<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the Fiscal Year Ended DECEMBER 31, 2001

                             Commission File Number
                                     0-09782
                        REAL ESTATE ASSOCIATES LIMITED II
                        A CALIFORNIA LIMITED PARTNERSHIP
                  I.R.S. Employer Identification No. 95-3547609

         9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
        Registrant's Telephone Number, Including Area Code (310) 278-2191
      Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:

                                      NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed with the Commission by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

                                Yes   X    No

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

ITEM 1. 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.

The general partners of REAL II are National Partnership Investments Corp.
("NAPICO"), a California Corporation (the "Corporate General Partner") 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 as limited partner. The
business of REAL II is conducted primarily by NAPICO.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.

On December 3, 2001, Casden Properties Inc., entered into a merger agreement and
certain other transaction documents with Apartment Investment and Management
Company, a Maryland corporation ("AIMCO") and certain of its subsidiaries,
pursuant to which, on March 11, 2002, AIMCO acquired Casden Properties Inc. and
its subsidiaries, including NAPICO.

REAL II holds limited partnership interests in 14 local limited partnerships as
of December 31, 2001, after selling its interest in 6 local limited
partnerships, in December 1998, to the Operating Partnership. All of these local
partnership, except for one, 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 remaining partnership owns a limited
partnership interest in Casden Properties Operating Partnership, L.P.

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
<PAGE>
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.

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.
<PAGE>
During 2001, the projects in which REAL II had invested were substantially
rented. The following is a schedule of the status as of December 31, 2001, of
the projects owned by local limited partnerships in which REAL II is a limited
partner.

            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                Units Authorized
                                                   For Rental
                                                Assistance Under
                                                  Section 8 or
                                                   Other Rent                        Percentage of
                                     No. of        Supplement           Units         Total Units
Name and Location                    Units           Program          Occupied         Occupied
-----------------                    -----      ---------------       --------         ---------
<S>                                  <C>        <C>                   <C>            <C>
Azalea Court                           48                  0/0             47             98%
Theodore, AL

Branford Elderly                       38                 38/0             38            100%
Branford, CT

Cherrywood/Saturn Apts.                78                 78/0             74             95%
Twin Falls/Idaho Falls, ID

Clearfield Manor                       40                 40/0             39             97%
Clearfield, KY

Crystal Springs                        28                 0/28             28            100%
Crystal Springs, MS

Lakeside Apts.                         48                 48/0             47             98%
Mishawaka, IN

Landmark Towers                        40                 40/0             40            100%
Nampa, ID

Magnolia State                         60                 0/24             59             98%
Gulfport, MS

New Haven Plaza (owns a
limited partnership interest
in Casden Properties Operating
Partnership, L.P.)

Redfern Grove Apts.                    72                  72/0            72            100%
E. Providence, RI

Sugar River Mills                     162                 162/0           160             99%
Claremont, NH
</TABLE>
<PAGE>
            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2001
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                Units Authorized
                                                   For Rental
                                                Assistance Under
                                                  Section 8 or
                                                   Other Rent                        Percentage of
                                     No. of        Supplement           Units         Total Units
Name and Location                    Units           Program          Occupied         Occupied
-----------------                    -----      ---------------       --------         ---------
<S>                                 <C>         <C>                   <C>            <C>
Valebrook                             151                100/0            148             98%
Lawrence, MA

Westward Ho Apts.                     290                290/0            277             96%
Phoenix, AZ

Willow Wick Apts.                      24                  0/5             14             58%
Centre, AL
                                    -----             --------         ------
TOTALS                              1,079               868/57          1,043             97%
                                    =====             ========         ======
</TABLE>
<PAGE>
ITEM 2. PROPERTIES:

The local limited partnerships in which REAL II holds interests own various
multi-family rental properties. See Item 1 for information pertaining to these
properties.


ITEM 3. LEGAL PROCEEDINGS:

CLASS ACTION

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (a partnership in
which NAPICO is a general partner) and two investors holding an aggregate of
five units of limited partnership interest in Real Estate Associates Limited VI
(another partnership in which Company is a general partner) commenced an action
in the United States District Court for the Central District of California on
behalf of themselves and all other similarly situated, against the Partnership,
NAPICO and certain other affiliated entities. The complaint alleges that the
defendants breached their fiduciary duty to the limited partners of such Funds
and made materially false and misleading statements in the consent solicitation
statements that were disseminated to the limited partners of such Funds relating
to approval of the transfer of partnership interests in limited partnerships to
the Operating Partnership. The plaintiffs seek preliminary and permanent
injunction relief and other equitable relief, as well as compensatory and
punitive damages. However, plaintiffs made no effort to enjoin the transaction
from taking place. On August 4, 1999, a holder of one unit of limited
partnership interest in Housing Programs Limited (a partnership in which the
Company is a general partner) filed a lawsuit similar to the one discussed above
against added Housing Programs Limited. The second action has been subsumed in
the first action, which has been certified as a class action.

After defendants moved for summary disposition of the action, plaintiffs filed a
motion for leave to file an amended complaint. Although defendants opposed the
filing of the complaint proposed by plaintiffs, the court issued an order on
July 20, 2001 granting plaintiffs leave to amend but denying them leave to file
the complaint they proposed. Plaintiffs filed a Second, Restated, Amended and
Supplemental Complaint dated August 7, 2001 and on August 21, 2001 filed a
Corrected Second, Restated, Amended and Supplemental Complaint (CSRASC). The
CSRASC adds eight new defendants and six new counts which were not included in
prior complaints. The new counts include; (i) violations of the anti-bundling
rules of the Securities and Exchange Act of 1934, (ii) violation of the doctrine
of inherent fairness, (iii) a declaratory judgment that the certain defendants
are not entitled to indemnification under the partnership agreements, (iv)
rescission of the business combination discussed in Note 1, (v) a constructive
trust on any recovery from a separate lawsuit pending in the United States
District Court of the Middle District of Pennsylvania which was brought on
behalf of several limited partnerships which are not parties to this action; and
(vi) an accounting. Defendants made a motion to dismiss the CSRASC, which was
denied. The court found that the issues presented would be more appropriate
resolved in a motion for summary judgment or summary adjudication. Defendants
intend to make such a motion. The deadline to do so is April 1, 2002.

Defendants denied allegations in the CSRASC in their answer. The parties are in
the process of conducting discovery. The discovery deadline is February 28, 2002
and the trial is scheduled for July 16, 2002. A motion is before the court to
extend these deadlines and the hearing on that issue is scheduled for February
4, 2002. Once discovery is complete, defendants will move for summary judgement
dismissing the complaint.

