SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                    For the fiscal year ended December 31, 2003


[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

              For the transition period from __________ to __________

                         Commission file number 0-09782


                        REAL ESTATE ASSOCIATES LIMITED II
                       (A California Limited Partnership)


          California                                               95-3547609
(State or other jurisdiction of                                 (I.R.S. Employer
 incorporation or organization                                   Identification
No.)

                          55 Beattie Place, PO Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)

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

                                      NONE

        Securities Registered Pursuant to Section 12(g)of the Exchange Act:

                            Limited Partnership Units
                                (Title of class)

Check whether the issuer(1) filed all reports required to be filed by Section 13
or 15(d) of the  Exchange  Act during  the past 12 months  (or for such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  registrant's  knowledge  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.   $3,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2003. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.


                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>



The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

                                     PART I

ITEM 1.     Description of Business

Real Estate Associates  Limited II ("REAL II" or the "Partnership") is a limited
partnership  which  was  formed  under the laws of the  State of  California  on
December 4, 1979. On March 17, 1980,  REAL II offered 3,000 units  consisting of
6,000 Limited Partnership  Interests and Warrants to purchase a maximum of 6,000
Additional  Limited  Partnership  Interests through a public offering managed by
E.F.  Hutton Inc. REAL II received  $13,365,000  in  subscriptions  for units of
Limited  Partnership  Interests (at $5,000 per unit) during the period March 17,
1979 to September 15, 1980,  pursuant to a registration  statement on Form S-11.
As of  December  31,  1981 REAL II had  received an  additional  $13,365,000  in
subscriptions  pursuant to the exercise of warrants  and the sale of  additional
Limited Partnership Interests.

The  Partnership  shall be  dissolved  only upon the  expiration  of 52 complete
calendar  years  (December  31,  2031)  from  the date of the  formation  of the
Partnership  or the occurrence of various other events as specified in the terms
of the Partnership  agreement.  The principal  business of the Partnership is to
invest, directly or indirectly, in other limited partnerships which own or lease
and operate federal, state and local government-assisted housing projects.

The  general  partners of REAL II are  National  Partnership  Investments  Corp.
("NAPICO" or the "Corporate  General  Partner"),  a California  Corporation  and
National Partnership  Investments  Associates  ("NAPIA").  NAPIA is a California
limited partnership and consists of Messrs.  Nicholas G. Ciriello,  an unrelated
individual,  as general  partner and Charles H.  Boxenbaum and Leonard Crosby as
limited partners. The business of REAL II is conducted primarily by NAPICO.

On December 3, 2001,  Casden Properties Inc. entered into a merger agreement and
certain other  transaction  documents with  Apartment  Investment and Management
Company, a publicly traded real estate investment trust ("AIMCO") and certain of
its  subsidiaries,  pursuant to which, on March 11, 2002,  AIMCO acquired Casden
Properties  Inc. and its  subsidiaries,  including  100% of the stock of NAPICO.
Prior to March 11, 2002, Casden Properties Inc. owned a 95.25% economic interest
in NAPICO, with the balance owned by Casden Investment Corporation ("CIC"). CIC,
which is wholly owned by Alan I. Casden, owned 95% of the voting common stock of
NAPICO prior to March 11, 2002.

REAL II holds limited partnership interests in twelve Local Limited Partnerships
(the "Local  Limited  Partnerships")  as of December 31, 2003,  as a result of 1
Local  Limited  Partnership  selling its  investment  property in April 2003 and
after selling its interest in 7 Local Limited  Partnerships,  in December  1998.
All of these Local Limited  Partnerships,  own low income housing projects which
are  subsidized  and/or have mortgage notes payable to or insured by agencies of
the federal or local government.

The  partnerships  in which  REAL II has  invested  were,  at  least  initially,
organized by private developers who acquired the sites, or options thereon,  and
applied for  applicable  mortgage  insurance and  subsidies.  REAL II became the
principal  limited  partner in these  Local  Limited  Partnerships  pursuant  to
arm's-length  negotiations with these developers,  or others, who act as general
partners. As a limited partner, REAL II's liability for obligations of the Local
Limited  Partnership is limited to its investment.  The local general partner of
the  Local  Limited   Partnership   retains   responsibility   for   developing,
constructing,  maintaining,  operating  and managing the Project.  Under certain
circumstances  of default,  REAL II has the right to replace the general partner
of the Local Limited  Partnerships,  but otherwise does not have control of sale
or refinancing, etc.

Although each of the  partnerships  in which REAL II has invested owns a project
which must compete in the market place for tenants,  interest subsidies and rent
supplements from governmental  agencies make it possible to offer these dwelling
units to eligible "low income" tenants at a cost significantly  below the market
rate for comparable conventionally financed dwelling units in the area.

The  Partnership  does not have any  employees.  Services are  performed for the
Partnership  by  the  Corporate  General  Partner  and  agents  retained  by the
Corporate General Partner.

In order to stimulate  private  investment  in low income  housing,  the federal
government  and  certain  state and local  agencies  have  provided  significant
ownership  incentives,   including  among  others,   interest  subsidies,   rent
supplements,  and mortgage insurance, with the intent of reducing certain market
risks and  providing  investors  with  certain tax  benefits,  plus limited cash
distributions  and the  possibility of long-term  capital  gains.  There remain,
however,  significant  risks.  The long-term nature of investments in government
assisted housing limits the ability of REAL II to vary its portfolio in response
to changing economic,  financial and investment conditions. Such investments are
also subject to changes in local economic circumstances and housing patterns, as
well as rising operating costs, vacancies, rent collection difficulties,  energy
shortages and other factors  which have an impact on real estate  values.  These
projects also require greater management expertise and may have higher operating
expenses than conventional housing projects.

Under recently adopted law and policy,  the United States  Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment  ("HAP")  Contracts  on a long  term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and  Affordability  Act of 1997 ("MAHRAA")  provides for
the  restructuring  of  mortgage  loans  insured  by the  FHA  with  respect  to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the Local Limited  Partnerships  in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

Laws  benefiting   disabled  persons  may  result  in  the  Local  Partnerships'
incurrence of unanticipated expenses.  Under the Americans with Disabilities Act
of 1990,  or ADA,  all places  intended to be used by the public are required to
meet certain Federal requirements related to access and use by disabled persons.
Likewise,  the Fair Housing Amendments Act of 1988, or FHAA,  requires apartment
properties  first  occupied  after  March  13,  1990  to be  accessible  to  the
handicapped.  These  and  other  Federal,  state  and  local  laws  may  require
modifications  to  the  Local  Limited  Partnership's  properties,  or  restrict
renovations of the properties. Noncompliance with these laws could result in the
imposition  of fines or an award of damages to private  litigants and also could
result in an order to correct any non-complying  feature,  which could result in
substantial  capital  expenditures.   Although  the  Corporate  General  Partner
believes that the Local Limited  Partnership's  properties are  substantially in
compliance with present  requirements,  the Local Limited Partnerships may incur
unanticipated expenses to comply with the ADA and the FHAA.

The following table details the Partnership's ownership percentages of the Local
Limited  Partnerships  and  the  cost of  acquisition  of  such  ownership.  All
interests are limited  partner  interests.  Also included is the total  mortgage
encumbrance  on each property for each of the Local Limited  Partnerships  as of
December 31, 2003.

                              REAL II      Original Cost
                             Percentage    Of Ownership      Mortgage
 Partnership                  Interest       Interest          Notes
                                          (in thousands)  (in thousands)

 Azalea Court                   95%           $ 165           $ 1,448
 Branford Elderly               99%              195              697
 Cherrywood/Saturn Apts.        98%              308            2,764
 Clearfield Manor               95%              173            1,053
 Crystal Springs                98%               95              602
 Lakeside Apts.                 99%              285            1,806
 Landmark Towers                99%              190              613
 Magnolia State                 98%              200            1,153
 Redfern Grove Apts.            99%              360              757
 Sugar River Mills              98%            1,800            6,882
 Valebrook                      98%              850            2,401
 Willow Wick Apts.              99%               80              420
                                              $4,701          $20,596

Although each Local Limited  Partnership in which the  Partnership has invested,
owns an apartment complex which must compete with other apartment  complexes for
tenants,  government  mortgage  interest and rent  subsidies make it possible to
rent units to eligible tenants at below market rates. In general, this insulates
the Projects from market competition.

During  2002,   all  of  the  projects  in  which  REAL  II  had  invested  were
substantially  rented.  The following is a schedule of the status as of December
31, 2003, of the projects owned by the Local Limited  Partnerships in which REAL
II has invested as a limited partner.

              SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2003

<TABLE>
<CAPTION>

                                           Financed
                                            Insured       Units       Occupancy Percentage
                                              And      Authorized      For the Years Ended
   Property Name                  No. of  Subsidized   For Rental         December 31,
   and Location                    Units     Under     Assistance       2003         2002
   Azalea Court
<S>                                   <C>                    <C>         <C>         <C>
     Theodore, AL                     48      (A)            47          98%         100%
   Branford Elderly
     Branford, CT                     38      (B)            38          99%         100%
   Cherrywood/Saturn Apts.
     Twin Falls/Idaho Falls, ID       78      (D)            78          97%          92%
   Clearfield Manor
     Clearfield, KY                   40      (A)            40          99%         100%
   Crystal Springs
     Crystal Springs, MS              28      (A)            28         100%         100%
   Lakeside Apts.
     Mishawaka, IN                    48      (B)            48          98%          98%
   Landmark Towers
     Nampa, ID                        40      (D)            40          99%         100%
   Magnolia State
     Gulfport, MS                     60      (A)            24          93%         96%
   Redfern Grove Apts.
     E. Providence, RI                72      (C)            72          99%         100%
   Sugar River Mills
     Claremont, NH                   162      (B)           162          97%          99%
   Valebrook
     Lawrence, MA                    151      (E)           100          99%          99%
   Westward Ho Apts.
     Phoenix, AZ                     290      (F)           290         (F)           94%
   Willow Wick Apts.
     Centre, AL                       24      (A)             5          47%          48%
   TOTALS                          1,079                    972
</TABLE>

(A)  The  project is financed by the Rural  Housing  Services  Section 515 which
     also provides for interest and rental subsidies.

(B)  The  mortgage is insured by the Federal  Housing  Administration  under the
     provisions of Section 236 of the National Housing Act.

(C)  The mortgage is regulated by the Rhode Island Housing and Mortgage Finance
     Corporation.

(D)  The mortgage is regulated by the Idaho Housing and Finance Association.

(E)  The mortgage is regulated by the Massachusetts Housing and Finance
     Association.

(F)  Property was sold April 29, 2003.

ITEM 2.     Description of Properties

The Local  Limited  Partnerships  in which REAL II holds  interests  own various
multi-family  rental  properties.  See "Item 1.  Description  of  Business"  for
information pertaining to these properties.

