous  disputes arose between  the  parties.   As  a
result  of  those  disputes,  Jones abandoned  the  project  prior  to
completion  and  filed suit in the matter of J.A.  Jones  Construction
Company v. Factor's Walk Partners in the United States District  Court
for  the Northern District of Georgia.  On January 1, 1994, the  court
entered a judgment in favor of Jones and against FWP in the amount  of
$1,069,017.   The  judgment accrued interest at 9.5%  and  $62,562  of
interest  was accrued in both 1994 and 1995.  FWP filed an appeal  and
this appeal was held in abeyance while FWP and Jones participated in a
court sponsored settlement program.  On November 8, 1996, a settlement
agreement  was reached whereby a note in the amount of $1,000,000  was
issued.  The note calls for 6% interest until September 1, 1997,  with
the  rate increasing .5% on each August 1 thereafter to a maximum rate
of  prime plus 2% (therefore, 7% at December 31, 1998) and is  due  on
October   1,   2011.   Interest  is  due  quarterly.   The  Registrant
recognized  a  gain in the amount of $238,312 for the  excess  of  the
amount  of  the judgment over the amount stipulated in the  settlement
agreement in 1996.

                     On June 30, 1992, DHP, Inc. assigned to D, LTD  a
note receivable, from FWP to the Registrant, that had been assigned to
DHP,  Inc.   The  note was in the stated amount of  $55,951  and  bore
interest  at  10%; the note was due on June 30, 1997.  On January  13,
1994  D, LTD obtained a judgment on this note in the amount of $73,184
in  Common  Pleas  Court for Philadelphia County,  Pennsylvania.   The
judgment  accrues  interest at 15%.  The judgment  provided  that  all
future distributions, in any form, due to the Registrant on account of
its  ownership interest in FWP, be immediately delivered  to  D,  LTD.
Interest accrued during 1998 was $21,249. The balance of the  note  at
December 31, 1998 was $153,435.

                     In  1998, Washington Square recognized income  of
$10,000 including $117,000 of depreciation expense compared to a  loss
of  $31,000 including $113,000 of depreciation expense in 1997  and  a
loss  of  $29,000 including $110,000 of depreciation expense in  1996.
The  decrease  in the loss from 1997 to 1998 resulted mainly  from  an
increase  in  rental income due to an increase in the  average  rental
rates  combined  with a decrease in maintenance expense.   Maintenance
expense  decreased due to a lower turnover of apartment units in  1998
as  compared to 1997.  The increase in the loss from 1996 to  1997  is
due to an increase in interest expense partially offset by an increase
in rental income due to an increase in the average rental rates and  a
decrease  in  utilities expense.  Interest expense  increased  due  to
default  interest  incurred on the mortgage  while  utilities  expense
decreased due to the mild weather experienced in 1997.

                     On June 30, 1992, DHP, Inc. assigned to D, LTD  a
note  receivable from the Registrant in the stated amount of $404,046.
The  note bore interest at 10% and was due on June 30, 1997.  On March
23,  1993  D,  LTD obtained a judgment on this note in the  amount  of
$454,299  in Common Pleas Court for Philadelphia County, Pennsylvania.
The  judgment accrues interest at 15%.  Interest accrued  during  1998
and  1997  was $147,747 and $408,037, respectively.  Payments  on  the
judgment  are  to  be  made from available cash flow  from  Washington
Square  and  before any distribution can be made to  the  Registrant's
limited  partners.  The balance of the note at December  31,  1998  is
$997,365.

                      In   February  1993,  one  of  the  Registrant's
properties, the Morrison-Clark Inn, was foreclosed by the lender.   In
November 1993, the lender obtained a judgment in the matter of Capital
Bank,  N.A.  v.  Diversified Historic Investors II in  the  amount  of
$1,800,000.  In return for payment of $20,000, Capital Bank has agreed
to  forbear  from  executing  on  the judgment  until  July  6,  1999.
Although  there  have been no discussions, the Registrant  anticipates
that  it  will be able to extend the forbearance agreement for several
more years for similar consideration.

Item7A.         Quantitative and Qualitative Disclosures about  Market
Risk

               Not applicable.

Item 8.        Financial Statements and Supplementary Data

               Registrant is not required to furnish the supplementary
financial information referred to in Item 302 of Regulations S-K.
<PAGE>
                     Independent Auditor's Report

To the Partners of
Diversified Historic Investors II

We  have  audited  the  accompanying  consolidated  balance  sheet  of
Diversified Historic Investors II (a Pennsylvania limited partnership)
and  subsidiaries  as of December 31, 1998 and 1997  and  the  related
statements  of  operations and changes in partners'  equity  and  cash
flows  for  the years ended December 31, 1998, 1997 and  1996.   These
consolidated  financial  statements  are  the  responsibility  of  the
partnership's management.  Our responsibility is to express an opinion
on these consolidated financial statements based on our audit.  We did
not audit the financial statements of Tindeco Wharf Partnership, which
statements reflect total assets of $19,072,099 and $19,292,293  as  of
December  31,  1998  and  1997, respectively, and  total  revenues  of
$3,954,174  and  $3,751,874, respectively for the  years  then  ended.
Those statements were audited by other auditors whose report has  been
furnished to us, and our opinion, insofar as it relates to the amounts
included for Tindeco Wharf Partnership, is based solely on the  report
of the other auditors.