The managing general partner of such NAPICO managed partnerships and the other
defendants believe that the plaintiffs' claims are without merit and intend to
contest the actions vigorously.
<PAGE>
NEW HAVEN PLAZA

On December 30, 1998, the Operating Partnership acquired, for value, title to
New Haven Plaza Associates' property in Far Rockaway, New York. Thereafter,
NAPICO commenced an action for a declaratory judgment that NAPICO had the
authority to transfer the property and that the value paid by the Operating
Partnership for the property was fair. Defendants have pled counterclaims
alleging that inter alia, NAPICO was not authorized to transfer the property and
breached its fiduciary duties to the limited partners. Defendants also seek an
accounting and distributions of surplus cash. The parties are in the process of
conducting discovery.

On June 11, 2001, the court found that the defendants had no vote or control in
the Partnership. However, the court found the conveyance to be invalid because
it was not consistent with New York partnership law. The court held that the
transfer of the property in exchange for an interest in the Operating
Partnership violated the purpose of Partnership. Notwithstanding the court's
decision, defendants claim that NAPICO could not transfer the property to the
Operating Partnership without their consent. Clarification is being sought from
the court. Defendants have moved summary judgment, injunctive relieve and to
amend their complaint. NAPICO cross-moved to dismiss defendant's claim to remove
NAPICO as the general partner of the Partnership. The motions have been
submitted to the court. Oral argument on these motions was held on February 11,
2002 and the motions are presently under consideration by the court.

Management of NAPICO believes that the defendant's claims are without merit and
intend to contest the actions vigorously.

OTHER

Plaintiff, who is a limited partner in the Partnership, claims that NAPICO and
other defendants (1) have refused to provide the plaintiff with access to the
books and records of the Partnership, and (2) have breached their fiduciary
duties and the partnership agreement by failing to provide such access and by
failing to act in the best interest of the Partnership. The defendants have,
however, provided their books and records to plaintiff pursuant to a protective
order. Plaintiff has failed to quantify its purported damages. Trial is schedule
for August 13, 2002. Management of NAPICO believes that the claims are without
merit and intend to contest the actions vigorously.

The corporate general partner of the Partnership is a plaintiff in various
lawsuits and has also been named a defendant in other lawsuits arising from
transactions in the ordinary course of business. None of these suits were
related to REAL II.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests, held for investment by the Partnership, by the Operating
Partnership, together with certain amendments to the Partnership Agreement and
other disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests in 1998,
the consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.
<PAGE>
PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
        HOLDER 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. Limited Partnership Interests may be transferred only if certain
requirements are satisfied. At December 31, 2001 there were 1,580 registered
holders of units in REAL II. 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. In March 1999, the
Partnership made distributions of $4,950,000 to the limited partners and $50,000
to the general partners, using proceeds from the sale of the partnership
interests. No other distributions have been made since the inception of the
Partnership.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA:

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                                   -----------------------
                                       2001              2000              1999              1998              1997
                                       ----              ----              ----              ----              ----
<S>                                <C>               <C>               <C>               <C>               <C>
Loss from operations               $  (367,375)      $  (312,667)      $  (373,134)      $  (846,393)      $  (666,499)

Gain on Sale of Limited
   Partnership Interests                    --                --                --         4,002,592                --

Distributions from
   Limited Partnerships
   Recognized as Income                 54,376           101,059            96,547           224,996           244,281

Equity in (Loss) Income of
   Limited Partnerships
   and Amortization of
   Acquisition Costs                   (21,093)               --                --        (2,562,191)          820,899
                                   -----------       -----------       -----------       -----------       -----------
Net (Loss) Income                  $  (334,092)      $  (211,608)      $  (276,587)      $   819,004       $   398,681
                                   ===========       ===========       ===========       ===========       ===========

Net (Loss) Income per limited
   Partnership Interest            $       (31)      $       (20)      $       (26)      $        76       $        37
                                   ===========       ===========       ===========       ===========       ===========

Total assets                       $   139,881       $   343,527       $   543,027       $ 5,946,785       $ 5,095,968
                                   ===========       ===========       ===========       ===========       ===========

Investments in Limited
   Partnerships                    $        --       $        --       $        --       $        --       $ 3,493,251
                                   =========         =========         =========         =========         ===========
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS:

LIQUIDITY

The Partnership's primary sources of funds include interest income on money
market investments and certificates of deposit and distributions from local
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 sufficient to provide for distributions to the Partnership's
limited partners in any material amount. The Partnership made a cash
distribution to investors in March 1999, using proceeds from the disposition of
its investments in certain limited partnerships.

CAPITAL RESOURCES

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.

RESULTS OF OPERATIONS

The Partnership was formed to provide various benefits to its partners as
discussed in Item 1.

At December 31, 2001, the Partnership has investments in 14 limited
partnerships, 13 of which own housing projects that were substantially all
rented. The remaining partnership owns a limited partnership interest in Casden
Operating Partnership, L.P. The Partnership sold its interests in 7 local
partnerships in December 1998. The Partnership, as a limited partner, is
entitled to 94% to 99% of the profits and losses of the local limited
partnerships. The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment balance by
its proportionate share of the income or loss of the local limited partnerships.
Equity in losses of limited partnerships is recognized in the financial
statements until the limited partnership investment account are reduced to a
zero balance. Losses incurred after the limited partnership investment account
is reduced to zero are not recognized. Limited partners are not liable for
losses beyond their contributed capital. At December 31, 2001 and 2000, the
Partnership does not have any positive investment balance.

Distributions received from 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.

The total income from the local limited partnerships that was allocated to the
Partnership was $448,000, $450,000 and $535,000 for the years ended December 31,
2001, 2000 and 1999, respectively. However, because losses incurred after the
investment account is reduced to a zero balance are not recognized and
subsequent income is not recognized until the investment account becomes
positive again, the Partnership recognized equity in loss of limited
partnerships of $21,093 for the year ended December 31, 2001, which is equal to
the cash contributed during the year, and recognized no equity in income (loss)
of limited partnerships for the years ended December 31, 2000 and 1999. The
cumulative amount of the unrecognized equity in losses of certain limited
partnerships was approximately $7,224,000 and $7,693,000 as of December 31, 2001
and 2000, respectively.

Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were $54,376, $101,059 and $96,547 for
the years ended December 31, 2001, 2000 and 1999, respectively. These amounts
were recognized as income on the accompanying statements of operations, in
accordance with the equity method of accounting.
<PAGE>
As of December 31, 2001, 2000 and 1999, the Partnership has cash and cash
equivalents of $139,881, $343,527 and $468,311, respectively. Substantially all
of these amounts are on deposit primarily with high credit quality financial
institutions, earning interest. This resulted in the Partnership earning
$24,423, $22,017 and $29,870 in interest income for the years ended December 31,
2001, 2000 and 1999, respectively. 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.

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 .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 $175,792 for 2001, 2000 and 1999.

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.

As a result of the foregoing, the Partnership in 1997 commenced an extensive
review of disposition, refinancing or re-engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred expenses
in connection with this review by various third party professionals, including
accounting, legal, valuation, structural and engineering costs, which amounted
to $72,627 for the year ended December 31, 1999, and are included in
administrative expenses.

On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships, with a total carrying value of $1,007,181 to the
Operating Partnership. The sale resulted in net cash proceeds to the Partnership
of $5,250,000 and a net gain of $4,002,592, after deducting selling costs. The
cash proceeds were held in escrow at December 31, 1998 and were collected in
1999. In March 1999, the Partnership made cash distributions of $4,950,000 to
the limited partners and $50,000 to the general partners, using proceeds from
the sale of the partnership interests.
<PAGE>
The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (ii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by the Partnership.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.

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 $126,311, $98,417 and $88,568 for the years ended
December 31, 2001, 2000 and 1999, respectively. Administrative expenses were
$89,695, $60,475 and $138,644 for the years ended December 31, 2001, 2000 and
1999, respectively. Included in administrative expenses are reimbursements to
NAPICO for certain expenses, which totaled $19,368, $14,962 and $23,340 for the
years ended December 31, 2001, 2000 and 1999, respectively. Also included in
administrative expenses for 1999 is $72,627, related to the aforementioned
third-party review of the properties owned by the local partnerships.

Total revenue for the local partnerships were $9,895,000, $9,880,000 and
$9,793,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Total expenses for the local partnerships were $9,455,000, $9,411,000 and
$9,236,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

The total net income for the local partnerships for 2001, 2000 and 1999
aggregated $440,000, $469,000, and $556,000, respectively. The net income
allocated to the Partnership was $448,000, $450,000 and $535,000 for 2001, 2000
and 1999, respectively.

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.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

The Financial Statements and Supplementary Data are listed under Item 14.


ITEM 9. CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE:

Not applicable.
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (A California limited partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                   AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
                                DECEMBER 31, 2001
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Real Estate Associates Limited II
(A California limited partnership)

We have audited the accompanying balance sheets of Real Estate Associates
Limited II (a California limited partnership) as of December 31, 2001 and 2000,
and the related statements of operations, partners' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 2001. Our
audits also included the financial statement schedules listed in the index in
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules 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. These limited
partnerships represent the investee information in Note 2 and the financial
statement schedules. 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 of America. 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 our audits and the reports of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of 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,
2001 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, based on our audits and the reports of other auditors, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.



DELOITTE & TOUCHE LLP

Los Angeles, California
March 22, 2002
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 2001 AND 2000

                                     ASSETS

<TABLE>
<CAPTION>
                                                                       2001            2000
                                                                       ----            ----
<S>                                                                 <C>             <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2)                        $      --       $      --

CASH AND CASH EQUIVALENTS                                             139,881         343,527
                                                                    ---------       ---------

          TOTAL ASSETS                                              $ 139,881       $ 343,527
                                                                    =========       =========


             LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY)

LIABILITIES:

     Accounts payable                                               $  46,404       $  15,704
     Fees and expenses due general partner (Note 3)                    99,746              --
                                                                    ---------       ---------

                                                                      146,150          15,704

COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)


PARTNERS' EQUITY (DEFICIENCY):
    General partners                                                 (218,158)       (214,817)
    Limited partners                                                  211,889         542,640
                                                                    ---------       ---------

                                                                       (6,269)        327,823
                                                                    ---------       ---------

           TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY)      $ 139,881       $ 343,527
                                                                    =========       =========
</TABLE>

     The accompanying notes are integral part of these financial statements.
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                         2001            2000            1999
                                                         ----            ----            ----
<S>                                                   <C>             <C>             <C>
INTEREST INCOME                                       $  24,423       $  22,017       $  29,870
                                                      ---------       ---------       ---------

OPERATING EXPENSES:
      Legal and accounting                              126,311          98,417          88,568
      Management fees - general partner (Note 3)        175,792         175,792         175,792
      Administrative  (Note 3)                           89,695          60,475         138,644
                                                      ---------       ---------       ---------

TOTAL OPERATING EXPENSES                                391,798         334,684         403,004
                                                      ---------       ---------       ---------

LOSS FROM OPERATIONS                                   (367,375)       (312,667)       (373,134)

DISTRIBUTIONS FROM LIMITED
      PARTNERSHIPS RECOGNIZED AS
      INCOME (Note 2)                                    54,376         101,059          96,547

EQUITY IN LOSS OF LIMITED PARTNERSHIPS
      AND AMORTIZATION OF ACQUISITION
      COSTS (Note 2)                                    (21,093)             --              --
                                                      ---------       ---------       ---------

NET LOSS                                              $(334,092)      $(211,608)      $(276,587)
                                                      =========       =========       =========


NET LOSS PER LIMITED PARTNERSHIP
      INTEREST (Note 1)                               $     (31)      $     (20)      $     (26)
                                                      =========       =========       =========
</TABLE>


    The accompanying notes are integral part of these financial statements.
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999




<TABLE>
<CAPTION>
                             General           Limited
                             Partners          Partners           Total
                             --------          --------           -----
<S>                        <C>               <C>               <C>
EQUITY (DEFICIENCY),
    January 1, 1999        $  (159,935)      $ 5,975,953       $ 5,816,018

    Distributions              (50,000)       (4,950,000)       (5,000,000)

    Net loss for 1999           (2,766)         (273,821)         (276,587)
                           -----------       -----------       -----------

EQUITY (DEFICIENCY),
    December 31, 1999         (212,701)          752,132           539,431

    Net loss for 2000           (2,116)         (209,492)         (211,608)
                           -----------       -----------       -----------

EQUITY (DEFICIENCY),
    December 31, 2000         (214,817)          542,640           327,823

    Net loss for 2001           (3,341)         (330,751)         (334,092)
                           -----------       -----------       -----------

EQUITY (DEFICIENCY),
    December 31, 2001      $  (218,158)      $   211,889       $    (6,269)
                           ===========       ===========       ===========
</TABLE>