ITEM 3.     Legal Proceedings

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interest  in Real  Estate  Associates  Limited  III (an  affiliated
partnership in which National  Partnership  Investments Corp.  ("NAPICO") is the
corporate  general partner) and two investors holding an aggregate of five units
of limited  partnership  interests in Real Estate Associates Limited VI (another
affiliated  partnership  in  which  NAPICO  is the  corporate  general  partner)
commenced  an  action  against  the   Partnership,   NAPICO  and  certain  other
defendants. The claims included, but were not limited to, claims for breaches of
fiduciary duty to the limited  partners of certain  NAPICO-managed  partnerships
and  violations of securities  laws by making  materially  false and  misleading
statements in the consent  solicitation  statements sent to the limited partners
of such  partnerships  relating  to  approval  of the  transfer  of  partnership
interests  in  limited  partnerships,  owning  certain  of  the  properties,  to
affiliates of Casden Properties,  Inc.,  organized by an affiliate of NAPICO. On
August 4, 1999, one investor holding one unit of limited partnership interest in
Housing Programs Limited (another affiliated  partnership in which NAPICO is the
corporate  general partner)  commenced a virtually  identical action against the
Partnership,  NAPICO and certain other entities.  The second action was subsumed
in the first action, and was certified as a class action.

On April 29, 2003, the court entered  judgment  against NAPICO and certain other
defendants  in the amount of  approximately  $25.2  million  for  violations  of
securities laws and against NAPICO for approximately  $67.3 million for breaches
of fiduciary  duty, both amounts plus interest of  approximately  $25.6 million,
and for punitive damages against NAPICO in the amount of $2.6 million.

On August 11, 2003,  Apartment  Investment and Management  Company ("AIMCO") and
NAPICO  entered  into  a  Stipulation  of  Settlement   (the   "Stipulation   of
Settlement")  with the  plaintiff  class (the  "Plaintiffs")  and their  counsel
relating  to the  settlement  of the  litigation.  The  principal  terms  of the
Stipulation of Settlement include,  among other things (1) payments in both cash
($29 million) and stock ($19  million) by Alan I. Casden,  on behalf of himself,
NAPICO and other defendants,  to the Plaintiffs,  (2) guaranteed  payments in an
aggregate  amount  of $35  million  ($7  million  per  year for 5  years),  plus
interest,  by NAPICO to the  Plaintiffs,  (3) a release of claims of all parties
associated with the litigation and (4) joint agreement by the parties to request
that a new judgment be entered in the litigation to, among other things, expunge
the judgment originally entered against NAPICO and the other defendants.

In connection with the Stipulation of Settlement, on August 12, 2003, NAPICO and
AIMCO executed a Settlement  Agreement  (the  "Settlement  Agreement")  with the
prior  shareholders  of  Casden  Properties,  Inc.  The  principal  terms of the
Settlement  Agreement  include,   among  other  things,  that  (1)  NAPICO  will
voluntarily  discontinue  the action it  commenced  on May 13, 2003  against the
former  shareholders  of Casden  Properties,  Inc. and other  indemnitors in the
Casden  Merger,  (2) Alan I. Casden and certain  related  entities  will resolve
certain  pending  claims for  indemnification  made by  NAPICO,  AIMCO and their
affiliates,  (3) AIMCO or an  affiliate  will  provide  $25  million  of the $29
million in cash that Alan I. Casden is obligated to provide under the Stipulaton
of Settlement in exchange for 531,915 shares of AIMCO Class A Common Stock owned
by The Casden Company,  and (4) The Casden Company will promise to pay to NAPICO
an  aggregate  amount of $35 million  ($7  million  per year for 5 years),  plus
interest,  on a secured,  nonrecourse  basis.  The Casden Company can prepay its
obligation  set forth in item (4) above in shares of AIMCO Class A Common  Stock
having a value based on the greater of $47 per share or the market value of such
shares at the time of payment.

On December 30, 2003,  the  Stipulation of Settlement  with the plaintiff  class
(the  "Plaintiffs")  and their counsel  relating to the settlement of litigation
against the Registrant,  National Partnership  Investments Corp.  ("NAPICO") and
certain  other  defendants  became  effective in accordance  with its terms.  In
addition,  on  December  30,  2003,  the  Settlement  Agreement  with the  prior
shareholders of Casden  Properties,  Inc.,  NAPICO and Apartment  Investment and
Management Company ("AIMCO") also closed in accordance with its terms.

In addition to the litigation  discussed above, the Corporate General Partner is
involved in various other  lawsuits  arising from  transactions  in the ordinary
course of  business.  In the opinion of  management  and the  Corporate  General
Partner,   the  claims  will  not  result  in  any  material  liability  to  the
Partnership.

ITEM 4.     Submission Of Matters To A Vote of Security Holders

No  matters  were  submitted  to a vote  of the  limited  partners  through  the
solicitation of proxies or otherwise during the quarter ended December 31, 2003.

                                     PART II

ITEM 5. Market For The Registrant's Partnership Interest And Related Partnership
        Matters

The Limited  Partnership  Interests are not traded on a public exchange but were
sold through a public offering managed by E.F. Hutton Inc. It is not anticipated
that any public market will develop for the purchase and sale of any Partnership
interest,  therefore,  an investor may be unable to sell or otherwise dispose of
his or her interest in the  Partnership.  Limited  Partnership  Interests may be
transferred only if certain requirements are satisfied. At December 31, 2003 the
Partnership  had  5,326  Units or  10,652  interests  outstanding  held by 1,373
limited partners of record.  The Partnership has invested in certain  government
assisted  projects  under  programs  which in many  instances  restrict the cash
return available to project owners.  The Partnership was not designed to provide
cash  distributions  to investors in  circumstances  other than  refinancing  or
disposition of its investments in limited partnerships.

The  Partnership  distributed  the  following  amounts  during  the years  ended
December 31, 2003 and 2002 (in thousands, except per interest data):
<TABLE>
<CAPTION>

                                      Per Limited                        Per Limited
                     Year Ended       Partnership       Year Ended       Partnership
                  December 31, 2003     Interest     December 31, 2002     Interest

<S>                     <C>              <C>               <C>               <C>
Sale proceeds           $ 500            $46.94            $ --              $ --
</TABLE>

AIMCO and its affiliates  owned 870 limited  partnership  units (the "Units") or
1,740 limited  partnership  interests in the Partnership  representing 16.33% of
the  outstanding  Units at December  31,  2003.  A Unit  consists of two limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional  Units in  exchange  for cash or a  combination  of cash and units in
AIMCO  Properties,  L.P., the operating  partnership  of AIMCO.  Pursuant to the
Partnership Agreement,  unitholders holding a majority of the Units are entitled
to take action with  respect to a variety of matters that  include,  but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Corporate General Partner.  Although the Corporate General Partner
owes fiduciary duties to the limited partners of the Partnership,  the Corporate
General partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the Corporate  General  Partner,  as corporate  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Corporate General Partner to AIMCO, as its sole stockholder.

ITEM 6.     Management's Discussion And Analysis Or Plan of Operation

This item should be read in conjunction with the financial  statements and other
items contained elsewhere in this report.

Liquidity and Capital Resources

The  Partnership's  primary sources of funds include interest income earned from
investing  available  cash and the receipt of  distributions  from Local Limited
Partnerships in which the Partnership has invested.  It is not expected that any
of the Local Limited  Partnerships  in which the  Partnership  has invested will
generate cash flow from operations  sufficient to provide for  distributions  to
limited partners in any material amount.  An infrequent source of funds would be
funds received by the  Partnership as its share of any proceeds from the sale of
a property owned by a Local Limited Partnership or the Partnership's sale of its
interest  in a Local  Limited  Partnership.  As  mentioned  below,  Westward  Ho
Associates sold its investment property during 2003. The Partnership distributed
$500,000 to its limited  partners  during the year ended  December 31, 2003 from
the funds  received from this sale. No  distributions  were made during the year
ended December 31, 2002.

The properties in which the Partnership has invested, through its investments in
the Local Limited Partnerships, receive one or more forms of assistance from the
Federal  Government.  As a result,  the Local Limited  Partnerships'  ability to
transfer  funds either to the  Partnership  or among  themselves  in the form of
distributions,  loans or advances is generally  restricted  by these  government
assistance programs. These restrictions, however, are not expected to impact the
Partnership's  ability  to meet  its cash  obligations.  The  Corporate  General
Partner monitors developments in the area of legal and regulatory compliance and
is studying new federal laws,  including  the  Sarbanes-Oxley  Act of 2002.  The
Sarbanes-Oxley Act of 2002 mandates or suggests  additional  compliance measures
with regard to governance,  disclosure, audit and other areas. In light of these
changes,  the Partnership  expects that it will incur higher expenses related to
compliance, including increased legal and audit fees.

Distributions  received from Local Limited Partnerships are recognized as return
of  capital  until  the  investment  balance  has been  reduced  to zero or to a
negative  amount  equal to future  capital  contributions  required.  Subsequent
distributions received are recognized as income.

As of December 31, 2003 and 2002, the Partnership has cash and cash  equivalents
of approximately $503,000 and $11,000, respectively.  Substantially all of these
amounts are on deposit with a high credit quality financial institution, earning
interest.  The amount of interest  income varies with market rates  available on
deposits and with the amount of funds available for investment. Cash equivalents
can be converted to cash to meet  obligations of the  Partnership as they arise.
The Partnership intends to continue investing available funds in this manner.

Results of Operations

At December 31, 2003, the  Partnership  has  investments in twelve Local Limited
Partnerships,  all of which own housing  projects  that were  substantially  all
rented.  The Partnership,  as a limited partner,  does not exercise control over
the activities and operations, including refinancing or selling decisions of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investment in the Local Limited  Partnerships using the equity method.  Thus the
individual  investments are carried at cost plus the Partnership's  share of the
Local Limited  Partnership's  profits less the Partnership's  share of the Local
Limited  Partnership's  losses,  distributions and impairment charges.  However,
since the  Partnership  is not legally  liable for the  obligations of the Local
Limited  Partnerships,  or is not  otherwise  committed  to  provide  additional
support to them, it does not recognize losses once its investment in each of the
Local Limited  Partnerships  reaches zero.  Distributions from the Local Limited
Partnerships  are accounted for as a reduction of the  investment  balance until
the investment balance is reduced to zero. Subsequent distributions received are
recognized as income in the  accompanying  statements of  operations.  For those
investments  where the Partnership has determined that the carrying value of its
investments  approximates  the estimated  fair value of those  investments,  the
Partnership's  policy is to  recognize  equity  in  income of the Local  Limited
Partnerships  only to the extent of  distributions  received and amortization of
acquisition  costs  from  those  Local  Limited  Partnerships.   Therefore,  the
Partnership  limits its  recognition of equity earnings to the amount it expects
to ultimately realize.  The Partnership  recognized no equity in loss of limited
partnerships for the years ended December,  2003 and 2002, as the  Partnership's
investment in all Local Limited  Partnership's had been reduced to zero prior to
January 1, 2002.

On  April  29,  2003,  Westward  Ho  Associates  sold its  investment  property,
consisting of 290 units,  to an affiliate of its third party general partner for
approximately  $12,362,000.  During  the  year  ended  December  31,  2003,  the
Partnership  received proceeds of approximately  $1,504,000 for its 94% interest
in the Local Limited Partnership after the repayment of the mortgage encumbering
the investment  property and the payment of other  liabilities.  The Partnership
used  approximately  $478,000 of the proceeds to pay accrued management fees and
expense reimbursements owed to the Corporate General Partner.