We  conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit
to   obtain   reasonable  assurance  about  whether  the  consolidated
financial  statements  are free of material  misstatement.   An  audit
includes  examining, on a test basis, evidence supporting the  amounts
and  disclosures in the consolidated 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 audit  provides
a reasonable basis for our opinion.

In  our  opinion,  based on our audits and the  report  of  the  other
auditors,  the  consolidated financial statements  referred  to  above
presents  fairly, in all material respects, the financial position  of
Diversified Historic Investors II and subsidiaries as of December  31,
1998  and 1996, and the results of operations and cash flows  for  the
years  ended  December  31, 1998, 1997 and  1996  in  conformity  with
generally accepted accounting principles.

Our  audits  were made for the purpose of forming an  opinion  on  the
basic  financial  statements taken as a whole.  The Schedule  of  Real
Estate  and Accumulated Depreciation on page 28 is presented  for  the
purposes  of  additional analysis and is not a required  part  of  the
basic  financial statements.  Such information has been  subjected  to
the  auditing  procedures  applied in the audit  of  the  consolidated
financial statements and, in our opinion, which insofar as it  relates
to  Tindeco Wharf Partnership is based solely on the report  of  other
auditors,  such information is fairly stated in all material  respects
in relation to the basic financial statements taken as a whole.

As  discussed  in  Note  C  of the financial  statements,  Diversified
Historic  Investors II is liable for payment of a $1,800,000 guarantee
resulting from the foreclosure on a property in 1993.  In the past the
partnership has been able to continue the forebearance when the period
ends in July, 1999.  If the lender executes judgment it is expected to
have significant adverse impact on the partnership and could result in
a forced sale of the remaining properties.

Gross, Kreger & Passio
Philadelphia, Pennsylvania
April 5, 1999
<PAGE>
                     Independent Auditor's Report


To the Partners of
Tindeco Wharf Partnership

We  have  audited  the  accompanying balance sheet  of  Tindeco  Wharf
Partnership  as  of December 31, 1998, and the related  statements  of
profit  and loss, partners' deficit and cash flows for the  year  then
ended.   The  financial  statements  are  the  responsibility  of  the
Partnership's management.  Our responsibility is to express an opinion
on these financial statements based on our audit.

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

In  our  opinion, the financial statements referred to  above  present
fairly,  in  all material respects, the financial position of  Tindeco
Wharf  Partnership  as of December 31, 1998, and the  results  of  its
operations,  the changes in partners' deficit and its cash  flows  for
the  year  then ended in conformity with generally accepted accounting
principles.


Grant Thorton
Philadelphia, Pennsylvania
April 3, 1999
<PAGE>
                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)

              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                   AND FINANCIAL STATEMENT SCHEDULES


Consolidated financial statements:                                   Page

     Consolidated Balance Sheets at December 31, 1998 and 1997        17

     Consolidated  Statements of Operations for the Years Ended
     December  31,  1998,  1997, and 1996                             18

     Consolidated  Statements  of Changes in Partners' Equity
     for  the  Years  Ended  December 31, 1998, 1997, and 1996        19

     Consolidated  Statements of Cash Flows for the Years Ended
     December  31,  1998, 1997 and 1996                               20

     Notes to consolidated financial statements                     21-27

Financial statement schedules:

     Schedule XI - Real Estate and Accumulated Depreciation           29

     Notes to Schedule XI                                             30




All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or notes thereto.
<PAGE>


                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)

                      CONSOLIDATED BALANCE SHEETS
                      December 31, 1998 and 1997

                                Assets

                                                    1998              1997
Rental properties at cost:
   Land                                         $   934,582       $   934,582
   Buildings and improvements                    40,542,742        39,666,989
   Furniture and fixtures                         3,026,576         2,866,600
                                                 ----------        ----------
                                                 44,503,900        43,468,171
   Less - accumulated depreciation              (21,218,232)      (19,522,725)
                                                 ----------        ----------
                                                 23,285,668        23,945,446

Cash and cash equivalents                           219,254            71,023
Restricted cash                                   1,095,373         1,293,871
Accounts receivable                                  71,582            48,911
Other assets (net of accumulated
   amortization of $351,780 and $288,791)         1,831,411         1,784,502
                                                 ----------        ----------
               Total                            $26,503,288       $27,143,753
                                                 ==========        ==========
                                 Liabilities and Partners' Equity

Liabilities:
   Debt obligations                             $32,808,014       $32,712,165
   Accounts payable:
        Trade                                     2,827,452         2,565,803
        Related parties                           1,521,734         1,496,403
   Interest payable                              11,343,408         9,576,402
   Tenant security deposits                         249,134           242,687
   Other liabilities                              1,293,221         1,109,686
                                                 ----------        ----------
               Total liabilities                 50,042,963        47,703,146
                                                 ----------        ----------
Partners' equity                                (23,539,675)      (20,559,393)
                                                 ----------        ----------
               Total                            $26,503,288       $27,143,753
                                                 ==========        ==========

The accompanying notes are an integral part of these financial statements.
<PAGE>

                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)