    The accompanying notes are integral part of these financial statements.
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<TABLE>
<CAPTION>
                                                                           2001              2000              1999
                                                                           ----              ----              ----
<S>                                                                   <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                          $  (334,092)      $  (211,608)      $  (276,587)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
         Equity in loss of limited partnerships and
             amortization of acquisition costs                             21,093                --                --
         Decrease (increase) in due from general partner                       --            74,716           (74,716)
         Increase in fees and expenses due general partner                 99,746
         Increase (decrease) in accounts payable                           30,700            12,108          (127,171)
                                                                      -----------       -----------       -----------

             Net cash used in operating activities                       (182,553)         (124,784)         (478,474)
                                                                      -----------       -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital contributions                                                 (21,093)               --                --
    Proceed from the sale of limited
        partnership interests                                                  --                --         5,250,000
                                                                      -----------       -----------       -----------
             Net cash (used in) provided by investing activities          (21,093)               --         5,250,000
                                                                      -----------       -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Distributions to partners                                                  --                --        (5,000,000)

NET  DECREASE  IN CASH
      AND CASH EQUIVALENTS                                               (203,646)         (124,784)         (228,474)

CASH AND CASH EQUIVALENTS,
    BEGINNING OF YEAR                                                     343,527           468,311           696,785
                                                                      -----------       -----------       -----------
CASH AND CASH EQUIVALENTS,
    END OF YEAR                                                       $   139,881       $   343,527       $   468,311
                                                                      ===========       ===========       ===========
</TABLE>


    The accompanying notes are integral part of these financial statements.
<PAGE>
                       REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


1.       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 Coast Housing Investment
         Associates ("CHIA"), a limited partnership, and National Partnership
         Investments Corp. ("NAPICO"), the corporate general partner. The
         limited partner of CHIA is an officer of NAPICO. The business of the
         Partnership is conducted primarily by NAPICO.

         Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of
         Casden Investment Corporation ("CIC"), which is wholly owned by Alan I.
         Casden. On December 30, 1998, Casden Properties Operating Partnership,
         L.P. (the "Operating Partnership"), a majority owned subsidiary of
         Casden Properties Inc., a real estate investment trust organized by
         Alan I. Casden, purchased a 95.25% economic interest in NAPICO. The
         remaining economic interest, including a majority of the voting common
         stock, continues to be owned by CIC.

         On December 3, 2001, Casden Properties Inc., entered into a merger
         agreement and certain other transaction documents with Apartment
         Investment and Management Company, a Maryland corporation ("AIMCO") and
         certain of its subsidiaries, pursuant to which, on March 11, 2002,
         AIMCO acquired Casden Properties Inc. and its subsidiaries, including
         NAPICO.

         The Partnership offered 3,000 units and issued 2,673 units of limited
         partner interests through a public offering. Each unit was comprised of
         two limited partner interests and a warrant granting an investor the
         right to purchase two additional limited partner interests. An
         additional 5,346 interests were issued from the exercise of the
         warrants and the sale of interests associated with warrants not
         exercised. The general partners have a 1 percent interest in the
         profits and losses of the Partnership. The limited partners have 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.


                                       6
<PAGE>
                       REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS(CONTINUED)
                                DECEMBER 31, 2001


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         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 of
         America.

         Recent Accounting Pronouncements

         In July 2001, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards Number (SFAS No.) 141, "Business
         Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets."
         SFAS No. 141 was effective immediately and SFAS 142 will be effective
         January 2002. The new standards are not expected to have a significant
         impact on the Partnership's financial statements.

         Use of Estimates

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosure of contingent assets
         and liabilities at the date of the financial statements and reported
         amounts of revenues and expenses during the reporting period. 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


                                       7
<PAGE>
                       REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS(CONTINUED)
                                DECEMBER 31, 2001


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         the investment account and are being amortized on a straight line basis
         over the estimated lives of the underlying assets, which is generally
         30 years.

         Net Loss Per Limited Partnership Interest

         Net loss per limited partnership interest was computed by dividing the
         limited partners' share of net loss by the number of limited
         partnership interests outstanding during the year. The number of
         limited partnership interests was 10,693 for all years presented.

         Cash and Cash Equivalents

         Cash and cash equivalents consist of cash and bank certificates of
         deposit with an original maturity date of three months or less. The
         Partnership has its cash and cash equivalents on deposit with high
         credit quality financial institutions. Such cash and cash equivalents
         are in excess of the FDIC insurance limit.

         Impairment of Long-Lived Assets

         The Partnership reviews 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, 2001, 2000 and 1999.

2.       INVESTMENTS IN LIMITED PARTNERSHIPS

         The Partnership holds limited partnership interests in 14 limited
         partnerships as of December 31, 2001 and 2000, after selling its
         interests in 6 limited partnerships in 1998. All of the limited
         partnerships, except for one, own residential low income rental
         projects consisting of 1,079 apartment units. The mortgage loans of
         these projects are payable to or insured by various governmental
         agencies. The remaining partnership owns a limited partnership interest
         in Casden Operating Partnership, L.P.

         The Partnership, as a limited partner, is entitled to between 94
         percent and 99 percent of the profits and losses of the limited
         partnerships.


                                       8


<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


2.       INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

         Equity in losses of limited partnerships is recognized in the financial
         statements until the limited partnership investment account is reduced
         to a zero balance. Losses incurred after the limited partnership
         investment account is reduced to zero are not recognized. The
         cumulative amount of the unrecognized equity in losses of certain
         limited partnerships was in the aggregate approximately $7,224,000 and
         $7,693,000 as of December 31, 2001 and 2000, respectively.

         Distributions from limited partnerships are accounted for as a return
         of capital until the investment balance is reduced to zero. Subsequent
         distributions received are recognized as income.

         The Partnership has no carrying value in investments in limited
         partnerships as of December 31, 2001 and 2000.

         The difference between the investment per the accompanying balance
         sheets at December 31, 2001 and 2000, and the deficiency per the
         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.