Distributions  from the Local Limited  Partnerships  in which the  Partnership's
investment  in the Local  Limited  Partnerships  has been  reduced  to zero were
approximately  $94,000 and $36,000  for the years  ended  December  31, 2003 and
2002, respectively.  These amounts were recognized as income on the accompanying
statements of operations, in accordance with the equity method of accounting.

Under recently adopted law and policy,  the United States  Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment  ("HAP")  Contracts  on a long  term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and  Affordability  Act of 1997 ("MAHRAA")  provides for
the  restructuring  of  mortgage  loans  insured  by the  FHA  with  respect  to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the Local Limited  Partnerships  in which the Partnership has an investment will
be permitted  to  restructure  their  mortgage  indebtedness  under  MAHRAA.  In
addition,  the economic  impact on the  Partnership  of the  combination  of the
reduced  payments under the HAP Contracts and the  restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

Operating expenses,  other than management fees, consist of legal and accounting
fees for services rendered to the Partnership and administrative expenses. Legal
and accounting fees were approximately $107,000 and $105,000 for the years ended
December  31,  2003  and  2002,   respectively.   Administrative  expenses  were
approximately  $34,000 and $33,000  for the years  ended  December  31, 2003 and
2002,  respectively.  Included in administrative  expenses are reimbursements to
NAPICO for certain expenses, which totaled approximately $20,000 for both of the
years ended December 31, 2003 and 2002.

A recurring partnership expense is the annual management fee. The fee is payable
to the Corporate  General  Partner of the  Partnership  and is calculated at 0.4
percent of the Partnership's  original remaining invested assets. The management
fee is paid to the Corporate  General  Partner for its continuing  management of
partnership  affairs.  The fee is payable beginning with the month following the
Partnership's initial investment in a Local Limited Partnership. Management fees
were approximately $176,000 for both 2003 and 2002.

Total revenue for the Local Limited  Partnerships was  approximately  $7,059,000
and $7,169,000 for the years ended December 31, 2003 and 2002, respectively.

Total expenses for the Local Limited Partnerships were approximately  $6,819,000
and $6,615,000 for the years ended December 31, 2003 and 2002, respectively.

Total net income for the Local Limited Partnerships for 2003 and 2002 aggregated
approximately $240,000 and $554,000,  respectively.  The net income allocated to
the  Partnership  was  approximately  $236,000  and  $400,000 for 2003 and 2002,
respectively.  However,  none of this allocated net income was recognized by the
Partnership  as the  investment  balance had already  been  reduced to zero from
prior years' losses.

The Partnership, as a Limited Partner in the Local Limited Partnerships in which
it  has  invested,  is  subject  to the  risks  incident  to  the  construction,
management,  and ownership of improved real estate. The Partnership  investments
are also subject to adverse general economic conditions,  and, accordingly,  the
status of the national economy,  including substantial unemployment,  concurrent
inflation and changing  legislation which could increase vacancy levels,  rental
payment defaults,  and operating  expenses,  which in turn, could  substantially
increase the risk of operating losses for the projects.

Other

AIMCO and its affiliates  owned 870 limited  partnership  units (the "Units") or
1,740 limited  partnership  interests in the Partnership  representing 16.33% of
the  outstanding  Units at December  31,  2003.  A Unit  consists of two limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional  Units in  exchange  for cash or a  combination  of cash and units in
AIMCO  Properties,  L.P., the operating  partnership  of AIMCO.  Pursuant to the
Partnership Agreement,  unitholders holding a majority of the Units are entitled
to take action with  respect to a variety of matters that  include,  but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Corporate General Partner.  Although the Corporate General Partner
owes fiduciary duties to the limited partners of the Partnership,  the Corporate
General partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the Corporate  General  Partner,  as corporate  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Corporate General Partner to AIMCO, as its sole stockholder.

Recent Accounting Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46 ("FIN 46"),  Consolidation of Variable Interest Entities.
FIN 46 requires the  consolidation of entities in which an enterprise  absorbs a
majority of the entity's  expected  losses,  receives a majority of the entity's
expected  residual  returns,  or both, as a result of ownership,  contractual or
other  financial  interests  in the  entity.  Prior to the  issuance  of FIN 46,
entities were generally  consolidated by an enterprise when it had a controlling
financial  interest  through  ownership  of a majority  voting  interest  in the
entity.  FIN 46 applied  immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003,  FIN 46 will  apply to  financial  statements  for  periods  ending  after
December 15, 2004.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities under the provisions of FIN 46. The  Partnership has not yet determined
the anticipated  impact of adopting FIN 46 for its  partnership  agreements that
existed as of January 31, 2003. However, FIN 46 may require the consolidation of
the  assets,   liabilities  and  operations  of  certain  of  the  Partnership's
unconsolidated  partnership  investments.  Although  the  Partnership  does  not
believe  the full  adoption  of FIN 46 will  have an impact  on cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

In May 2003,  the FASB issued SFAS 150, which  establishes  standards for how an
issuer   classifies   and   measures   certain   financial    instruments   with
characteristics  of both  liabilities and equity.  The  requirements of SFAS 150
apply  to  the   classification   and  measurement  of  freestanding   financial
instruments.  SFAS 150 is effective  for financial  instruments  entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Partnership has adopted
SFAS 150 as of July 1, 2003.  Additionally,  in September  2003,  the FASB staff
indicated  that  SFAS 150  also  applies  to the  non-controlling  interests  in
consolidated  finite life partnerships.  However,  on October 29, 2003, the FASB
indefinitely  deferred the provisions of SFAS 150 for finite life  partnerships.
The  adoption  of SFAS 150 did not have a material  impact on the  Partnership's
results of operations taken as a whole.

Critical Accounting Policies and Estimates

A summary of the Partnership's  significant  accounting  policies is included in
"Note 2 - Organization and Summary of Significant  Accounting Policies" which is
included in the financial  statements  in "Item 7.  Financial  Statements".  The
Corporate  General  Partner  believes that the  consistent  application of these
policies enables the Partnership to provide readers of the financial  statements
with useful and reliable  information about the Partnership's  operating results
and financial  condition.  The preparation of financial statements in conformity
with accounting  principles generally accepted in the United States requires the
Partnership to make estimates and  assumptions.  These estimates and assumptions
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial statements as well as reported amounts of revenues and expenses during
the  reporting  period.  Actual  results  could  differ  from  these  estimates.
Judgments  and  assessments  of  uncertainties  are  required  in  applying  the
Partnership's  accounting  policies in many areas.  The  following may involve a
higher degree of judgment and complexity.

Method of Accounting for Investments in Limited Partnerships

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investments  in the Local  Limited  Partnerships  using the equity  method.  The
Partnership  is allocated  profits and losses of the Local Limited  Partnerships
based  upon  its  respective   ownership   percentage  (between  95%  and  99%).
Distributions  of surplus cash from  operations  from most of the Local  Limited
Partnerships  are  restricted  by the  Local  Limited  Partnerships'  Regulatory
Agreements  with the United States  Department of Housing and Urban  Development
("HUD") and /or are  restricted  by the terms of the mortgages  encumbering  the
Projects. These restrictions limit the distribution to a portion, generally less
than 10%, of the initial invested capital.  The excess surplus cash is deposited
into a residual  receipts  reserve,  of which the  ultimate  realization  by the
Partnership is uncertain as HUD  frequently  retains it upon sale or dissolution
of the Local  Limited  Partnership.  The  Partnership  is allocated  profits and
losses and receives distributions from refinancings and sales in accordance with
the Local Limited Partnerships' partnership agreements. These agreements usually
limit the Partnership's  distributions to an amount  substantially less than its
ownership percentage in the Local Limited Partnership.

The individual  investments are carried at cost plus the Partnership's  share of
the Local  Limited  Partnership's  profits less the  Partnership's  share of the
Local Limited  Partnership's  losses,  distributions and impairment charges. See
"Item 7. Financial  Statements Note 2 - Organization  and Summary of Significant
Accounting Policies" for a description of the impairment policy. The Partnership
is not legally liable for the obligations of the Local Limited  Partnerships and
is not otherwise committed to provide additional support to them. Therefore,  it
does not  recognize  losses  once its  investment  in each of the Local  Limited
Partnerships reaches zero. Distributions from the Local Limited Partnerships are
accounted  for as a reduction of the  investment  balance  until the  investment
balance is reduced to zero.  When the  investment  balance  has been  reduced to
zero,  subsequent  distributions  received  are  recognized  as  income  in  the
accompanying statements of operations.

For those  investments  where the  Partnership  has determined that the carrying
value  of its  investments  approximates  the  estimated  fair  value  of  those
investments,  the  Partnership's  policy is to recognize equity in income of the
Local  Limited  Partnerships  only to the extent of  distributions  received and
amortization  of  acquisition  costs  from  those  Local  Limited  Partnerships.
Therefore,  the  Partnership  limits its  recognition of equity  earnings to the
amount it expects to ultimately realize.


<PAGE>



ITEM 7.     Financial Statements

REAL ESTATE ASSOCIATES LIMITED II

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Balance Sheet - December 31, 2003

      Statements of Operations - Years ended December 31, 2003 and 2002

      Statements of Changes in Partners' (Deficiency) Capital - Years ended
      December 31, 2003 and 2002

      Statements of Cash Flows - Years ended December 31, 2003 and 2002

      Notes to Financial Statements


<PAGE>



                          Independent Auditors' Report



The Partners
Real Estate Associates Limited II

We have audited the accompanying balance sheet of Real Estate Associates Limited
II as of December 31, 2003, and the related statements of operations,  partners'
(deficiency)  capital,  and cash  flows for each of the two years in the  period
ended December 31, 2003. These financial  statements are the  responsibility  of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial  statements based on our audits.  We did not audit the financial
statements of the limited  partnerships,  the investments in which are reflected
in the accompanying  financial statements using the equity method of accounting.
The investee  information  for these limited  partnerships is included in Note 2
and Note 5. The financial  statements of these limited partnerships were audited
by other  auditors.  Their  reports have been  furnished to us, and our opinion,
insofar as it relates to the amounts included for these limited partnerships, is
based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in 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 audits and the reports of the other  auditors
provide a reasonable basis for our opinion.

In our opinion,  based on our audits and the reports of the other auditors,  the
financial statements referred to above present fairly, in all material respects,
the financial  position of Real Estate Associates  Limited II as of December 31,
2003,  and the results of its  operations and its cash flows for each of the two
years in the period ended  December  31, 2003,  in  conformity  with  accounting
principles generally accepted in the United States.

                                                            /s/Ernst & Young LLP


Greenville, SC
April 16, 2004



<PAGE>



                        REAL ESTATE ASSOCIATES LIMITED II
                                  BALANCE SHEET
                                 (in thousands)

                                December 31, 2003

<TABLE>
<CAPTION>

                           ASSETS
<S>                                             <C>                             <C>
Investments in Local Limited Partnerships (Note 2)                              $   --
Cash and cash equivalents                                                          503
       Total Assets                                                             $  503

       LIABILITIES AND PARTNERS' (DEFICIENCY) CAPITAL
Liabilities                                                                     $   --

Contingencies (Note 6)

Partners' (deficiency) capital:
  General partners                                               $ (208)
  Limited partners                                                   711            503
       Total Liabilities and Partners' (Deficiency) Capital                     $   503

                  See Accompanying Notes to Financial Statements.