                 CONSOLIDATED STATEMENTS OF OPERATIONS

         For the Years Ended December 31, 1998, 1997 and 1996


                                        1998           1997           1996

Revenues:
   Rental income                     $4,623,527     $4,463,462     $4,303,963
   Hotel income                       1,582,824      1,282,525      1,282,662
   Interest income                       35,575         29,639         18,654
                                      ---------      ---------      ---------
             Total revenues           6,241,926      5,775,626      5,605,279
                                      ---------      ---------      ---------
Costs and expenses:
   Rental operations                  1,850,883      1,858,158      1,684,209
   Hotel operations                   1,423,018      1,385,410      1,317,387
   General and administrative           198,000        300,000        198,000
   Interest                           4,007,500      3,975,462      3,198,970
   Depreciation and amortization      1,742,807      1,714,090      1,707,209
                                      ---------      ---------      ---------
             Total costs and expenses 9,222,208      9,233,120      8,105,775
                                      ---------      ---------      ---------
Loss before extraordinary item       (2,980,282)    (3,457,494)    (2,500,496)

Extraordinary gain                            0              0        238,312
                                      ---------      ---------      ---------
Net loss                            ($2,980,282)   ($3,457,494)   ($2,262,184)
                                      =========      =========      =========
Net loss per limited partnership unit:
   Loss before extraordinary item   ($   143.27)   ($   166.22)   ($   120.21)
   Extraordinary gain                         0              0          11.46
                                      ---------      ---------      ---------
                                    ($   143.27)   ($   166.22)   ($   108.75)
                                      =========      =========      =========

The accompanying notes are an integral part of these financial statements.
<PAGE>

                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)

        CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY

         For the Years Ended December 31, 1998, 1997 and 1996


                                          Dover
                                        Historic      Limited
                                       Advisors (1) Partners (2)     Total

Percentage participation in profit or loss  1%          99%           100%

Balance at December 31, 1995            ($319,817) ($14,519,898) ($14,839,715)
Net loss                                  (22,622)   (2,239,562)   (2,262,184)
                                          -------    ----------    ----------
Balance at December 31, 1996             (342,439)  (16,759,460)  (17,101,899)
Net Loss                                  (34,575)   (3,422,919)   (3,457,494)
                                          -------    ----------    ----------
Balance at December 31, 1997             (377,014)  (20,182,379)  (20,559,393)
Net Loss                                  (29,803)   (2,950,479)   (2,980,282)
                                          -------    ----------    ----------
Balance at December 31, 1998            ($406,817) ($23,132,858) ($23,539,675)
                                          =======    ==========    ==========


 (1)   General Partner.

 (2)   20,593.3 limited partnership units outstanding at December  31,
       1998, 1997, and 1996.

The accompanying notes are an integral part of these financial statements.
<PAGE>

                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

         For the Years Ended December 31, 1998, 1997 and 1995

                                            1998         1997         1996

Cash flows from operating activities:
   Net loss                               ($2,980,282)($3,457,494)($2,262,184)
   Adjustments to reconcile net loss to
    net cash provided by operating activities:
Depreciation and amortization               1,742,807   1,714,090   1,707,209
Extraordinary gain                                  0           0    (238,312)
Changes in assets and liabilities,
  net of disposals due to foreclosure:
   Decrease (increase) in restricted cash     198,498       6,896    (608,740)
   (Increase) decrease in accounts
     receivable                               (22,671)     (1,414)      2,533
   Increase in other assets                   (94,299)    (22,207)    (98,386)
   Increase in accounts payable - trade       261,649     357,244   1,341,822
   Increase (decrease) in accounts payable
     - related parties                         25,331    (265,640)    (67,326)
   Increase in interest payable             1,767,006   1,263,277   1,622,880
   Increase (decrease) in tenant security
     deposits                                   6,447       6,010      (5,027)
   Increase (decrease) in other liabilities   183,535     981,954  (1,102,965)
      Net cash provided by operating        ---------   ---------   ---------
       activities:                          1,088,021     582,716     291,504
Cash flows from investing activities:       ---------   ---------   ---------
   Capital expenditures                    (1,035,729)   (215,746)   (253,239)
      Net cash used in investing            ---------   ---------   ---------
        activities:                        (1,035,729)   (215,746)   (253,239)
Cash flows from financing activities:       ---------   ---------   ---------
   Borrowings under debt obligations          182,998           0           0
   Payments of principal under debt
     obligations                              (87,059)   (375,514)    (73,620)
                                            ---------   ---------   ---------
      Net cash provided by (used in)
        financing activities                   95,939    (375,514)    (73,620)
        activities:                         ---------   ---------   ---------
Increase (decrease) in cash and cash
  equivalents                                 148,231      (8,544)    (35,355)
Cash and cash equivalents at beginning of year 71,023      79,567     114,922
                                            ---------   ---------   ---------
Cash and cash equivalents at end of year   $  219,254  $   71,023  $   79,567
                                            =========   =========   =========
Supplemental Disclosure of Cash Flow Information:
   Cash paid during the year for interest  $2,240,494  $2,712,185  $1,486,204

The accompanying notes are an integral part of these financial statements.
<PAGE>
                   DIVERSIFIED HISTORIC INVESTORS II
                        (a limited partnership)