         Selected financial information from combining the financial statements
         of the limited partnerships at December 31, 2001 and 2000 and for each
         of three years in the period ended December 31, 2001 is as follows:

                                 Balance Sheets
<TABLE>
<CAPTION>
                                                                  2001             2000
                                                                 -------          -------
                                                                      (in thousands)
<S>                                                              <C>              <C>
         Land and buildings, net                                 $15,567          $16,736
                                                                 =======          =======

         Total assets                                            $26,137          $26,683
                                                                 =======          =======

         Mortgages payable                                       $32,831          $33,696
                                                                 =======          =======

         Total liabilities                                       $34,277          $35,142
                                                                 =======          =======

         Deficiency of Real Estate Associates Limited II         $(6,351)         $(6,692)
                                                                 =======          =======

         Deficiency of other partners                            $(1,789)         $(1,767)
                                                                 =======          =======
</TABLE>


                                       9
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


2.       INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

                            Statements of Operations

<TABLE>
<CAPTION>
                                                       2001          2000         1999
                                                      -------       -------      -------
                                                                (in thousands)
<S>                                                   <C>           <C>          <C>
         Total revenue                                $ 9,895       $ 9,880      $ 9,793
                                                      =======       =======      =======

         Interest expense                             $ 2,721       $ 2,770      $ 2,878
                                                      =======       =======      =======

         Depreciation                                 $ 1,385       $ 1,389      $ 1,415
                                                      =======       =======      =======

         Total expenses                               $ 9,455       $ 9,411      $ 9,236
                                                      =======       =======      =======

         Net income                                   $   440       $   469      $   556
                                                      =======       =======      =======

         Net income allocable to the Partnership      $   448       $   450      $   535
                                                      =======       =======      =======
</TABLE>

         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


                                       10
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


2.       INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

         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.

         As a result of the foregoing, the Partnership in 1997 commenced an
         extensive review of disposition, refinancing or re-engineering
         alternatives for the properties in which the limited partnerships have
         invested and are subject to HUD mortgage and rental subsidy programs.
         The Partnership has incurred expenses in connection with this review by
         various third party professionals, including accounting, legal,
         valuation, structural and engineering costs, which amounted to $72,627
         for the year ended December 31, 1999, and are included in
         administrative expenses.

         On December 30, 1998, the Partnership sold its limited partnership
         interests in 7 local limited partnerships, with a total carrying value
         of $1,007,181, to the Operating Partnership. The sale resulted in cash
         proceeds to the Partnership of $5,250,000 and a net gain of $4,002,592
         after deducting the selling costs. The cash proceeds were held in
         escrow at December 31, 1998 and were collected in 1999. In March 1999,
         the Partnership made a cash distribution of $4,950,000 to the limited
         partners and $50,000 to the general partners, using proceeds from the
         sale of the partnership interests.

         The Operating Partnership purchased such limited partner interests for
         cash, which it raised in connection with a private placement of its
         equity securities. The purchase was subject to, among other things, (i)
         the purchase of the general partner interests in the local limited
         partnerships by the Operating Partnership; (ii) the approval of HUD and
         certain state housing finance agencies; and (iii) the consent of the
         limited partners to the sale of the local limited partnership interests
         held for investment by the Partnership.


                                       11
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


2.       INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

         In August 1998, a consent solicitation statement was sent to the
         limited partners setting forth the terms and conditions of the purchase
         of the limited partners' interests held for investment by the
         Partnership, together with certain amendments to the Partnership
         Agreement and other disclosures of various conflicts of interest in
         connection with the proposed transaction. Prior to the sale of the
         partnership interests, the consents of the limited partners to the sale
         and amendments to the Partnership Agreement were obtained.

3.       FEES AND EXPENSES DUE TO GENERAL PARTNER

         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 .4 percent of the original invested assets of the
         remaining limited partnerships. Invested assets is defined as the costs
         of acquiring project interests, including the proportionate amount of
         the mortgage loans related to the Partnership's interest in the capital
         accounts of the respective partnerships.

         The Partnership reimburses NAPICO for certain expenses. The
         reimbursement to NAPICO was $19,368, $14,962 and $23,340 in 2001, 2000
         and 1999, respectively, and is included in administrative expenses.

4.       CONTINGENCIES

         CLASS ACTION

         On August 27, 1998, two investors holding an aggregate of eight units
         of limited partnership interests in Real Estate Associates Limited III
         (a partnership in which NAPICO is a general partner) and two investors
         holding an aggregate of five units of limited partnership interest in
         Real Estate Associates Limited VI (another partnership in which Company
         is a general partner) commenced an action in the United States District
         Court for the Central District of California on behalf of themselves
         and all other similarly situated, against the Partnership, NAPICO and
         certain other affiliated entities. The complaint alleges that the
         defendants breached their fiduciary duty to the limited partners of
         such Funds and made materially false and misleading statements in the
         consent solicitation statements that were disseminated to the limited
         partners of such Funds relating to approval of the transfer of
         partnership interests in limited partnerships to the Operating
         Partnership. The plaintiffs seek preliminary and permanent injunction
         relief and other equitable relief, as well as compensatory and punitive
         damages. However, plaintiffs made no effort to enjoin the transaction
         from taking place.


                                       12
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


4.       CONTINGENCIES (CONTINUED)

         On August 4, 1999, a holder of one unit of limited partnership interest
         in Housing Programs Limited (a partnership in which the Company is a
         general partner) filed a lawsuit similar to the one discussed above
         against added Housing Programs Limited. The second action has been
         subsumed in the first action, which has been certified as a class
         action.

         After defendants moved for summary disposition of the action,
         plaintiffs filed a motion for leave to file an amended complaint.
         Although defendants opposed the filing of the complaint proposed by
         plaintiffs, the court issued an order on July 20, 2001 granting
         plaintiffs leave to amend but denying them leave to file the complaint
         they proposed. Plaintiffs filed a Second, Restated, Amended and
         Supplemental Complaint dated August 7, 2001 and on August 21, 2001
         filed a Corrected Second, Restated, Amended and Supplemental Complaint
         (CSRASC). The CSRASC adds eight new defendants and six new counts which
         were not included in prior complaints. The new counts include; (i)
         violations of the anti-bundling rules of the Securities and Exchange
         Act of 1934, (ii) violation of the doctrine of inherent fairness, (iii)
         a declaratory judgment that the certain defendants are not entitled to
         indemnification under the partnership agreements, (iv) rescission of
         the business combination discussed in Note 1, (v) a constructive trust
         on any recovery from a separate lawsuit pending in the United States
         District Court of the Middle District of Pennsylvania which was brought
         on behalf of several limited partnerships which are not parties to this
         action; and (vi) an accounting. Defendants made a motion to dismiss the
         CSRASC, which was denied. The court found that the issues presented
         would be more appropriate resolved in a motion for summary judgment or
         summary adjudication. Defendants intend to make such a motion. The
         deadline to do so is April 1, 2002.

         Defendants denied allegations in the CSRASC in their answer. The
         parties are in the process of conducting discovery. The discovery
         deadline is February 28, 2002 and the trial is scheduled for July 16,
         2002. A motion is before the court to extend these deadlines and the
         hearing on that issue is scheduled for February 4, 2002. Once discovery
         is complete, defendants will move for summary judgement dismissing the
         complaint.