</TABLE>

<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                            STATEMENTS OF OPERATIONS
                    (in thousands, except per interest data)

<TABLE>
<CAPTION>

                                                              Years Ended December 31,
                                                                2003              2002
REVENUES:
<S>                                                             <C>               <C>
  Interest income                                               $ 3               $ 3

OPERATING EXPENSES:
  Legal and accounting                                            107               105
  Management fees - general partner (Note 3)                      176               176
  Administrative (Note 3)                                          34                33
      Total operating expenses                                    317               314

Loss from partnership operations                                 (314)             (311)

Distributions in excess of investment in Local
  Limited Partnerships (Note 2)                                    94                36

Gain on sale of investment in Local Limited Partnership
  (Note 2)                                                      1,504                --

Net income (loss)                                             $ 1,284            $ (275)

Net income (loss) allocated to general partners (1%)            $ 13              $ (3)
Net income (loss) allocated to limited partners (99%)           1,271              (272)
                                                              $ 1,284            $ (275)

Net income (loss) per limited partnership interest
  (Note 1)                                                    $119.32           $ 25.52

Distribution per limited partnership interest                 $ 46.94             $ --


                  See Accompanying Notes to Financial Statements.

</TABLE>

<PAGE>

                        REAL ESTATE ASSOCIATES LIMITED II
                  STATEMENTS OF PARTNERS' (DEFICIENCY) CAPITAL
                    (in thousands, except per interest data)

<TABLE>
<CAPTION>
                                             General         Limited
                                             Partners        Partners          Total

Partnership interests (Note 1) (A)                            10,652

Partners' (deficiency) capital at
<S>       <C>                                 <C>             <C>               <C>
  January 1, 2002                             $ (218)         $ 212             $ (6)

Net loss for the year ended
  December 31, 2002                               (3)           (272)            (275)

Partners' (deficiency) capital at
  December 31, 2002                             (221)            (60)            (281)

Distribution to partners                          --            (500)            (500)

Net income for the year ended
  December 31, 2003                               13           1,271            1,284

Partners' (deficiency) capital at
  December 31, 2003                           $ (208)         $ 711            $ 503

(A)   Consists  of 10,652  partnership  interests  at  December  31, 2003 and 10,656
      partnership interests at December 31, 2002.

                  See Accompanying Notes to Financial Statements.

</TABLE>

<PAGE>

                        REAL ESTATE ASSOCIATES LIMITED II
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                    Years Ended December 31,
                                                                      2003            2002
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                 <C>              <C>
  Net income (loss)                                                 $ 1,284          $ (275)
  Adjustments to reconcile net income (loss) to net cash used
   in operating activities:
     Gain on sale of investment in Local Limited Partnership         (1,504)             --
     Decrease in accounts payable                                       (13)            (33)
     (Decrease) increase in accrued fees due to affiliates             (279)            179
         Net cash used in operating activities                         (512)           (129)

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
  Proceeds from sale of investment in Local Limited
   Partnership                                                        1,504              --

CASH FLOWS USED IN FINANCING ACTIVITIES:
  Distribution to partners                                             (500)             --

Net increase (decrease) in cash and cash equivalents                    492            (129)
Cash and cash equivalents, beginning of year                             11             140

Cash and cash equivalents, end of year                               $ 503            $ 11


                  See Accompanying Notes to Financial Statements.
</TABLE>

<PAGE>

                        REAL ESTATE ASSOCIATES LIMITED II
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


Note 1 - Organization and Summary of Significant Accounting Policies

Organization

Real  Estate  Associates  Limited  II (the  Partnership)  was  formed  under the
California  Limited  Partnership  Act on December 4, 1979. The  Partnership  was
formed to invest in other limited  partnerships  which own and operate primarily
federal,  state or  local  government-assisted  housing  projects.  The  general
partners are National Partnership  Investments  Associates ("NAPIA"),  a limited
partnership,   and  National  Partnership  Investments  Corp.  ("NAPICO"),   the
Corporate  General  Partner.  NAPIA  is a  California  limited  partnership  and
consists of Messrs.  Nicholas G. Ciriello, an unrelated  individual,  as general
partner and Charles H.  Boxenbaum and Leonard  Crosby as limited  partners.  The
business of the Partnership is conducted primarily by NAPICO.

On December 3, 2001,  Casden Properties Inc. entered into a merger agreement and
certain other  transaction  documents with  Apartment  Investment and Management
Company, a publicly traded real estate investment  trust("AIMCO") and certain of
its  subsidiaries,  pursuant to which, on March 11, 2002,  AIMCO acquired Casden
Properties  Inc. and its  subsidiaries,  including  100% of the stock of NAPICO.
Prior to March 11, 2002, Casden Properties Inc. owned a 95.25% economic interest
in NAPICO, with the balance owned by Casden Investment Corporation ("CIC"). CIC,
which is wholly owned by Alan I. Casden, owned 95% of the voting common stock of
NAPICO prior to March 11, 2002.

The general  partners share a one percent  interest in the profits and losses of
the Partnership. The limited partners share the remaining 99 percent interest in
proportion to their respective investments.

The  Partnership  shall be  dissolved  only upon the  expiration  of 52 complete
calendar  years  (December  31,  2031)  from  the date of the  formation  of the
Partnership  or the occurrence of various other events as specified in the terms
of the Partnership agreement.

Upon total or partial  liquidation  of the  Partnership  or the  disposition  or
partial  disposition of a project or project  interest and  distribution  of the
proceeds,  the  general  partners  will  be  entitled  to a  liquidation  fee as
stipulated  in the  Partnership  agreement.  The  limited  partners  will have a
priority return equal to their invested  capital  attributable to the project(s)
or project interest(s) sold and shall receive from the sale of the project(s) or
project  interest(s) an amount sufficient to pay state and federal income taxes,
if any,  calculated  at the maximum rate then in effect.  The general  partners'
liquidation fee may accrue but shall not be paid until the limited partners have
received distributions equal to 100 percent of their capital contributions.

Basis of Presentation

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  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.

Method of Accounting for Investments in Limited Partnerships

The investments in limited  partnerships are accounted for on the equity method.
Acquisition,  selection  and  other  costs  related  to the  acquisition  of the
projects  were  capitalized  as part of the  investment  account  and are  being
amortized by the straight line method over the estimated lives of the underlying
assets, which is generally 30 years.

Net Income (Loss) Per Limited Partnership Interest

Net income (loss) per limited partnership  interest was computed by dividing the
limited  partners'  share  of  net  income  (loss)  by  the  number  of  limited
partnership  interests outstanding at the end of the year. The number of limited
partnership interests was 10,652 for 2003 and 10,656 for 2002.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in bank accounts.  At certain
times,  the amount of cash  deposited  at a bank may exceed the limit on insured
deposits.  Cash balances  included  approximately  $503,000 at December 31, 2003
that are maintained by an affiliated  management company on behalf of affiliated
entities in a cash concentration account.

Impairment of Long-Lived Assets

The  Partnership  reviews its  investments in long-lived  assets to determine if
there  has  been  any  permanent   impairment  whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable.  If the sum of the  expected  future  cash  flows is less  than the
carrying amount of the assets, the Partnership recognizes an impairment loss. No
impairment  losses were recognized  during the years ended December 31, 2003 and
2002.

Segment Reporting

Statement of Financial  Accounting Standards ("SFAS") No. 131, "Disclosure about
Segments of an Enterprise and Related Information" established standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information about operating segments in interim financial reports.  It
also established  standards for related disclosures about products and services,
geographic  areas  and  major  customers.  As  defined  in  SFAS  No.  131,  the
Partnership has only one reportable segment.

Fair Value of Financial Instruments

SFAS No.  107,  "Disclosures  About Fair  Value of  Financial  Instruments",  as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair  Value  of  Financial  Instruments",  requires  disclosure  of  fair  value
information  about  financial  instruments,  whether  or not  recognized  in the
balance sheet, when it is practicable to estimate that value and excessive costs
would not be incurred.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the carrying  amount of its financial  instruments  approximate  their fair
value due to the short-term maturity of these instruments.

Recent Accounting Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46 ("FIN 46"),  Consolidation of Variable Interest Entities.
FIN 46 requires the  consolidation of entities in which an enterprise  absorbs a
majority of the entity's  expected  losses,  receives a majority of the entity's
expected  residual  returns,  or both, as a result of ownership,  contractual or
other  financial  interests  in the  entity.  Prior to the  issuance  of FIN 46,
entities were generally  consolidated by an enterprise when it had a controlling
financial  interest  through  ownership  of a majority  voting  interest  in the
entity.  FIN 46 applied  immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003,  FIN 46 will  apply to  financial  statements  for  periods  ending  after
December 15, 2004.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities under the provisions of FIN 46. The  Partnership has not yet determined
the anticipated  impact of adopting FIN 46 for its  partnership  agreements that
existed as of January 31, 2003. However, FIN 46 may require the consolidation of
the  assets,   liabilities  and  operations  of  certain  of  the  Partnership's
unconsolidated  partnership  investments.  Although  the  Partnership  does  not
believe  the full  adoption  of FIN 46 will  have an impact  on cash  flow,  the
Partnership cannot make any definitive  conclusion on the impact on net earnings
until it completes its evaluation,  including an evaluation of the Partnership's
maximum exposure to loss.

In May 2003,  the FASB issued SFAS 150, which  establishes  standards for how an
issuer   classifies   and   measures   certain   financial    instruments   with
characteristics  of both  liabilities and equity.  The  requirements of SFAS 150
apply  to  the   classification   and  measurement  of  freestanding   financial
instruments.  SFAS 150 is effective  for financial  instruments  entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim period  beginning after June 15, 2003. The Partnership has adopted
SFAS 150 as of July 1, 2003.  Additionally,  in September  2003,  the FASB staff
indicated  that  SFAS 150  also  applies  to the  non-controlling  interests  in
consolidated  finite life partnerships.  However,  on October 29, 2003, the FASB
indefinitely  deferred the provisions of SFAS 150 for finite life  partnerships.
The  adoption  of SFAS 150 did not have a material  impact on the  Partnership's
results of operations taken as a whole.

Note 2 - Investments in Local Limited Partnerships

As of December 31, 2003, the Partnership holds limited partnership  interests in
twelve limited partnerships ("Local Limited  Partnerships").  As of December 31,
2003, all of the Local Limited  Partnerships  own  residential low income rental
projects consisting of 789 apartment units. The mortgage loans of these projects
are payable to or insured by various governmental  agencies.  On April 29, 2003,
Westward Ho Associates sold its investment property, consisting of 290 units, to
an affiliate of its third party general partner for  approximately  $12,362,000.
During the year ended December 31, 2003, the  Partnership  received  proceeds of
approximately  $1,504,000  for its 94% interest in Westward Ho Associates  after
the  repayment  of the  mortgage  encumbering  the  investment  property and the
payment of other liabilities. The Partnership used approximately $478,000 of the
proceeds to pay current and accrued  management fees and expense  reimbursements
owed  to  the  Corporate  General  Partner  (see  "Note  3 -  Transactions  with
Affiliated Parties").  In addition,  during the year ended December 31, 2003 the
Partnership distributed $500,000 to the limited partners of the Partnership.