NOTE A - ORGANIZATION

Diversified  Historic Investors II (the "Partnership") was  formed  in
December  1984  to acquire, rehabilitate, and manage  real  properties
which  are  certified historic structures as defined in  the  Internal
Revenue  Code  (the "Code"), or which are eligible for designation  as
such, utilizing mortgage financing and the net proceeds from the  sale
of  limited  partnership  units.  Rehabilitations  undertaken  by  the
Partnership  were  done  with  a view to  obtaining  certification  of
expenditures  therefore as "qualified rehabilitation expenditures"  as
defined  in  the Code.  The General Partner, Dover Historic  Advisors,
has  the exclusive responsibility for all aspects of the Partnership's
operations

NOTE B - SIGNIFICANT ACCOUNTING POLICIES

A  summary  of  the  significant accounting policies  applied  in  the
preparation  of  the  accompanying consolidated  financial  statements
follows:

1.     Principles of Consolidation

The  accompanying consolidated financial statements of the Partnership
include  the accounts of two subsidiary partnerships (the "Ventures"),
in  which  the Partnership has controlling interests, with appropriate
elimination  of  inter-partnership transactions and  balances.   These
financial  statements  reflect  all adjustments  (consisting  only  of
normal   recurring  adjustments)  which,  in  the   opinion   of   the
Partnership's General Partner, are necessary for a fair  statement  of
the results for the years presented.

2.     Depreciation

Depreciation  is  computed  using the straight-line  method  over  the
estimated useful lives of the assets.  Buildings and improvements  are
depreciated over 25 years and furniture and fixtures over five years.

3.     Finance Costs

Loan fees have been incurred with respect to certain loans.  Such fees
are  being  amortized over the terms of the related loans  (18  to  40
years) and being charged to amortization expense.

The  Partnership prepaid all amounts due under a ground lease for  one
of  its properties.  Such prepayment is being amortized over the  term
of the lease (75 years) and being charged to amortization expense.

Tindeco Wharf Partnership ("TWP") incurred $791,054 of settlement fees
in  conjunction  with a bond refinancing.  These settlement  fees  are
included in other assets and are being amortized over the term of  the
bond  issue.   Accumulated amortization was $143,351 and  $120,695  at
December 31, 1998 and 1997, respectively.

4.     Cash and Cash Equivalents

The Partnership considers all highly liquid instruments purchased with
a maturity of less than three months to be cash equivalents.

5.     Net Income Per Limited Partnership Unit

The  net  income per limited partnership unit is based on the weighted
average  number  of limited partnership units outstanding  during  the
period (20,593.3 in 1998, 1997 and 1996).

6.     Income Taxes

Income  taxes or credits resulting from earnings or losses are payable
by  or  accrue  to  the  benefits  of the  partners;  accordingly,  no
provision   has  been  made  for  income  taxes  in  these   financial
statements.

7.     Restricted Cash

Restricted  cash  includes amounts held for tenant security  deposits,
insurance and real estate tax reserves.

8.     Revenue Recognition

Revenues  are recognized when rental payments are due on  a  straight-
line  basis.   Rental payments received in advance are deferred  until
earned.

9.     Rental Properties

Rental  properties are stated at cost.  A provision for impairment  of
value is recorded when a decline in value of property is determined to
be  other  than temporary as a result of one or more of the following:
(1)  a  property  is  offered for sale at a price  below  its  current
carrying  value, (2) a property has significant balloon  payments  due
within  the  foreseeable future which the Partnership  does  not  have
sufficient  resources, and anticipates it will  be  unable  to  obtain
replacement financing or debt modification sufficient to allow  it  to
continue to hold the property over a reasonable period of time, (3)  a
property has been, and is expected to continue, generating significant
operating  deficits  and  the Partnership is unable  or  unwilling  to
sustain  such deficits and has been unable, or anticipates it will  be
unable,   to   obtain  debt  modification,  financing  or  refinancing
sufficient  to  allow  it  to continue to  hold  the  property  for  a
reasonable  period  of time or, (4) a property's  value  has  declined
based  on  management's expectations with respect to projected  future
operational  cash  flows  and  prevailing  economic  conditions.    An
impairment  loss is indicated when the undiscounted sum  of  estimated
future  cash flows from an asset, including estimated sales  proceeds,
and  assuming a reasonable period of ownership up to 5 years, is  less
than  the  carrying  amount  of the asset.   The  impairment  loss  is
measured  as the difference between the estimated fair value  and  the
carrying   amount  of  the  asset.  In  the  absence  of   the   above
circumstances,  properties and improvements are stated  at  cost.   An
analysis is done on an annual basis at December of each year.

10.    Use of Estimates

The  preparation  of  the  financial  statements  in  conformity  with
generally accepted accounting principles requires management  to  make
estimates  and  assumptions that affect the amounts  reported  in  the
financial  statements  and accompanying notes.  Actual  results  could
differ from those estimates.

