SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                   For the fiscal year ended December 31, 2002


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

                  For the transition period from __________ to __________

                         Commission file number 0-09782


                        REAL ESTATE ASSOCIATES LIMITED II
                       (A California Limited Partnership)


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

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

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

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

                                      NONE

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

                            Limited Partnership Units
                                (Title of class)

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

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

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

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2002. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  The discussions of the  Registrant's
business  and  results  of  operations,   including  forward-looking  statements
pertaining to such matters,  do not take into account the effects of any changes
to the  Registrant's  business  and results of  operations.  Actual  results may
differ  materially  from those described in the  forward-looking  statements and
will  be  affected  by  a  variety  of  risks  and  factors  including,  without
limitation:  national and local economic  conditions;  the terms of governmental
regulations that affect the Registrant and interpretations of those regulations;
the competitive  environment in which the Registrant operates;  financing risks,
including the risk that cash flows from  operations may be  insufficient to meet
required  payments of  principal  and  interest;  real estate  risks,  including
variations  of real  estate  values and the  general  economic  climate in local
markets and competition for tenants in such markets; and possible  environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

                                     PART I

ITEM 1.     Description of Business

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

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

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

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

REAL  II  holds  limited   partnership   interests  in  thirteen  Local  Limited
Partnerships  (the "Local Limited  Partnerships") as of December 31, 2002, after
selling its interest in 7 Local Limited  Partnerships,  in December 1998. All of
these Local Limited  Partnerships,  own low income  housing  projects  which are
subsidized  and/or have mortgage  notes payable to or insured by agencies of the
federal or local government.

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

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

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

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

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

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

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

The following table details the Partnership's ownership percentages of the Local
Limited  Partnerships  and  the  cost of  acquisition  of  such  ownership.  All
interests are limited  partner  interests.  Also included is the total  mortgage
encumbrance  on each property for each of the Local Limited  Partnerships  as of
December 31, 2002.

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

 Azalea Court                   95%          $  165           $1,457
 Branford Elderly               99%             195              760
 Cherrywood/Saturn Apts.        98%             308            2,858
 Clearfield Manor               95%             173            1,065
 Crystal Springs                99%              95              607
 Lakeside Apts.                 99%             200            1,817
 Landmark Towers                99%             285              678
 Magnolia State                 99%             190            1,174
 Redfern Grove Apts.            99%             360              953
 Sugar River Mills              98%           1,800            6,711
 Valebrook                      98%             850            2,674
 Westward Ho Apts.              94%           2,320           11,212
 Willow Wick Apts.              95%              80              422
                                             $7,021          $32,388

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


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

                  SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2002

<TABLE>
<CAPTION>

                                           Financed
                                            Insured       Units       Occupancy Percentage
                                              And      Authorized      For the Years Ended
   Property Name                  No. of  Subsidized   For Rental         December 31,
   and Location                    Units     Under     Assistance       2002         2001


   Azalea Court
<S>                                   <C>                    <C>        <C>          <C>
     Theodore, AL                     48      (A)            47         100%         98%
   Branford Elderly
     Branford, CT                     38      (B)            38         100%         100%
   Cherrywood/Saturn Apts.
     Twin Falls/Idaho Falls, ID       78      (D)            78          92%         95%
   Clearfield Manor
     Clearfield, KY                   40      (A)            40         100%         97%
   Crystal Springs
     Crystal Springs, MS              28      (A)            28         100%         100%
   Lakeside Apts.
     Mishawaka, IN                    48      (B)            48          98%         98%
   Landmark Towers
     Nampa, ID                        40      (D)            40         100%         100%


   Magnolia State
     Gulfport, MS                     60      (A)            24         96%          98%
   Redfern Grove Apts.
     E. Providence, RI                72      (C)            72         100%         100%
   Sugar River Mills
     Claremont, NH                   162      (B)           162          99%         99%
   Valebrook
     Lawrence, MA                    151      (E)           100          99%         98%
   Westward Ho Apts.
     Phoenix, AZ                     289      (B)           289          94%         96%
   Willow Wick Apts.
     Centre, AL                       24      (A)             5          48%         58%
   TOTALS                          1,078                    971
</TABLE>

(A) The project is financed by the Rural Housing Services Section 515 which also
  provides for interest and rental subsidies.
(B) The  mortgage is insured by the  Federal  Housing  Administration  under the
  provisions of Section 236 of the National Housing Act.
(C) The mortgage is regulated by the Rhode Island  Housing and Mortgage  Finance
  Corporation.
(D) The mortgage is regulated by the Idaho Housing and Finance Association.
(E)The  mortgage is  regulated   by  the   Massachusetts   Housing  and  Finance
  Association.