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investments  in the Local  Limited  Partnerships  using the equity  method.  The
Partnership  is allocated  profits and losses of the Local Limited  Partnerships
based  upon  its  respective   ownership   percentage  (between  95%  and  99%).
Distributions  of surplus cash from  operations  from most of the Local  Limited
Partnerships  are  restricted  by the  Local  Limited  Partnerships'  Regulatory
Agreements  with the United States  Department of Housing and Urban  Development
("HUD")  and/or are  restricted  by the terms of the mortgages  encumbering  the
Projects. These restrictions limit the distribution to a portion, generally less
than 10%, of the initial invested capital.  The excess surplus cash is deposited
into a residual  receipts  reserve,  of which the  ultimate  realization  by the
Partnership is uncertain as HUD  frequently  retains it upon sale or dissolution
of the Local  Limited  Partnership.  The  Partnership  is allocated  profits and
losses and receives distributions from refinancings and sales in accordance with
the Local Limited Partnerships' partnership agreements. These agreements usually
limit the Partnership's  distributions to an amount  substantially less than its
ownership percentage in the Local Limited Partnership.

The individual  investments are carried at cost plus the Partnership's  share of
the Local  Limited  Partnership's  profits less the  Partnership's  share of the
Local Limited  Partnership's  losses,  distributions and impairment charges. See
"Note 1 -  Organization  and Summary of Significant  Accounting  Policies" for a
description of the impairment  policy. The Partnership is not legally liable for
the obligations of the Local Limited Partnerships and is not otherwise committed
to provide additional support to them.  Therefore,  it does not recognize losses
once its  investment  in each of the Local  Limited  Partnerships  reaches zero.
Distributions  from  the  Local  Limited  Partnerships  are  accounted  for as a
reduction of the investment  balance until the investment  balance is reduced to
zero.  When  the  investment  balance  has  been  reduced  to  zero,  subsequent
distributions  received are recognized as income in the accompanying  statements
of operations.

For those  investments  where the  Partnership  has determined that the carrying
value  of its  investments  approximates  the  estimated  fair  value  of  those
investments,  the  Partnership's  policy is to recognize equity in income of the
Local  Limited  Partnerships  only to the extent of  distributions  received and
amortization  of  acquisition  costs  from  those  Local  Limited  Partnerships.
Therefore,  the  Partnership  limits its  recognition of equity  earnings to the
amount it expects to ultimately realize.

The   Partnership  has  no  carrying  value  in  investments  in  Local  Limited
Partnerships as of December 31, 2003.

The difference  between the investment  per the  accompanying  balance sheets at
December  31,  2003,  and the  deficiency  per the Local  Limited  Partnerships'
combined financial statements is due primarily to cumulative unrecognized equity
in losses of certain limited  partnerships,  costs capitalized to the investment
account,  cumulative  distributions  recognized  as income  and  recognition  of
impairment losses.

Summaries of the condensed  combined balance sheet of the  aforementioned  Local
Limited  Partnerships  as of December  31,  2003,  and the  combined  results of
operations  for each of the two years in the period ended  December 31, 2003 are
as follows  (2002  amounts  have been  restated  to exclude the  operations  for
Westward Ho Associates, which sold its investment property on April 29, 2003):

                        Condensed Combined Balance Sheet
                        of the Local Limited Partnerships

                                                December 31, 2003
                                                 (in thousands)
Assets:
   Land                                              $ 1,310
   Buildings and improvements, net of
     accumulated depreciation of
     approximately $23,396                             8,016
   Other Assets                                        9,755
     Total Assets                                    $19,081

Liabilities and Partners' Deficit:
Liabilities:
  Mortgage Notes Payable                             $20,596
  Notes Payable                                          220
  Other Liabilities                                      862
      Total Liabilities                               21,678

Partners' Deficit                                     (2,597)
      Total Liabilities & Partners' Deficit          $19,081

                    Condensed Combined Results of Operations
                        of the Local Limited Partnerships

                                                          December 31,
                                                     2003              2002
                                                         (in thousands)
Revenues:
  Rental income                                     $ 6,533           $ 6,575
  Other income                                          526               594
     Total revenues                                   7,059             7,169

Expenses:
  Operating                                           4,010             3,841
  Financial                                           1,778             1,782
  Depreciation and amortization                       1,031               992
     Total expenses                                   6,819             6,615

Net income from continuing operations                $ 240             $ 554

Under recently adopted law and policy,  the United States  Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment  ("HAP")  Contracts  on a long  term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market  rentals  instead of above market  rentals,  which may not be the case
under existing HAP  Contracts.  The payments under the renewed HAP Contracts may
not be in an amount that would provide  sufficient cash flow to permit owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and  Affordability  Act of 1997 ("MAHRAA")  provides for
the  restructuring  of  mortgage  loans  insured  by the  FHA  with  respect  to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the Local Limited  Partnerships  in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

Note 3 - Transactions with Affiliated Parties

Under the terms of the Restated  Certificate and Agreement of Limited  Partners,
the  Partnership  is liable to NAPICO for an annual  management fee equal to 0.4
percent of the original  invested assets of the limited  partnerships.  Invested
assets are defined as the costs of acquiring  project  interests,  including the
proportionate  amount  of  the  mortgage  loans  related  to  the  Partnership's
interests in the capital  accounts of the respective  partnerships.  For both of
the years ended December 31, 2003 and 2002, the fee was approximately $176,000.

The Partnership  reimburses  NAPICO for certain  expenses.  The reimbursement to
NAPICO  was  approximately  $20,000  for both 2003 and 2002 and is  included  in
administrative expenses.

During the year ended  December  31,  2003 the  Partnership  paid  approximately
$478,000 of accrued fees and expenses owed to the Corporate General Partner. The
payments  were made  with  proceeds  from the sale of  Westward  Ho  Apartments.
Approximately $452,000 of the fees and expenses paid were for accrued management
fees and approximately $26,000 were for accrued  administrative  reimbursements.
There  were no fees  and  expenses  owed to the  Corporate  General  Partner  at
December  31,  2003.  No such fees were paid during the year ended  December 31,
2002.

AIMCO and its affiliates  owned 870 limited  partnership  units (the "Units") or
1,740 limited  partnership  interests in the Partnership  representing 16.33% of
the  outstanding  Units at December  31,  2003.  A Unit  consists of two limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional  Units in  exchange  for cash or a  combination  of cash and units in
AIMCO  Properties,  L.P., the operating  partnership  of AIMCO.  Pursuant to the
Partnership Agreement,  unitholders holding a majority of the Units are entitled
to take action with  respect to a variety of matters that  include,  but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Corporate General Partner.  Although the Corporate General Partner
owes fiduciary duties to the limited partners of the Partnership,  the Corporate
General partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the Corporate  General  Partner,  as corporate  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Corporate General Partner to AIMCO, as its sole stockholder.

Note 4 - Income Taxes

The  Partnership  is not taxed on its income.  The  partners  are taxed in their
individual  capacities based upon their  distributive share of the Partnership's
taxable  income  or  loss  and are  allowed  the  benefits  to be  derived  from
off-setting  their  distributive  share of the tax losses against taxable income
from other sources  subject to passive loss  limitations.  The taxable income or
loss differs from  amounts  included in the  statements  of  operations  because
different  methods  are used in  determining  the  losses of the  Local  Limited
Partnerships as discussed below. The tax loss is allocated to the partner groups
in accordance with Section 704(b) of the Internal  Revenue Code and therefore is
not necessarily proportionate to the interest percentage owned.

A reconciliation is as follows:

                                                  Years Ended December 31,
                                                     2003            2002
                                                       (in thousands)
Net income (loss) per financial statements         $ 1,284         $ (275)

Other                                                 (267)            176
Partnership's share of Local Limited
  Partnership                                        7,961           1,253

Income per tax return                              $ 8,978         $ 1,154
Income per limited partnership interest            $815.62         $107.22

The following is a reconciliation between the Partnership's reported amounts and
the  federal  tax basis of net assets  (liabilities)  at  December  31, 2003 (in
thousands):

      Net assets as reported                             $ 503
      Add (deduct):
       Investment in Partnerships                        (6,252)
       Deferred offering costs                            3,516
       Other                                                 41
      Net liabilities - federal tax basis               $(2,192)

Note 5 - Real Estate and Accumulated  Depreciation of Local Limited Partnerships
         in Which REAL II has Invested

<TABLE>
<CAPTION>

                        Gross Amount At Which Carried
                             At December 31, 2003
                                (in thousands)

                                       Buildings
                                          And
                                        Related
                                        Personal             Accumulated    Date of
    Description     Encumbrances Land   Property    Total    Depreciation Construction

<S>                   <C>        <C>     <C>       <C>         <C>       <C>   <C>
Azalea Court          $ 1,448    $ 62    $ 1,876   $ 1,938     $ 1,018   10/80-3/81

Branford Elderly          697      138     1,619     1,757         833    6/80-4/81

Cherrywood/Saturn
Apartments              2,764      146     2,633     2,779       2,057    9/79-4/80

Clearfield Manor        1,053       50     1,272     1,322         689   10/80-10/81

Crystal Springs           602       36       796       832         658    7/80-3/81

Lakeside
Apartments              1,806      115     1,651     1,766       1,578   10/80-6/81

Landmark Towers           613       39     1,681     1,720       1,493   4/79-10/80

Magnolia State          1,153       57     1,659     1,716       1,196    3/80-8/80

Redfern Grove
Apartments                757      246     2,812     3,058       2,282    7/80-7/81

Sugar River Mills       6,882      310     9,429     9,739       6,593    2/81-4/82

Valebrook               2,401       89     5,360     5,449       4,472    2/79-2/80

Willow Wick
Apartments                420       22       624       646         527    9/80-5/81

  Totals              $20,596   $1,310   $31,412   $32,722     $23,396
</TABLE>

Reconciliation of real estate

                                                 Years Ended December 31,
                                                   2003           2002
                                                      (in thousands)

Balance at beginning of year                     $ 48,561       $47,629
Net (disposals) improvements during the year      (15,839)          932
Balance at end of year                           $ 32,722       $48,561

Reconciliation of accumulated depreciation

                                                 Years Ended December 31,
                                                   2003           2002
                                                      (in thousands)
Balance at beginning of year                     $ 33,143       $31,844
Depreciation expense for the year                   1,031         1,299
Disposals for the year                            (10,788)           --
Balance at end of year                           $ 23,396       $33,143

Note 6 - Contingencies

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interest  in Real  Estate  Associates  Limited  III (an  affiliated
partnership in which National  Partnership  Investments Corp.  ("NAPICO") is the
corporate  general partner) and two investors holding an aggregate of five units
of limited  partnership  interests in Real Estate Associates Limited VI (another
affiliated  partnership  in  which  NAPICO  is the  corporate  general  partner)
commenced  an  action  against  the   Partnership,   NAPICO  and  certain  other
defendants. The claims included, but were not limited to, claims for breaches of
fiduciary duty to the limited  partners of certain  NAPICO-managed  partnerships
and  violations of securities  laws by making  materially  false and  misleading
statements in the consent  solicitation  statements sent to the limited partners
of such  partnerships  relating  to  approval  of the  transfer  of  partnership
interests  in  limited  partnerships,  owning  certain  of  the  properties,  to
affiliates of Casden Properties,  Inc.,  organized by an affiliate of NAPICO. On
August 4, 1999, one investor holding one unit of limited partnership interest in
Housing Programs Limited (another affiliated  partnership in which NAPICO is the
corporate  general partner)  commenced a virtually  identical action against the
Partnership,  NAPICO and certain other entities.  The second action was subsumed
in the first action, and was certified as a class action.