NOTE C - DEBT OBLIGATIONS

Debt obligations were as follows:

                                                             December 31,
                                                          1998         1997

Mortgage loan, interest only at 14% at December 31,   $ 5,920,572  $ 5,800,000
1998 and 1997;  principal  due  2015, collateralized
by the related rental property

Mortgage loan, interest at 12%, collateralized by the   1,800,000    1,800,000
related rental property with maturity at January 1,
1992 (A)

Mortgage loans, interest at the Federal Reserve         1,080,615    1,018,188
Discount rate plus  2%  with a minimum of 7% and a
maximum of 15% (7% at December  31, 1998 and 1997),
principal and interest payable monthly based on a
20-year amortization schedule; collateralized by the
related rental property; principal due October 1, 2005

Mortgage revenue bonds comprised of the following:     16,737,463   16,826,402
$1,440,000 Serial Bonds, interest rates ranging from
4.6% to 6.1%, maturing semi-annually from June 20,
1999, to December 20, 2006; $1,650,000 Term Bonds,
interest at 6.5%, maturing December 20, 2012;
$8,260,000 Term Bonds, interest at  6.6%, maturing
December 20, 2024; $5,605,000 Term Bonds,  interest
at 6.7%, maturing December 20, 2028; collateralized
by the related rental property

Notes payable to a property management company, bearing    15,893       14,104
interest at 12% per annum; principal and interest to be
repaid from the earliest positive cash flow from
operations or capital transactions, or within 90 days of
termination of the management agreement; unpaid principal
and interest due upon the earlier of sale or refinance of
the property or December 1, 2007

Second mortgage loan, principal and interest at 7.5%,   4,953,471    4,953,471
payable in monthly installments of $36,606 to July 2005
based upon available cash flow, at which time the balance
is due; collateralized by the related rental property (B)

Note payable to a developer, interest accrues at 12%,
of which 6% interest is payable annually; deferred
interest is payable out of cash flow after a preference
return to the Partnership with interest accruing on the
unpaid amount; principal and unpaid interest due at the
earlier of sale or refinancing of the property or 2005;
unsecured                                               2,300,000    2,300,000
                                                       ----------   ----------
                                                      $32,808,014  $32,712,165
                                                       ==========   ==========

(A)    Interest  payments  were not made after  August  1991.   Lender
       declared  default  and  accelerated  payment  of  the  note  in
       February 1992.  The partnership which owns the property filed a
       petition of reorganization in May 1992.  In November 1992,  the
       automatic stay was lifted and the property which collateralizes
       this  loan  was  foreclosed  by the lender  in  February  1993.
       However,  the partnership guaranteed $1,800,000 of the original
       note balance, which is included in debt obligations.

(B)    Interest  and principal after August 1, 1990 due  only  to  the
       extent  of  available  cash  flow.  Any  unpaid  principal  and
       interest is deferred.  Additional interest equal to 20% of  net
       cash  flow from operations, as defined, in excess of $1,075,000
       is  payable  annually.  The lender is also entitled to  receive
       10%  of  the  net  proceeds from the sale of  the  property  as
       defined.  No interest was paid during 1998, 1997 or 1996.

Approximate  maturities of mortgage loan obligations at  December  31,
1998, for each of the succeeding five years are as follows:

Year Ending December 31,

                         1999         $  1,898,008
                         2000              107,003
                         2001              119,017
                         2002              131,154
                         2003              144,528
                         Thereafter     30,408,304
                                        ----------
                                      $ 32,808,014
                                        ==========

NOTE E - ACQUISITIONS

The  Partnership  acquired one property and three general  partnership
interests  in Ventures during the period August 1985 to October  1985,
as discussed below.

In  August  1985,  the Partnership was admitted, with  a  99%  general
partner interest, to a Pennsylvania general partnership, which owns  a
building located in Savannah, Georgia, consisting of 22,559 commercial
square  feet  and a 44 room hotel, for a cash capital contribution  of
$3,600,409.

In  October  1985, the Partnership was admitted, with an  85%  general
partner interest, to a Pennsylvania general partnership, which owned a
54-room  hotel  located  in  Washington,  D.C.,  for  a  cash  capital
contribution   of   $1,820,100.   The   Partnership's   interest   was
subsequently  reduced  to  69% when an affiliate  of  the  Partnership
acquired a 19% interest.  The lender foreclosed in 1993.

In  October  1985,  the Partnership purchased a three-story  building,
consisting  of  29  residential apartments and 9,500  square  feet  of
commercial space, for a cash contribution of $1,320,883.

In  October  1985, the Partnership was admitted, with an  85%  general
partner  interest,  to a Maryland general partnership,  which  owns  a
building located in Baltimore, Maryland, consisting of 240 residential
units  and 41,307 square feet of commercial space, for a cash  capital
contribution of $7,271,300.  The Partnership subsequently purchased an
additional 5% interest for $262,500.

NOTE F- COMMITMENTS AND CONTINGENCIES

Pursuant to certain agreements, the developers of and lenders  to  the
properties are entitled to share in the following:

1.     15% of net cash flow from operations (one property), and 15% to
       50%  of  net cash flow from operations above certain  specified
       amounts (two properties);

2.     10%  to 45% of the net proceeds, as defined, of the sale of the
       respective  properties  (three  properties).   Generally,   the
       Partnership is entitled to a priority distribution of  the  net
       proceeds of sale prior to any payments to developers.