         The managing general partner of such NAPICO managed partnerships and
         the other defendants believe that the plaintiffs' claims are without
         merit and intend to contest the actions vigorously.


                                       13
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


4.       CONTINGENCIES (CONTINUED)

         NEW HAVEN PLAZA

         On December 30, 1998, the Operating Partnership acquired, for value,
         title to New Haven Plaza Associates' property in Far Rockaway, New
         York. Thereafter, NAPICO commenced an action for a declaratory judgment
         that NAPICO had the authority to transfer the property and that the
         value paid by the Operating Partnership for the property was fair.
         Defendants have pled counterclaims alleging that inter alia, NAPICO was
         not authorized to transfer the property and breached its fiduciary
         duties to the limited partners. Defendants also seek an accounting and
         distributions of surplus cash. The parties are in the process of
         conducting discovery. Thereafter, plaintiff will move for partial
         judgment on the pleadings to dismiss all of defendants' affirmative
         defenses and counterclaims, other than for an accounting.

         On June 11, 2001, the court found that the defendants had no vote or
         control in the Partnership. However, the court found the conveyance to
         be invalid because it was not consistent with New York partnership law.
         The court held that the transfer of the property in exchange for an
         interest in the Operating Partnership violated the purpose of
         Partnership. Notwithstanding the court's decision, defendants claim
         that NAPICO could not transfer the property to the Operating
         Partnership without their consent. Clarification is being sought from
         the court. Defendants have moved summary judgment, injunctive relieve
         and to amend their complaint. NAPICO cross-moved to dismiss defendant's
         claim to remove NAPICO as the general partner of the Partnership. The
         motions have been submitted to the court. Oral argument on these
         motions was held on February 11, 2002 and the motions are presently
         under consideration by the court.

         Management of NAPICO believes that the defendant's claims are without
         merit and intend to contest the actions vigorously.

         OTHER

         Plaintiff, who is a limited partner in the Partnership, claims that
         NAPICO and other defendants (1) have refused to provide the plaintiff
         with access to the books and records of the Partnership, and (2) have
         breached their fiduciary duties and the partnership agreement by
         failing to provide such access and by failing to act in the best
         interest of the Partnership. The defendants have, however, provided
         their books and records to plaintiff pursuant to a protective order.
         Plaintiff has failed to quantify its purported damages. Trial is
         schedule for August 13, 2002. Management of NAPICO believes that the
         claims are without merit and intend to contest the actions vigorously.


                                       14
<PAGE>
                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2001


4.       CONTINGENCIES (CONTINUED)

         The corporate general partner of the Partnership is a plaintiff in
         various lawsuits and has also been named a defendant in 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.

5.       INCOME TAXES

         No provision has been made for income taxes in the accompanying
         financial statements since such taxes, if any, are the liability of the
         individual partners. The major differences in tax and financial
         reporting result from the use of different bases and depreciation
         methods for the properties held by the limited partnerships.
         Differences in tax and financial losses also arise as losses are not
         recognized for financial reporting purposes when the investment balance
         has been reduced to zero.

6.       FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "Disclosure about
         Fair Value of Financial Instruments," requires disclosure of fair value
         information about financial instruments. The carrying amount of assets
         and liabilities reported on the balance sheets that require such
         disclosure approximates fair value due to their short-term maturity.

7.       FOURTH-QUARTER ADJUSTMENT

         The Partnership's policy is to record its equity in loss of limited
         partnerships on a quarterly basis, using estimated financial
         information furnished by the various local operating general partners.
         The equity in loss of limited partnerships reflected in the
         accompanying annual financial statements is based primarily upon
         audited financial statements of the investee limited partnerships. The
         estimated nine-month equity in loss is equal to the actual total of
         $21,093 for 2001 equity in loss.


                                       15
<PAGE>
                                                                        SCHEDULE

                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                    Year Ended December 31, 2001
                                           --------------------------------------------------------------------------------
                                                                                Cash
                                             Balance         Capital           Distri-          Equity           Balance
                                             January         Contri-           butions            In            December
Limited Partnerships                         1, 2001         butions           Received          Loss           31, 2001

----------------------------------------   ------------    -------------    --------------   -------------    -------------
<S>                                        <C>             <C>              <C>              <C>              <C>
Azalea Court Apartments                    $               $                $                $                $

Branford Elderly Housing

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

Lakeside Apartments

Landmark Towers

Magnolia State Apts.

New Haven Plaza                                                  21,093                           (21,093)

Redfern Grove Apartments

Sugar River Mills

Valebrook

Westward Ho Apartments

Willow Wick Apartments                                                                                  -                -
                                           ------------    -------------    --------------   -------------    -------------

                                           $         -     $     21,093     $            -   $    (21,093)    $          -
                                           ============    =============    ==============   =============    =============
</TABLE>


Note:  Fund has no existing partnership investment balance
<PAGE>
                                                                        SCHEDULE
                                                                     (CONTINUED)

                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                    Year Ended December 31, 2000
                                           ---------------------------------------------------------------------------------
                                                                                 Cash
                                             Balance                            Distri-          Equity           Balance
                                             January          Capital           butions            in            December
Limited Partnerships                         1, 2000       Contributions        Received         Income          31, 2000
----------------------------------------   ------------    --------------    --------------   -------------    -------------
<S>                                        <C>             <C>               <C>              <C>              <C>
Azalea Court Apartments                    $               $                 $                $                $           -

Branford Elderly Housing

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

Lakeside Apartments

Landmark Towers

Magnolia State Apts.

New Haven Plaza

Redfern Grove Apartments

Sugar River Mills

Valebrook

Westward Ho Apartments

Willow Wick Apartments
                                           ------------    --------------    --------------   -------------    -------------

                                           $               $                 $                $                $
                                           ============    ==============    ==============   =============    =============
</TABLE>
<PAGE>
                                                                        SCHEDULE
                                                                     (CONTINUED)

                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                    Year Ended December 31, 1999
                                           ------------------------------------------------------------------------------
                                                                                Cash
                                             Balance                           Distri-          Equity          Balance
                                             January         Capital           butions            in           December
Limited Partnerships                         1, 1999      Contributions        Received         Income         31, 1999
----------------------------------------   -----------    --------------    --------------   ------------    ------------
<S>                                        <C>            <C>               <C>              <C>             <C>
Azalea Court Apartments                    $              $                 $                $               $          -

Branford Elderly Housing

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

Lakeside Apartments

Landmark Towers

Magnolia State Apts.