On April 29, 2003, the court entered  judgment  against NAPICO and certain other
defendants  in the amount of  approximately  $25.2  million  for  violations  of
securities laws and against NAPICO for approximately  $67.3 million for breaches
of fiduciary  duty, both amounts plus interest of  approximately  $25.6 million,
and for punitive damages against NAPICO in the amount of $2.6 million.

On August 11, 2003,  Apartment  Investment and Management  Company ("AIMCO") and
NAPICO  entered  into  a  Stipulation  of  Settlement   (the   "Stipulation   of
Settlement")  with the  plaintiff  class (the  "Plaintiffs")  and their  counsel
relating  to the  settlement  of the  litigation.  The  principal  terms  of the
Stipulation of Settlement include,  among other things (1) payments in both cash
($29 million) and stock ($19  million) by Alan I. Casden,  on behalf of himself,
NAPICO and other defendants,  to the Plaintiffs,  (2) guaranteed  payments in an
aggregate  amount  of $35  million  ($7  million  per  year for 5  years),  plus
interest,  by NAPICO to the  Plaintiffs,  (3) a release of claims of all parties
associated with the litigation and (4) joint agreement by the parties to request
that a new judgment be entered in the litigation to, among other things, expunge
the judgment originally entered against NAPICO and the other defendants.

In connection with the Stipulation of Settlement, on August 12, 2003, NAPICO and
AIMCO executed a Settlement  Agreement  (the  "Settlement  Agreement")  with the
prior  shareholders  of  Casden  Properties,  Inc.  The  principal  terms of the
Settlement  Agreement  include,   among  other  things,  that  (1)  NAPICO  will
voluntarily  discontinue  the action it  commenced  on May 13, 2003  against the
former  shareholders  of Casden  Properties,  Inc. and other  indemnitors in the
Casden  Merger,  (2) Alan I. Casden and certain  related  entities  will resolve
certain  pending  claims for  indemnification  made by  NAPICO,  AIMCO and their
affiliates,  (3) AIMCO or an  affiliate  will  provide  $25  million  of the $29
million in cash that Alan I. Casden is obligated to provide under the Stipulaton
of Settlement in exchange for 531,915 shares of AIMCO Class A Common Stock owned
by The Casden Company,  and (4) The Casden Company will promise to pay to NAPICO
an  aggregate  amount of $35 million  ($7  million  per year for 5 years),  plus
interest,  on a secured,  nonrecourse  basis.  The Casden Company can prepay its
obligation  set forth in item (4) above in shares of AIMCO Class A Common  Stock
having a value based on the greater of $47 per share or the market value of such
shares at the time of payment.

On December 30, 2003,  the  Stipulation of Settlement  with the plaintiff  class
(the  "Plaintiffs")  and their counsel  relating to the settlement of litigation
against the Registrant,  National Partnership  Investments Corp.  ("NAPICO") and
certain  other  defendants  became  effective in accordance  with its terms.  In
addition,  on  December  30,  2003,  the  Settlement  Agreement  with the  prior
shareholders of Casden  Properties,  Inc.,  NAPICO and Apartment  Investment and
Management Company ("AIMCO") also closed in accordance with its terms.

In addition to the litigation  discussed above, the Corporate General Partner is
involved in various other  lawsuits  arising from  transactions  in the ordinary
course of  business.  In the opinion of  management  and the  Corporate  General
Partner,   the  claims  will  not  result  in  any  material  liability  to  the
Partnership.

Note 7 - Abandonment of Limited Partnership Interests

During 2003 and 2002, the number of limited partnership interests decreased by 4
and  37  interests,  respectively,  due to  limited  partners  abandoning  their
interests. In abandoning his or her Limited Partnership  Interest(s),  a limited
partner relinquishes all right, title, and interest in the partnership as of the
date of abandonment.  However, the limited partner is allocated his or her share
of net income or loss for that year. The income or loss per limited  partnership
interest in the accompanying statements of operations is calculated based on the
number of interests outstanding at the end of the year.

ITEM 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosures

None.

ITEM 8A.    Controls and Procedures

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Corporate  General Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer and  principal  financial  officer of the  Corporate  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fourth quarter of 2003 that have materially  affected,  or are reasonably likely
to  materially  affect,  the  Partnership's   internal  control  over  financial
reporting.

                                    PART III

ITEM 9.     Directors and Executive Officers of the Registrant

Real Estate Associates Limited II (the "Partnership" or the "Registrant") has no
directors  or officers.  The general  partner  responsible  for  conducting  the
business  of  the  Partnership  is  National  Partnership   Investments  Corp  a
California Corporation ("NAPICO" or the "Corporate General Partner").

The names and ages of, as well as the positions and offices held by, the present
directors  and officers of NAPICO are set forth  below:  The  Corporate  General
Partner manages and controls  substantially all of the Partnership's affairs and
has general  responsibility  and ultimate authority in all matters affecting its
business.  There are no family  relationships  between or among any directors or
officers.

Peter K. Kompaniez              59    Director
David R. Robertson              38    President, Chief Executive Officer
                                        and Director
Charles McKinney                52    Senior Vice President and Director
                                        of Asset Management
Jeffrey H. Sussman              38    Senior Vice President, General
                                        Counsel and Secretary
Brian H. Shuman                 41    Senior Vice President and Chief
                                        Financial Officer

Peter K.  Kompaniez  has been Director of the  Corporate  General  Partner since
April 1, 2002. Mr. Kompaniez has been Vice Chairman of the Board of Directors of
AIMCO since July 1994 and was appointed  President in July 1997.  Mr.  Kompaniez
has also  served as Chief  Operating  Officer of NHP  Incorporated  after it was
acquired by AIMCO in  December  1997.  Effective  April 1, 2004,  Mr.  Kompaniez
resigned as  President  of AIMCO.  Mr.  Kompaniez  will  continue in his role as
Director of the Corporate General Partner and Vice Chairman of AIMCO's Board and
will serve AIMCO on a variety of special and  ongoing  projects in an  operating
role.

David R. Robertson has been President, Chief Executive Officer and a Director of
the Corporate  General  Partner since  October 2002.  Mr.  Robertson has been an
Executive  Vice  President  of AIMCO  since  February  2002,  and was  appointed
President and Chief  Executive  Officer of AIMCO  Capital in October  2002.  Mr.
Robertson  is  responsible  for  property   operations,   asset  management  and
transaction   activities   within  AIMCO   Capital's   portfolio  of  affordable
properties,  and for  redevelopment  and  construction  activities  for both the
conventional  and  affordable  property  portfolios.  Since  February  1996, Mr.
Robertson has been Chairman and Chief Executive Officer of Robeks Corporation, a
privately held chain of specialty food stores.

Charles McKinney has been Senior Vice President and Director of Asset Management
of the  Corporate  General  Partner and AIMCO Capital since January 2003 and has
overall responsibility for monitoring the construction, lease-up, operations and
compliance  issues for all  assets  constituting  a part of  AIMCO's  affordable
portfolio.  Mr.  McKinney  joined AIMCO as Vice President of Transactions in the
Affordable  Group  in  June  2002  and  had   responsibility   for  value  added
dispositions  of  affordable  properties  in the  Western  portion of the United
States.  From  September  2000  through  May 2002,  Mr.  McKinney  was  Managing
Underwriter for Real Estate Recovery, Inc. where he was responsible for the real
estate loan underwriting and loan review for the company's  clients.  From March
1998 through August 2000, Mr.  McKinney was the Executive  Managing  Director of
American Capital Advisors, Inc. an investment banking company.

Jeffrey H. Sussman has been Senior Vice President, General Counsel and Secretary
of the Corporate  General  Partner since joining  NAPICO in 1998. Mr. Sussman is
responsible for the legal affairs of NAPICO and its affiliates. Prior to joining
NAPICO in 1998, Mr. Sussman was an associate with the law firm of Rus, Miliband,
Williams & Smith in Irvine,  California.  His  practice  emphasized  real estate
finance  and  insolvency  law and  included  the  representation  of  borrowers,
lenders, and court-appointed  trustees in matters involving apartment complexes,
retail centers and hotels.

Brian H. Shuman has been Senior Vice  President and Chief  Financial  Officer of
the  Corporate  General  Partner  since  joining  NAPICO in 2000.  Mr. Shuman is
responsible  for  the  financial  affairs  of  NAPICO  as  well  as the  limited
partnership  sponsored by it. From 1996 until joining NAPICO in August 2000, Mr.
Shuman was Vice President - Finance for Preferred  Health  Management  Inc., the
largest  provider  of  worker   compensation   diagnostic  imaging  services  in
California formed in 1996, and was responsible for establishing and managing the
accounting, billing, collection, treasury and financial reporting departments.

The board of directors of the Corporate General Partner does not have a separate
audit  committee.  As such,  the board of  directors  of the  Corporate  General
Partner fulfills the functions of an audit committee. The board of directors has
determined  that Brian H. Shuman meets the  requirement  of an "audit  committee
financial expert".

The directors and officers of the Corporate  General Partner with authority over
the Partnership are all employees of subsidiaries of AIMCO.  AIMCO has adopted a
code of ethics that applies to such  directors  and  officers  that is posted on
AIMCO's  website  (www.AIMCO.com).   AIMCO's  website  is  not  incorporated  by
reference to this filing.

ITEM 10.    Executive Compensation

None of the directors and officers of the Corporate General Partner received any
remuneration from the Partnership during the year ended December 31, 2003.

ITEM 11.    Security Ownership of Certain Beneficial Owners and Management

(a)   Security Ownership of Certain Beneficial Owners

The General Partners own all of the outstanding general partnership interests of
REAL II.  Except as noted below as of December 31, 2003,  no person or entity is
known to the  Partnership  to own  beneficially  in excess  of 5 percent  of the
outstanding limited partnership interests.

                                         Number of Limited
      Entity                           Partnership Interests     Percentage
      AIMCO Properties, LP
        (an affiliate of AIMCO)               1,740.0              16.33%

AIMCO Properties,  LP is indirectly ultimately controlled by AIMCO. Its business
address is Stanford  Place 3, 4582 S. Ulster St.  Parkway,  Suite 1100,  Denver,
Colorado 80237.

(b)   None of the  directors or officers of the  Corporate  General  Partner own
      directly or beneficially any limited partnership interests in REAL II.