J.  A.  Jones Construction Company ("Jones") contracted with  Factor's
Walk  Partners  ("FWP"),  a  subsidiary of the  Partnership,  for  the
renovation  of what was originally a warehouse, into the River  Street
Inn/Factor's  Walk.   During  construction,  numerous  disputes  arose
between  the parties.  As a result of those disputes, Jones  abandoned
the project prior to completion and filed suit.  In the matter of J.A.
Jones  Construction Company v. Factor's Walk Partners  in  the  United
States  District  Court  for the Northern  District  of  Georgia.   On
January  1, 1994, the court entered a judgment in favor of  Jones  and
against  FWP  in  the  amount  of $1,069,017.   The  judgment  accrued
interest at 9.5% and $62,562 of interest was accrued in both 1995  and
1994.   FWP filed an appeal which was held in abeyance while  FWP  and
Jones  participated  in  a  court sponsored  settlement  program.   On
November 8, 1996, a settlement agreement was reached whereby a note in
the  amount of $1,000,000 was issued.  The note calls for 6%  interest
until September 1, 1997, with the rate increasing .5% on each August 1
thereafter  to a maximum of prime plus 2% (therefore, 7%  at  December
31,  1998)  and is due on October 1, 2011.  Interest is due  quarterly
with  the  first  payment  due September  1,  1997.   The  Partnership
recognized  a  gain in the amount of $238,312 for the  excess  of  the
amount  of  the judgment over the amount stipulated in the  settlement
agreement in 1996.

NOTE G - RELATED PARTY TRANSACTIONS

On  June 30, 1992, DHP, Inc. assigned to D, LTD a note receivable from
the  Partnership  in  the stated amount of $404,046.   The  note  bore
interest  at 10% and was due on June 30, 1997.  On March 23, 1993,  D,
LTD  obtained  a  judgment on this note in the amount of  $454,299  in
Common  Pleas  Court  for  Philadelphia  County,  Pennsylvania.    The
judgment  accrues interest at 15%.  Interest accrued during  1998  and
1997  was  $147,747  and  $408,037,  respectively.   Payments  on  the
judgment  are  to  be  made from available cash flow  and  before  any
distribution  can be made to the Partnership's limited partners.   The
balance of the note at December 31, 1998 was $997,365.

On June 30, 1992, DHP, Inc. assigned to D, LTD a note receivable, from
FWP  to the Partnership, that had been assigned to DHP, Inc.  The note
was in the stated amount of $55,951 and bore interest at 10%; the note
was  due  on  June 30, 1997.  On January 13, 1994 D,  LTD  obtained  a
judgment  on this note in the amount of $73,184 in Common Pleas  Court
for  Philadelphia County, Pennsylvania.  The judgment accrues interest
at  15%.  The judgment provides that all future distributions, in  any
form,  due to the Partnership on account of its ownership interest  in
FWP, be immediately delivered to D, LTD.  Interest accrued during 1998
and  1997  was $21,249 and $15,771, respectively. The balance  of  the
note at December 31, 1998 was $153,435.

The   seller  of  Washington  Square  agreed  to  lend  funds  to  the
Partnership  to  cover  cash  flow deficits  for  a  five-year  period
expiring  in 1990.  The Partnership borrowed $97,008 through  December
1988.   The  loan bears interest at 12%, with principal  and  interest
payments out of cash flow.  Interest accrued during both 1998 and 1997
was  $11,641.   The  balance  of the note at  December  31,  1998  was
$225,059.

NOTE H - INCOME TAX BASIS RECONCILIATION

Certain  items  enter  into  the  determination  of  the  results   of
operations in different time periods for financial reporting  ("book")
purposes and for income tax ("tax") purposes.  Reconciliations of  net
loss and partners' equity follows:

                                           For the Years Ended December 31,
                                          1998          1997          1996
                                          ----          ----          ----
Net loss - book                       ($2,980,282) ($ 3,457,494) ($ 2,262,184)
   Depreciation                           147,722       (86,047)     (221,239)
   Interest                             1,103,722     1,277,877       864,793
   Guarantor fees                         121,800       121,800       121,800
   Investor service fee                    20,000      (200,000)       10,000
   Administrative fee                           0       342,000             0
   Gain on foreclosure                          0             0      (238,312)
   Other                                        0        (1,191)            0
Minority interest - tax only              179,674       147,592        93,373
                                        ---------     ---------     ---------
Net loss - tax                       ($ 1,407,364) ($ 1,855,463) ($ 1,631,769)
                                        =========     =========     =========

Partners' equity - book              ($23,539,675) ($20,559,393) ($17,101,899)
Costs of issuance                       2,471,196     2,471,196     2,471,196
Cumulative tax over (under) book loss   6,947,522     6,376,859     5,394,643
Facade easement donation (tax only)       203,778       203,778       203,778
Prior period adjustment                    48,071        48,071        48,071
Capital adjustments (tax only)           (324,580)     (324,580)     (619,813)
                                       ----------    ----------    ----------
Partners' equity - tax               ($14,193,688) ($11,784,069) ($ 9,604,024)
                                       ==========    ==========    ==========
<PAGE>



                       SUPPLEMENTAL INFORMATION
<PAGE>
                          DIVERSIFIED HISTORIC INVESTORS II
                                (a limited partnership)

                 SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                   DECEMBER 31, 1998

                                                               Costs Capitalized
                                                                   Subsequent
                                                                to Acquisition
                                    Initial Cost to
                                    Partnership (b)
                                                               Buildings and
Description (a)      Encumbrances       Land     Improvements   Improvements
                          (f)

44 room hotel with
21,500 square feet
of commercial space
in Savannah, GA      $  5,920,572    $200,000    $ 9,178,160    $   854,407
Savannah, GA

29 apartment units
and 9,500 square feet
of commercial space
in West Chester, PA     1,080,614      87,500      2,833,383         93,424

262 apartment units
and 39,000 square
feet of commercial
space in Baltimore, MD 24,006,827     647,082      2,000,000     28,609,944
                       ----------     -------     ----------     ----------
                      $31,008,013    $934,582    $14,011,543    $29,557,775
                       ==========     =======     ==========     ==========
                                           Gross Amount at which
                                                      Carried at
                                           December 31, 1998

                                        Buildings and
                                                      Accumulated  Date of  Date
Description (a)        Land    Improvements   Total  Depreciation  Constr.  Acq.