New Haven Plaza

Redfern Grove Apartments

Sugar River Mills

Valebrook

Westward Ho Apartments

Willow Wick Apartments
                                           -----------    --------------    --------------   ------------    ------------

                                           $              $                 $                $               $
                                           ===========    ==============    ==============   ============    ==============
</TABLE>
<PAGE>
                                                                        SCHEDULE
                                                                     (CONTINUED)


                        REAL ESTATE ASSOCIATES LIMITED II
               INVESTMENTS IN, EQUITY IN EARNINGS OF AND DIVIDENDS
                   RECEIVED FROM AFFILIATES AND OTHER PERSONS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


NOTES:   1.       Equity in losses of the limited partnership represents the
                  Partnership's allocable share of the net loss from the limited
                  partnerships for the year. Equity in losses of the limited
                  partnerships will be recognized until the investment balance
                  is reduced to zero or a negative balance equal to further
                  commitments by the Partnership.

         2.       Cash distributions from the limited partnerships are treated
                  as a return on the investment and reduce the investment
                  balance until such time as the investment is reduced to zero
                  or a negative balance equal to further commitments by the
                  Partnership. Distributions subsequently received will be
                  recognized as income.
<PAGE>
                                                                    SCHEDULE III

                        REAL ESTATE ASSOCIATES LIMITED II
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                        IN WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                                             Buildings,
                                                                            Furnishings
                                                                          and Equipment -
                                                                          Initial Cost to
                                                                          Partnership and
                                      Number   Outstanding               Amount Carried at               Accumulated   Construction
     Partnership/Location            of Units  Mortage Loan     Land      Close of Period      Total     Depreciation     Period
<S>                                  <C>       <C>           <C>         <C>                <C>          <C>           <C>
Azalea Court Apts.                         48      $978,207     $62,500         $1,321,625   $1,384,125      $902,618   10/80-3/81
  Theodore, AL
Branford Elderly Hsng.                     38       819,232     138,000          1,598,978    1,736,978       741,764   6/80-4/81
  Branford, Connecticut
Cherrywood/Saturn Apartments               78     2,942,036     146,186          2,612,516    2,758,702     1,969,776   9/79-4/80
  Twin Falls/Idaho Falls, Idaho
Clearfield Manor                           40     1,076,764      50,000          1,271,490    1,321,490       918,111   10/80-10/81
  Clearfield, KY
Crystal Springs Apts.                      28       608,442      35,835            795,434      831,269       626,013   7/80-3/81
  Crystal Springs, MS
Lakeside Apartments                        48     1,530,000     115,366          1,582,705    1,698,071     1,540,647   10/80-6/81
  Mishawaka, IN
Landmark Towers                            40       738,623      38,700          1,644,148    1,682,848     1,436,238   4/79-10/80
  Nampa, Idaho
Magnolia State Apts.                       60     1,185,949      57,165          1,613,888    1,671,053     1,107,700   3/80-8/80
  Gulfport, MS
Redfern Grove Apts.                        72     1,292,875     245,502          2,773,202    3,018,704     2,123,557   7/80-7/81
  E. Providence, RI
Sugar River Mills                         162     6,847,872     301,007          9,374,895    9,675,902     5,939,742   2/81-4/82
  Claremon, NH
Valebrook Assoc.                          151     2,928,226      88,886          5,107,609    5,196,495     4,185,087   2/79-7/80
  Lawrence, Massachusetts
Westward Ho Apartments                    290    11,461,036   1,040,000         15,070,006   16,110,006    10,062,771   4/80-12/81
  Phoenix, Arizona
Willow Wick Apts.                          24       421,831      21,675            521,591      543,266       507,708   9/80-5/81
  Centre, AL
                                     --------  ------------  ----------  -----------------  -----------  ------------




TOTAL                                    1079   $32,831,093  $2,340,822        $45,288,087  $47,628,909   $32,061,732
                                     ========  ============  ==========  =================  ===========  ============
</TABLE>
<PAGE>
                                                                    SCHEDULE III
                                                                     (CONTINUED)


                        REAL ESTATE ASSOCIATES LIMITED II
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                      HELD BY LOCAL LIMITED PARTNERSHIPS IN
                          WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2001


NOTES:   1.       Each local limited partnership has developed, owns and
                  operates the housing project. Substantially all project costs,
                  including construction period interest expense, were
                  capitalized by the limited partnerships.

         2.       Depreciation is provided for by various methods over the
                  estimated useful lives of the projects. The estimated
                  composite useful lives of the buildings are generally from 25
                  to 40 years.

         3.       Investments in property and equipment:

<TABLE>
<CAPTION>
                                                                  Buildings,
                                                                 Furnishings
                                                                     And
                                               Land               Equipment              Total
                                         -----------------    -----------------    -----------------
<S>                                      <C>                  <C>                  <C>
Balance at January 1, 1999               $       2,340,822    $      44,532,756    $      46,873,578

Net additions during 1999                                -              252,970              252,970
                                         -----------------    -----------------    -----------------

Balance, December 31, 1999                       2,340,822           44,785,726           47,126,548

Net additions during 2000                                -              370,112              370,112
                                         -----------------    -----------------    -----------------

Balance, December 31, 2000                       2,340,822           45,155,838           47,496,660

Net additions during 2001                                -              132,249              132,249
                                         -----------------    -----------------    -----------------

Balance, December 31, 2001               $       2,340,822    $      45,288,087    $      47,628,909
                                         =================    =================    =================
</TABLE>
<PAGE>
                                                                    SCHEDULE III
                                                                     (Continued)


                        REAL ESTATE ASSOCIATES LIMITED II
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                      HELD BY LOCAL LIMITED PARTNERSHIPS IN
                          WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                                  Buildings,
                                                                  Furnishings
                                                                      And
                                                                   Equipment
                                                                ---------------
Accumulated Depreciation:
--------------------------------------
<S>                                                             <C>
Balance at January 1, 1999                                      $    28,146,882

Net additions during 1999                                             1,317,651
                                                                ---------------

Balance at December 31, 1999                                         29,464,533

Net additions during 2000                                             1,296,123
                                                                ---------------

Balance at December 31, 2000                                         30,760,656

Net additions during 2001                                             1,301,076
                                                                ---------------

Balance at December 31, 2001                                    $    32,061,732
                                                                ===============
</TABLE>
<PAGE>
PART III.