ITEM 12.    Certain Relationships and Related Transactions

Under the terms of the Restated  Certificate and Agreement of Limited  Partners,
the  Partnership  is liable to NAPICO for an annual  management fee equal to 0.4
percent of the original  invested assets of the limited  partnerships.  Invested
assets are defined as the costs of acquiring  project  interests,  including the
proportionate  amount  of  the  mortgage  loans  related  to  the  Partnership's
interests in the capital  accounts of the respective  partnerships.  For both of
the years ended December 31, 2003 and 2002, the fee was approximately $176,000.

The Partnership  reimburses  NAPICO for certain  expenses.  The reimbursement to
NAPICO  was  approximately  $20,000  for both 2003 and 2002 and is  included  in
administrative expenses.

During the year ended  December  31,  2003 the  Partnership  paid  approximately
$478,000 of accrued fees and expenses owed to the Corporate General Partner. The
payments  were made  with  proceeds  from the sale of  Westward  Ho  Apartments.
Approximately $452,000 of the fees and expenses paid were for accrued management
fees and approximately $26,000 were for accrued  administrative  reimbursements.
There  were no fees  and  expenses  owed to the  Corporate  General  Partner  at
December  31,  2003.  No such fees were paid during the year ended  December 31,
2002.

AIMCO and its affiliates  owned 870 limited  partnership  units (the "Units") or
1,740 limited  partnership  interests in the Partnership  representing 16.33% of
the  outstanding  Units at December  31,  2003.  A Unit  consists of two limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional  Units in  exchange  for cash or a  combination  of cash and units in
AIMCO  Properties,  L.P., the operating  partnership  of AIMCO.  Pursuant to the
Partnership Agreement,  unitholders holding a majority of the Units are entitled
to take action with  respect to a variety of matters that  include,  but are not
limited to, voting on certain amendments to the Partnership Agreement and voting
to remove the Corporate General Partner.  Although the Corporate General Partner
owes fiduciary duties to the limited partners of the Partnership,  the Corporate
General partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the Corporate  General  Partner,  as corporate  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Corporate General Partner to AIMCO, as its sole stockholder.

ITEM 13.    Exhibits and Reports on Form 8-K

(a)   Exhibits:

      Exhibit 3, Articles of  incorporation  and bylaws:  The  Registrant is not
      incorporated.  The Partnership  Agreement was filed with Form S-11 #266171
      which is hereby incorporated by reference.

      Exhibit  10,  Material  contracts:  The  Registrant  is not  party  to any
      material contracts,  other than the Restated  Certificate and Agreement of
      Limited  Partnership dated December 4, 1979, and the twenty-one  contracts
      representing the Partnerships  investment in Local Limited Partnerships as
      previously filed at the Securities and Exchange Commission,  File #266171,
      which is hereby incorporated by reference.

      Exhibit  31.1,  Certification  of equivalent  of Chief  Executive  Officer
      pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),  as Adopted
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      Exhibit  31.2,  Certification  of equivalent  of Chief  Financial  Officer
      pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a),  as Adopted
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      Exhibit 32.1, Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

      Exhibit 99.1, Independent Auditors Report for Azalea Court Investment
      Group, Ltd

      Exhibit 99.2, Independent Auditors Report for Branford Development
      Associates

      Exhibit 99.3, Independent Auditors Report for Cherrywood Associates

      Exhibit 99.4, Independent Auditors Report for Crystal Springs Associates,
      Ltd

      Exhibit 99.5, Independent Auditors Report for Lakeside Apartments

      Exhibit 99.6, Independent Auditors Report for Landmark Associates

      Exhibit 99.7, Independent Auditors Report for Gulfport Associates, Ltd

      Exhibit 99.8, Independent Auditors Report for Sugar River Mills
      Associates, L.P.

      Exhibit 99.9, Independent Auditors Report for Valebrook Associates

      Exhibit 99.10, Independent Auditors Report for Alabama Properties, Ltd. II

      Exhibit 99.11, Independent Auditors Report for Clearfield Manor
      Associates, Ltd.

(b) Reports on Form 8-K:

      Current  Report on Form 8-K dated  November  24,  2003 and filed  with the
      Securities  and Exchange  Commission on November 26, 2003  disclosing  the
      Stipulation of Settlement relating to the settlement of litigation against
      NAPICO as the Corporate General Partner of the Partnership.

      Current  Report on Form 8-K dated  December  30,  2003 and filed  with the
      Securities  and  Exchange  Commission  on January 2, 2004  disclosing  the
      Stipulation of Settlement relating to the settlement of litigation against
      NAPICO as the Corporate General Partner of the Partnership.


ITEM 14.    Principal Accounting Fees and Services

The Corporate  General Partner has reappointed  Ernst & Young LLP as independent
auditors to audit the financial statements of the Partnership for 2004.

Audit  Fees.  The  Partnership   paid  to  Ernst  &  Young  LLP  audit  fees  of
approximately $44,000 for 2003 and approximately $28,000 for 2002.

Tax Fees.  The  Partnership  paid to Ernst & Young LLP fees for tax services for
2003 and 2002 of approximately $20,000 for both years.

<PAGE>

                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                    REAL ESTATE ASSOCIATES LIMITED II
                                    (a California limited partnership)


                                    By:   National Partnership Investments Corp.
                                          Corporate General Partner


                                    By:   /s/David R. Robertson
                                          David R. Robertson
                                          President, Chief Executive Officer
                                          and Director


                                    By:   /s/Brian H. Shuman
                                          Brian H. Shuman
                                          Senior Vice President and
                                          Chief Financial Officer


                                    Date: April 23, 2004


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.


/s/Peter K. Kompaniez         Director                      Date: April 23, 2004
Peter K. Kompaniez


/s/David R. Robertson         President, Chief Executive    Date: April 23, 2004
David R. Robertson            Officer and Director


/s/Brian H. Shuman            Senior Vice President and     Date: April 23, 2004
Brian H. Shuman               Chief Financial Officer

<PAGE>


                        REAL ESTATE ASSOCIATES LIMITED II
                                  EXHIBIT INDEX


Exhibit     Description of Exhibit

 3          Articles of incorporation and  bylaws:   The   Registrant   is  not
            incorporated. The Partnership Agreement was filed  with  Form  S-11
            #266171 which is hereby incorporated by reference.

10          Material  contracts:  The  Registrant  is not party to any  material
            contracts,  other than the  Restated  Certificate  and  Agreement of
            Limited  Partnership  dated  December  4, 1979,  and the  twenty-one
            contracts representing the Partnership's investment in Local Limited
            Partnerships  as  previously  filed at the  Securities  and Exchange
            Commission, File #266171, which is hereby incorporated by reference.

31.1        Certification  of equivalent of Chief Executive  Officer pursuant to
            Securities  Exchange  Act  Rules  13a-14(a)/15d-14(a),   as  Adopted
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2        Certification  of equivalent of Chief Financial  Officer pursuant to
            Securities  Exchange  Act  Rules  13a-14(a)/15d-14(a),   as  Adopted
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1        Certification  Pursuant  to  18  U.S.C.  Section  1350,  as  Adopted
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1        Independent Auditors Report for Azalea Court Investment Group, Ltd

99.2        Independent Auditors Report for Branford Development Associates

99.3        Independent Auditors Report for Cherrywood Associates

99.4        Independent Auditors Report for Crystal Springs Associates, Ltd

99.5        Independent Auditors Report for Lakeside Apartments

99.6        Independent Auditors Report for Landmark Associates

99.7        Independent Auditors Report for Gulfport Associates, Ltd

99.8        Independent Auditors Report for Sugar River Mills Associates, L.P.

99.9        Independent Auditors Report for Valebrook Associates

99.10       Independent Auditors Report for Alabama Properties, Ltd. II

99.11       Independent Auditors Report for Clearfield Manor Associates, Ltd.

<PAGE>
Exhibit 31.1

                                  CERTIFICATION

I, David R. Robertson, certify that:

1.    I have  reviewed  this  annual  report  on  Form  10-KSB  of  Real  Estate
      Associates Limited II;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  April 23, 2004

                                    /s/David R. Robertson
                                    David R. Robertson
                                    President  and Chief  Executive  Officer  of
                                    National       Partnership       Investments
                                    Corporation,   equivalent   of   the   chief
                                    executive officer of the Partnership
<PAGE>
Exhibit 31.2

                                  CERTIFICATION

I, Brian H. Shuman, certify that:

1.    I have  reviewed  this  annual  report  on  Form  10-KSB  of  Real  Estate
      Associates Limited II;

2.    Based on my knowledge,  this report does not contain any untrue  statement
      of a material fact or omit to state a material fact  necessary to make the
      statements made, in light of the circumstances under which such statements
      were made,  not  misleading  with  respect  to the period  covered by this
      report;

3.    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  report,  fairly  present  in all  material
      respects the financial condition,  results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The  registrant's  other  certifying  officer(s) and I are responsible for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules  13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such  disclosure  controls and  procedures,  or caused such
            disclosure   controls  and  procedures  to  be  designed  under  our
            supervision,  to ensure that  material  information  relating to the
            registrant,  including its consolidated subsidiaries,  is made known
            to us by others  within  those  entities,  particularly  during  the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying  officer(s) and I have disclosed,  based
      on  our  most  recent   evaluation  of  internal  control  over  financial
      reporting,  to the  registrant's  auditors and the audit  committee of the
      registrant's  board of directors  (or persons  performing  the  equivalent
      functions):

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.

Date:  April 23, 2004

                                /s/Brian H. Shuman
                                Brian H. Shuman
                                Senior  Vice   President  and  Chief   Financial
                                Officer  of  National  Partnership   Investments
                                Corporation,  equivalent of the chief  financial
                                officer of the Partnership
<PAGE>

Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002



In connection  with the Annual  Report on Form 10-KSB of Real Estate  Associates
Limited II (the  "Partnership"),  for the year ended  December 31, 2003 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
David R.  Robertson,  as the  equivalent of the chief  executive  officer of the
Partnership,  and Brian H.  Shuman,  as the  equivalent  of the chief  financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/David R. Robertson
                                    Name:  David R. Robertson
                                    Date:  April 23, 2004


                                           /s/Brian H. Shuman
                                    Name:  Brian H. Shuman
                                    Date:  April 23, 2004


This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.


<PAGE>


Exhibit 99.1
                          INDEPENDENT AUDITOR'S REPORT

To the Partners
Azalea Court Investment Group, Ltd.
Theodore, Alabama

We have  audited the  accompanying  balance  sheets of Azalea  Court  Investment
Group,  Ltd., a limited  partnership,  RHS Project No.:  01-049-630805993  as of
December 31, 2003 and 2002, and the related statements of operations,  partners'
deficit and cash flows for the years then ended. These financial  statements are
the  responsibility of the partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Azalea Court Investment Group,
Ltd.,  RHS Project No.:  01-049-630805993  as of December 31, 2003 and 2002, and
the  results  of its  operations  and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 24, 2004 on our  consideration of Azalea Court  Investment  Group,
Ltd.'s  internal  control  over  financial  reporting  and on our  tests  of its
compliance with certain  provisions of laws and  regulations.  That report is an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.