44 room hotel with
21,500 square feet
of commercial space
in Savannah, GA      $200,000  $10,032,567  $10,232,567 $5,030,173 85-86 8/9/85

29 apartment units
and 9,500 square feet
of commercial space
in West Chester, PA    87,500    2,926,807    3,014,307  1,533,633  1985 10/1/85

262 apartment units
and 39,000 square
feet of commercial
space in Baltimore, MD647,082   30,609,944   31,257,026 14,654,426 85-88 10/15/8
                      -------   ----------   ---------- ----------
                     $934,582  $43,569,318  $44,503,900 $21,218,232
                      =======   ==========   ==========  ==========
<PAGE>
                    DIVERSIFIED HISTORIC INVESTORS
                        (a limited partnership)

                         NOTES TO SCHEDULE XI

                           December 31, 1998

(A)    All properties are certified historic structures as defined  in
       the  Internal Revenue Code, or are eligible for designation  as
       such.  The "date of construction" refers to the period in which
       such properties are rehabilitated.

(B)    Includes development/rehabilitation costs incurred pursuant  to
       development  agreements entered into when  the  properties  are
       acquired.

(C)    The  aggregate cost of real estate owned at December 31,  1998,
       for  Federal income tax purposes is $29,219,087.  However,  the
       depreciable basis of buildings and improvements is reduced  for
       Federal  income tax purposes by the investment tax  credit  and
       the historic rehabilitation credit obtained.

(D)    Reconciliation of real estate:

                                           1998          1997          1996
Balance at beginning of year           $43,468,171   $43,252,425   $42,999,186
Additions during the year:
   Improvements                          1,035,729       215,746       253,239
                                        ----------    ----------    ----------
Balance at end of year                 $44,503,900   $43,468,171   $43,252,425
                                        ==========    ==========    ==========
Reconciliation of accumulated depreciation:
                                           1998          1997          1996
Balance at beginning of year           $19,522,725   $17,857,486   $16,210,001
Depreciation expense for the year        1,695,507     1,665,239     1,647,485
                                        ----------    ----------    ----------
Balance at end of year                 $21,218,232   $19,522,725   $17,857,486
                                        ==========    ==========    ==========
(E)    See  Note B to the financial statements for depreciation method
       and lives.

(F)    See   Note  F  to  the  financial  statements  for  information
       regarding certain contingencies.

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

               None.

                               PART III

Item 10.       Directors and Executive Officers of Registrant

                a.    Identification of Directors - Registrant has  no
directors.

               b.   Identification of Executive Officers

                     The  General Partner of the Registrant  is  Dover
Historic  Advisors  (DoHA), a Pennsylvania general  partnership.   The
partners of DoHA are as follows:

Name            Age     Position           Term of Office       Period Served

SWDHA, Inc.     --      Partner in DoHA    Partner in DoHA      Since May 1997

EPK, Inc.       --      Partner in DoHA    Partner in DoHA      Since May 1997

               c.    Identification of Certain Significant Employees.
Registrant has  no  employees.  Its administrative and operational functions
are carried  out  by  a property management and partnership administration
firm engaged by the Registrant.

               d.     Family Relationships.  There is no family relationship
between or  among the executive officers and/or any person nominated or chosen
by Registrant to become an executive officer.

                 e.     Business  Experience.   DoHA  is   a   general
partnership formed in August 1985.  The General Partner is responsible
for  the  management and control of the Registrant's affairs and  will
have   general   responsibility  and  authority  in   conducting   its
operations.

             On May 13, 1997, SWDHA, Inc. and EPK, Inc. were appointed
partners of DoHA.  Spencer Wertheimer, the President and Sole Director
of  SWDHA,  Inc.,  is  an attorney with extensive experience  in  real
estate activities ventures.

              EPK,  Inc.  is  a Delaware corporation  formed  for  the
purpose of managing properties or interests therein.  EPK, Inc.  is  a
wholly-owned subsidiary of D, LTD, an entity formed in 1985 to act  as
the   holding  company  for  various  corporations  engaged   in   the
development  and management of historically certified  properties  and
conventional  real  estate as well as a provider  of  financial  (non-
banking) services.  EPK, Inc. is an affiliate of DoHA.

              The officers and directors of EPK, Inc. are described
below.

              Spencer  Wertheimer was appointed on  May  13,  1997  as
President, Treasurer and Sole Director of EPK, Inc.  Mr. Wertheimer is
an  attorney  with  extensive experience  in  real  estate  activities
ventures.