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

REAL ESTATE ASSOCIATES LIMITED II (the "Partnership") has no directors or
executive officers of its own. Partner.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P., (the
"Operating Partnership") a majority owned subsidiary of Casden Properties Inc.,
a real estate investment trust organized by Alan I. Casden, purchased a 95.25%
economic interest in NAPICO. On March 11, 2002, NAPICO became a wholly owned
subsidiary of Apartment Investment and Management Company. The following
biographical information is presented for the directors and executive officers
of NAPICO with principal responsibility for the Partnership's affairs.

CHARLES H. BOXENBAUM, 72, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company. Mr.
Boxenbaum has been a member of the Board of Directors of Casden Properties Inc.
since 1998.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
He is one of the founders and a past director of the First Los Angeles Bank,
organized in November 1974. Since March 1995, Mr. Boxenbaum has served on the
Board of Directors of the National Housing Council. Mr. Boxenbaum received his
Bachelor of Arts degree from the University of Chicago.

BRUCE E. NELSON, 50, President, Chief Operating Officer and a director of
NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments. Mr.
Nelson is a member of the Board of Directors of Casden Properties Inc. and is a
Director of the Affordable Housing Tax Credit Coalition.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.

ALAN I. CASDEN, 56, Chairman of the Board of Directors and Chief Executive
Officer of Casden Properties Inc., a director and member of the audit committee
of NAPICO, and chairman of the Executive Committee of NAPICO.

Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.
<PAGE>
Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, the President's Council of the California
Building Industry Association and the Urban Land Institute. He also serves on
the Board of Trustees of the University of Southern California. He holds a
Bachelor of Science degree and a Masters in Business Administration degree from
the University of Southern California.

BRIAN H. SHUMAN, 39, Senior Vice President and Chief Financial Officer.

Mr. Shuman joined NAPICO in 2000, and is responsible for the financial affairs
of NAPICO, as well as the limited partnerships 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. From 1994 to 1996, he was the Controller for
DVI Business Credit Corporation, which provides asset based lending to a wide
range of health concerns. From 1985 to 1994, Mr. Shuman served in senior
management positions, as a director or manager of finance, a portfolio tax
analyst, and a senior accountant/tax consultant. He holds a Bachelor of Arts
degree in economics and accounting from the University of Maryland. Mr. Shuman
is a Certified Public Accountant and is a member of American Institute of
Certified Public Accountants and the California Society of Public Accountants.

PATRICIA W. TOY, 72, Senior Vice President - Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

JEFFREY H. SUSSMAN, 35, Senior Vice President, General Counsel and Secretary.

Mr. Sussman joined NAPICO in 1998, and is responsible for the legal affairs of
NAPICO and its affiliates. He is also the President of NPEI and a member of the
preliminary investment committee. Prior to joining NAPICO in April 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.
Mr. Sussman received a Bachelor of Arts degree from the University of
California, Berkeley and Juris Doctor and Master in Business Administration
degrees from the University of Southern California. He is a member of the State
Bar of California, and holds Series 22, 39 and 63 licenses issued by the
National Association of Securities Dealers, Inc.

NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.
<PAGE>
ITEM 11.    MANAGEMENT REMUNERATION AND TRANSACTIONS:

Real Estate Associates Limited II has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to .4
percent of the invested assets, including the Partnership's allocable share of
the mortgages related to real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes its
initial contribution to the limited partnership. In addition, the Partnership
reimburses the Corporate General Partner for certain expenses.


ITEM 12.    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; no person is known to own beneficially in excess
         of 5% of the outstanding Limited Partnership Interests.

(b)      At December 31, 2001, security ownership of management is as listed:

<TABLE>
<CAPTION>
                                                                   Percentage of
                                                                    Outstanding
                                                 Amount and           Limited
                          Name of                Nature of          Partnership
Title of Class             Owner              Beneficial Owner        Interests
--------------            -------             ----------------      ------------
<S>                <C>                        <C>                  <C>
Limited            Charles H. Boxenbaum           $ 30,000                *
Partnership        780 Latimer Road
Interest           Santa Monica, CA 90402

Initial
Limited            Patricia W. Toy                   4,550                *
Partnership        4020 Berryman Avenue
Interest           Los Angeles, CA 90066
</TABLE>

*  Cumulative Limited Partnership Interest owned by corporate officers is less
   than 1% of outstanding Limited Partnership Interests.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The Partnership is obligated to NAPICO for an annual
management fee equal to .4 percent of the original invested assets of the
remaining limited partnerships. Invested assets is defined as the costs of
acquiring project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interest in the capital accounts of the
respective partnerships. The management fee was $175,792 for the years ended
December 31, 2001, 2000 and 1999.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $19,368, $14,962 and $23,340 in 2001, 2000 and 1999, respectively,
and is included in operating expenses.
<PAGE>
On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships to the Operating Partnership. The sale resulted in
net cash proceeds to the Partnership of $5,250,000 and a net gain of $4,002,592.
The cash proceeds were held in escrow at December 31, 1998 and were collected
subsequent to year-end. In March 1999, the Partnership made cash distributions
of $4,950,000 to the limited partners and $50,000 to the general partners, using
proceeds from the sale of the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (ii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by REAL II.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

FINANCIAL STATEMENTS

Reports of Independent Public Accountants.

Balance Sheets as of December 31, 2001 and 2000.

Statements of Operations for the years ended December 31, 2001, 2000 and 1999.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
2001, 2000 and 1999.

Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999.

Notes to Financial Statements.

FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED II AND TO THE LIMITED PARTNERSHIPS
IN WHICH REAL ESTATE ASSOCIATES LIMITED II HAS INVESTMENTS:

Schedule - Investments in Limited Partnerships, December 31, 2001, 2000 and
1999.

Schedule III - Real Estate and Accumulated Depreciation, December 31, 2001, 2000
and 1999.

The remaining schedules are omitted because the required information is included
in the financial statements and notes thereto, or they are not applicable or not
required.
<PAGE>
EXHIBITS

(3)      Articles of incorporation and bylaws: The registrant is not
         incorporated. The Partnership Agreement was filed with Form S-11
         #266171 incorporated herein 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 investment in Local Limited Partnerships
         as previously filed at the Securities and Exchange Commission, File
         #266171, which is hereby incorporated by reference.

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the year ended December 31, 2001.
<PAGE>
                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California.


REAL ESTATE ASSOCIATES LIMITED II

By:   NATIONAL PARTNERSHIP INVESTMENTS CORP.
      General Partner


/s/
---------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer


/s/
---------------------------------------
Bruce E. Nelson
Director and President


/s/
---------------------------------------
Alan I. Casden
Director


/s/
---------------------------------------
Brian H. Shuman
Chief Financial Officer