/s/Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 24, 2004



<PAGE>


Exhibit 99.2
                          INDEPENDENT AUDITOR'S REPORT

To the Partners
Branford Development Associates
Branford, Connecticut

We  have  audited  the  accompanying  balance  sheets  of  Branford  Development
Associates (A Limited Partnership),  Project No. 78-055M,(the "Project"),  as of
December  31,  2003,  2002 and 2001,  and the related  statements  of income and
partner's capital,  changes in partners'  capital,  and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of the Project at December 31,
2003 and 2002, and the results of its operations,  changes in partners' capital,
and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government  Auditing  Standards,  and the Consolidated  Audit
Guide for Audits of HUD Programs  issued by the U.S.  Department  of Housing and
Urban  Development,  we have also issued a report dated  January 14, 2003 on our
consideration  of the Project's  internal  control and reports dated January 14,
2003 on its  compliance  with  specific  requirements  applicable  to major  HUD
programs,   specific   requirements   applicable   to   non-major   HUD  program
transactions,   and  specific  requirements   applicable  to  Fair  Housing  and
Non-Discrimination.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial  statements taken as a whole. The  supplementary  data included in the
report  (shown  on  pages 11  through  17) are  presented  for the  purposes  of
additional  analysis  and  are  not a  required  part  of  the  basic  financial
statements of the Project.  Such  information has been subjected to the auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.


/s/Kimball, Paris & Gugliotti, P.C.
Middlebury, Connecticut
January 15, 2004


<PAGE>


Exhibit 99.3

                          INDEPENDENT AUDITOR'S REPORT


January 30, 2004

To the Partners of
Cherrywood Associates:

We have audited the  accompanying  balance  sheets of  Cherrywood  Associates (a
limited  partnership)  as of  December  31,  2003  and  2002,  and  the  related
statements of  operations,  partners'  deficit and cash flows for the years then
ended.  These  financial  statements  are  the  responsibility  of  the  General
Partners.  Our  responsibility  is to  express  an  opinion  on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America 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  audits  provide  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 Cherrywood  Associates as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supporting data required
by the Idaho  Housing and Finance  Agency (IHFA) and HUD included on pages 20 to
23 is  presented  for the purpose of  additional  analysis and is not a required
part of the basic financial statements of Cherrywood Associates. This supporting
data is the  responsibility of the General  Partners.  Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 30, 2004, on our consideration of Cherrywood  Associates' internal
control and a report dated  January 30, 2004,  on its  compliance  with laws and
regulations.  Those  reports  are an  integral  part of the audit  performed  in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

/s/Leavitt, Christensen & Co., PLLC
Boise, Idaho


<PAGE>


Exhibit 99.4

                          INDEPENDENT AUDITOR'S REPORT

To the Partners
Crystal Springs Associates, Ltd.
Crystal Springs, Mississippi

We have audited the accompanying  balance sheets of Crystal Springs  Associates,
Ltd., a limited partnership,  RHS Project No.:  28-015-6308066036 as of December
31, 2003 and 2002, and the related  statements of operations,  partners' deficit
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain  reasonable  assurance  about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  the  audits  provide  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 Crystal Springs  Associates,
Ltd., RHS Project No.:  28-015-6308066036  as of December 31, 2003 and 2002, and
the  results  of its  operations  and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  29, 2003 on our  consideration  of Crystal  Springs  Associates,
Ltd.'s  internal  control  over  financial  reporting  and on our  tests  of its
compliance with certain  provisions of laws and  regulations.  That report is an
integral  part of an audit  performed in  accordance  with  Government  Auditing
Standards and should be read in conjunction  with this report in considering the
results of our audit.

/s/Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 23, 2004


<PAGE>


Exhibit 99.5

                                INDEPENDENT AUDITORS' REPORT

To the Partners
Lakeside Apartments (Partnership)
South Bend, Indiana

We  have  audited  the  accompanying   balance  sheets  of  Lakeside  Apartments
(Partnership) as of December 31, 2003, and the related  statements of changes in
partners'  deficit,  profit and loss,  and cash  flows for the year then  ended.
These  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 auditing standards  generally accepted
in the United States of America and the standards applicable to financial audits
contained in 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 from
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 the audit  provide 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 Lakeside  Apartments  as of
December 31, 2003,  and the results of its operations and its cash flows for the
year then ended in conformity with accounting  principles  generally accepted in
the United States of America.

In accordance with Government  Auditing  Standards,  we have also issued reports
dated  January  23,  2004 on our  consideration  of the  Partnership's  internal
control and on our tests of its  compliance  with  certain  provisions  of laws,
regulations,  contracts  and grants.  Those  reports are an integral  part of an
audit performed in accordance with Governmental Auditing Standards and should be
read in conjunction with this report in considering the results of our audit.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  on pages 13 through 15 is  presented  for  purposes  of  additional
analysis and is not a required  part of the basic  financial  statements  of the
Partnership. Such information has been subjected to the audit procedures applied
in the audit of the basic financial  statements  and, in our opinion,  is fairly
stated, in all material respects,  in relation to the basic financial statements
taken as a whole.

/s/Crowe, Chizek and Company LLC
South Bend, Indiana
January 23, 2004



<PAGE>


Exhibit 99.6
                                INDEPENDENT AUDITORS' REPORT

February 16, 2004

To the Partners
Landmark Associates (a limited partnership)
Weiser, Idaho

We have  audited  the  accompanying  balance  sheets of Landmark  Associates  (a
limited  partnership)  as of  December  31,  2003  and  2002,  and  the  related
statements of income,  Partners' capital (deficit), and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Landmark  Associates  as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs  (the  "Guide"),  we have also issued  resports
dated February 16, 2004 on our  consideration of Landmark  Associates (a limited
partnership's)   internal  control  structure,   its  compliance  with  specific
requirements.  Those  reports  are an  integral  part of an audit  performed  in
accordance  with  Governmental   Auditing   Standards  and  should  be  read  in
conjunction with this report in considering the results of our audit.

/s/Leavitt, Christensen & Co., PLLC
Boise, Idaho


<PAGE>


Exhibit 99.7

                                INDEPENDENT AUDITORS' REPORT

To the Partners
Gulfport Associates, Ltd.
Gulfport, Mississippi

We have audited the accompanying balance sheets of Gulfport Associates,  Ltd., a
limited partnership,  RHS Project No.:  28-024-630806037 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' deficit and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted the audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free from 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 the
audits provide 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 Gulfport Associates,  Ltd., RHS
Project No.:  28-024-630806037 as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the years  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and in our  opinion  is  fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January 31, 2004 on our  consideration  of  Gulfport  Associates,  Ltd.'s
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit  performed in  accordance  with  Government  Auditing  Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/DONALD W. CAUSEY & ASSOCIATES, P.C.
Gadsden, Alabama
January 31, 2004



<PAGE>


Exhibit 99.8

                          INDEPENDENT AUDITOR'S REPORT


To the Partners
Sugar River Mills Associates, L.P.
Braintree, MA


We have audited the  accompanying  balance sheet of Sugar River Mills Associates
Limited  Partnership,  (a  Massachusetts  limited  partnership)  HUD Project No.
024-35052 (formerly HUD Project. No. 024-35052-PM-L8),  as of December 31, 2003,
and the related  statements of operations,  partners'  equity (deficit) and cash
flows for the year then ended. These 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 auditing standards  generally accepted
in the United States of America and the standards applicable to financial audits
contained in 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 Sugar River Mills Associates,
Limited  Partnership as of December 31, 2003, and the results of its operations,
the changes in partners'  equity  (deficit) and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  February 5, 2004 on our  consideration  of Sugar  River Mills  Associates
Limited  Partnership  internal  control,  a report dated February 5, 2004 on its
compliance  with laws,  regulations,  contracts  and grants,  and reports  dated
February 5, 2004 on its compliance with specific requirements  applicable to HUD
programs. Those reports are an integral part of an audit performed in accordance
with Government  Auditing  Standards and should be read in conjunction with this
report in considering the results of our audit.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole. The additional  information included in this report
(shown on pages 15  through  20) is  presented  for the  purpose  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 basic financial  statements and, in our opinion,  is fairly stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.


/s/Ercolini & Company LLP
Boston, Massachusetts
February 5, 2004


<PAGE>


Exhibit 99.9
                                INDEPENDENT AUDITORS' REPORT

To the Partners of
Valebrook Associates

We have  audited the  accompanying  balance  sheet of  Valebrook  Associates  (A
Limited  Partnership),  as of December 31, 2003,  and the related  statements of
income, partners' equity (deficit) and cash flows for the year then ended. These
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 auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free from 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 Valebrook Associates (A Limited
Partnership)  at December 31, 2003,  and the results of its  operations  and its
cash  flows for the year then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.


/s/BDO Seidman, LLP
Boston, Massachusetts
February 10, 2004



<PAGE>


Exhibit 99.10

                          INDEPENDENT AUDITORS' REPORT


To the Partners
Alabama Properties, Ltd., II
Centre, Alabama

We have audited the accompanying balance sheets of Alabama Properties,  ltd. II,
a limited partnership,  RHS Project No. 01-010-630805991 as of December 31, 2003
and 2002, and the related  statements of operations,  partners' deficit and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller   General  of  the  United  States,  and  the  U.S.   Department  of
Agriculture,  Farmers Home Administration Audit Program. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial  statements are free of material  misstatement.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that the
audits provide 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 Alabama  Properties,  Ltd. II,
RHS  Project No.  01-010-630805991  as of  December  31, 2003 and 2002,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2003 and  2002,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information  hs been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 27, 2004 on our  consideration  of Alabama  Properties,  Ltd. II's
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations. That report is an integral part
of an audit  performed in  accordance  with  Government  Auditing  Standards and
should be read in conjunction with this report in considering the results of our
audit.

/s/Donald W. Causey & Associates, P.C.

Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 27, 2004


<PAGE>


Exhibit 99.11


                          INDEPENDENT AUDITORS' REPORT


To the Partners of
Clearfield Manor Associates, Ltd.

We have audited the accompanying  balance sheet of Clearfield Manor  Associates,
Ltd. (a Kentucky limited  partnership) as of December 31, 2003 and 2002, and the
related  statement of results of  operations,  changes in partners'  capital and
cash  flows  for the  years  then  ended.  These  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 audits in accordance with auditing standards generally accepted
in the United States of America and Government  Auditing Standards issued by the
Comptroller  General  of the United  States,  and the  provisions  of the United
States  Department  of  Agriculture,  Rural  Development  audit  program.  Those
standards  require  that we plan and  perform  the  audits to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits 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 Clearfield Manor Associates,
Ltd. as of December 31, 2003 and 2002, and the results of its operations and its
changes in cash flows for the years then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

In accordance with Government Auditing  Standards,  we have also issued a report
dated March 5, 2004, on our consideration of Clearfield Manor Associates, Ltd.'s
internal  control over  financial  reporting  and tests of its  compliance  with
certain  provisions of laws and regulations.  That report is an integral part of
an audit performed in accordance with Government  Auditing  Standards and should
be read in conjunction with this report in considering the results of our audit.


/s/Morgan-Franklin, LLC
March 5, 2004
West Liberty, Kentucky