             Donna M. Zanghi (age 40) was appointed on May 13, 1997 as
Vice  President  and  Secretary of EPK, Inc.   Ms.  Zanghi  previously
served  as Secretary and Treasurer of DHP, Inc.  since June  14,  1993
and  as  a  Director  and Secretary/Treasurer  of  D,  LTD.   She  was
associated with DHP, Inc. and its affiliates since 1984 except for the
period from December 1986 to June 1989 and the period from November 1,
1992 to June 14, 1993.

              Michele F. Rudoi (age 32) was appointed on May 13,  1997
as  Assistant Secretary of EPK, Inc.  Ms. Rudoi previously  served  as
Assistant  Secretary and Director of both D, LTD and DHP,  Inc.  since
January 27, 1993.

Item 11.       Executive Compensation

                a.    Cash Compensation - During 1997, Registrant  has
paid  no cash compensation to DoHA, any partner therein or any  person
named in paragraph c. of Item 10.  Certain fees have been paid to DHP,
Inc. by Registrant.

               b.   Compensation Pursuant to Plans - Registrant has no
plan  pursuant  to  which compensation was paid or distributed  during
1997, or is proposed to be paid or distributed in the future, to DoHA,
any partner therein, or any person named in paragraph c. of Item 10 of
this report.

                c.   Other Compensation - No compensation not referred
to  in  paragraph  a.  or  paragraph b.  of  this  Item  was  paid  or
distributed  during 1997 to DoHA, any partner therein, or  any  person
named in paragraph c. of Item 10.

                d.    Compensation  of Directors - Registrant  has  no
directors.

                e.    Termination of Employment and Change of  Control
Arrangement - Registrant has no compensatory plan or arrangement, with
respect  to  any  individual, which results or will  result  from  the
resignation  or  retirement of any individual, or any  termination  of
such  individual's  employment with Registrant or  from  a  change  in
control   of   Registrant   or   a   change   in   such   individual's
responsibilities following such a change in control.

Item  12.        Security Ownership of Certain Beneficial  Owners  and
Management

                a.   Security Ownership of Certain Beneficial Owners -
No  person is known to Registrant to be the beneficial owner  of  more
than five percent of the issued and outstanding Units.

                b.    Security  Ownership of Management  -  No  equity
security  of Registrant are beneficially owned by any person named  in
paragraph c. of Item 10.

                c.   Changes in Control - Registrant does not know  of
any  arrangement,  the  operation of which may at  a  subsequent  date
result in a change in control of Registrant.

Item 13.       Certain Relationships and Related Transactions

               Pursuant to Registrant's Amended and Restated Agreement
of  Limited  Partnership,  DoHA is entitled  to  10%  of  Registrant's
distributable cash from operations in each year.  There  was  no  such
share allocable to DoHA for fiscal years 1996 through 1998.

               a.   Certain Business Relationships - Registrant has no
directors.

                b.   Indebtedness of Management - No executive officer
or  significant  employee of Registrant, Registrant's general  partner
(or any employee thereof), or any affiliate of any such person, is  or
has at any time been indebted to Registrant.


                                PART IV

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

               1.   Financial Statements:

                    a.    Consolidated Balance Sheets at December 31, 1998
                          and 1997.

                    b.    Consolidated Statements of Operations for the Years
                          Ended December 31, 1998, 1997 and 1996.

                    c.    Consolidated Statements  of  Changes in Partners'
                          Equity for the Years Ended December 31, 1998, 1997
                          and 1996.

                    d.    Consolidated Statements of Cash Flows for the Years
                          Ended December 31, 1998, 1997 and 1996.

                    e.    Notes to consolidated financial statements.

               2.   Financial statement schedules:

                    a.    Schedule  XI-  Real Estate and Accumulated
                          Depreciation.

                    b.    Notes to Schedule XI.

               3.   Exhibits:

                    (a) Exhibit        Document
                        Number

                           3           Registrant's   Amended   and    Restated
                                       Certificate  of Limited Partnership  and
                                       Agreement    of   Limited   Partnership,
                                       previously  filed as part  of  Amendment
                                       No.   2   of  Registrant's  Registration
                                       Statement    on    Form    S-11,     are
                                       incorporated herein by reference.

                           21          Subsidiaries   of  the  Registrant   are
                                       listed  in  Item 2. Properties  of  this
                                       Form 10-K.

                     (b) Reports on Form 8-K:


                         No reports were filed on Form 8-K during the quarter
                         ended December 31, 1998.

                     (c) Exhibits:

                         See Item 14(A)(3) above.
<PAGE>

                              SIGNATURES

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

                               DIVERSIFIED HISTORIC INVESTORS II

Date: August 31, 1999          By: Dover Historic Advisors, General Partner
      ---------------
                                   By: EPK, Inc., Partner

                                       By: /s/ Spencer Wertheimer
                                           ----------------------
                                           SPENCER WERTHEIMER
                                           President and Treasurer

                                       By: /s/ Michele F. Rudoi
                                           -----------------------
                                           MICHELE F. RUDOI,
                                           Assistant Secretary

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

             Signature                       Capacity             Date

DOVER HISTORIC ADVISORS                   General Partner

By: EPK, Inc., Partner

    By:  /s/ Spencer Wertheimer                             August 31, 1999
         ------------------------                           ---------------
         SPENCER WERTHEIMER
         President and Treasurer

    By:  /s/ Michele F. Rudoi                               August 31, 1999
         -----------------------                            ---------------
         MICHELE F. RUDOI,
         Assistant Secretary