ITEM 2.     Description of Properties

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

ITEM 3.     Legal Proceedings

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests  in Real Estate  Associates  Limited  III (an  affiliated
partnership in which NAPICO is the corporate  general partner) and two investors
holding an  aggregate  of five units of limited  partnership  interests  in Real
Estate Associates Limited VI (another affiliated  partnership in which NAPICO is
the corporate general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other  defendants.  The complaint  alleged that the defendants  breached
their  fiduciary  duty  to  the  limited  partners  of  certain  NAPICO  managed
partnerships  and  violated  securities  laws by  making  materially  false  and
misleading statements in the consent solicitation statements sent to the limited
partners  of  such  partnerships   relating  to  approval  of  the  transfer  of
partnership interests in limited partnerships, owning certain of the properties,
to affiliates of Casden  Properties  Inc.,  organized by an affiliate of NAPICO.
The plaintiffs  sought  equitable  relief,  as well as compensatory  damages and
litigation  related costs.  On August 4, 1999, one investor  holding one unit of
limited  partnership  interest in Housing Programs  Limited (another  affiliated
partnership  in which  NAPICO is the  corporate  general  partner)  commenced  a
virtually  identical  action in the United States District Court for the Central
District  of  California  against  the  Partnership,  NAPICO and  certain  other
entities.  The second action was subsumed in the first action, and was certified
as a  class  action.  On  August  21,  2001,  plaintiffs  filed  a  supplemental
complaint,  which added new claims,  including a  rescission  of the transfer of
partnership  interests  and an  accounting.  The matter was tried in October and
November  2002. In November  2002, the jury returned  special  verdicts  against
NAPICO and certain other defendants in the amount of approximately $25.2 million
for  violations of securities  laws and against NAPICO for  approximately  $67.3
million for  breaches of  fiduciary  duty.  In  addition,  the jury  awarded the
plaintiffs  punitive damages against NAPICO of approximately  $92.5 million.  On
April  3,  2003,  the  judge  entered  certain  orders  in  connection  with the
litigation that denied defendants' motion for a new trial and set April 28, 2003
as the date for entry of judgment against NAPICO and certain other defendants in
the amount of $25.2 million for violations of securities laws and against NAPICO
for $67.3 million for breaches of fiduciary  duty,  both amounts plus  interest,
subject to plaintiffs' agreement to reducing the jury award for punitive damages
against NAPICO from $92.5 million to $2.6 million. While the case is expected to
be appealed,  the entire matter is the responsibility of the former shareholders
of  Casden  Properties  Inc.  pursuant  to  the  documents  related  to  AIMCO's
acquisition of Casden Properties Inc., which was completed in March 2002.

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

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

No  matters  were  submitted  to a vote  of the  limited  partners  through  the
solicitation of proxies or otherwise during the quarter ended December 31, 2002.

                                    PART II

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

The Limited  Partnership  Interests are not traded on a public exchange but were
sold through a public offering managed by E.F. Hutton Inc. It is not anticipated
that any public market will develop for the purchase and sale of any Partnership
interest,  therefore,  an investor may be unable to sell or otherwise dispose of
his or her interest in the  Partnership.  Limited  Partnership  Interests may be
transferred  only if certain  requirements  are satisfied.  At December 31, 2002
there were 1,389  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.  No  distributions  were made during the years ended  December 31,
2002 and 2001.

AIMCO and its affiliates  owned 499 limited  partnership  units (the "Units") or
998 limited partnership  interests in the Partnership  representing 9.37% of the
outstanding  Units  at  December  31,  2002.  A Unit  consists  of  two  limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional units of limited partnership  interest in the Partnership in exchange
for cash or a  combination  of cash and units in the  operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Corporate  General Partner.  Although the Corporate General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
Corporate  General  partner  also  owes  fiduciary  duties  to AIMCO as its sole
stockholder.  As a result,  the  duties of the  Corporate  General  Partner,  as
corporate general partner,  to the Partnership and its limited partners may come
into conflict with the duties of the Corporate  General Partner to AIMCO, as its
sole stockholder.

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

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

The Corporate  General  Partner  monitors  developments in the area of legal and
regulatory   compliance  and  is  studying  new  federal  laws,   including  the
Sarbanes-Oxley  Act of 2002. The Sarbanes-Oxley Act of 2002 mandates or suggests
additional compliance measures with regard to governance,  disclosure, audit and
other areas.  In light of these changes,  the  Partnership  expects that it will
incur higher expenses related to compliance, including increased legal and audit
fees.

Capital Resources and Liquidity

The  Partnership's  primary sources of funds include interest income earned from
investing  available cash and distributions  from Local Limited  Partnerships in
which the  Partnership  has  invested.  It is not expected that any of the Local
Limited  Partnerships  in which the  Partnership has invested will generate cash
flow  sufficient  to provide  for  distributions  to the  Partnership's  limited
partners in any material  amount.  No  distributions  were made during the years
ended December 31, 2002 and 2001.

The properties in which the Partnership has invested, through its investments in
the Local Limited Partnerships, receive one or more forms of assistance from the
Federal  Government.  As a result,  the Local Limited  Partnerships'  ability to
transfer  funds either to the  Partnership  or among  themselves  in the form of
distributions,  loans or advances is generally  restricted  by these  government
assistance programs. These restrictions, however, are not expected to impact the
Partnership's ability to meet its cash obligations.

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

As of December 31, 2002 and 2001, the Partnership has cash and cash  equivalents
of $11,000 and $140,000, respectively. Substantially all of these amounts are on
deposit with a high credit quality financial institution, earning interest. This
resulted in the Partnership earning approximately $3,000 and $24,000 in interest
income for the years ended December 31, 2002 and 2001, 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.

Results of Operations

The  Partnership  was formed to provide  various  benefits  to its  partners  as
discussed in "Item 1.  Description of Business".  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  limited
partners in any material amount.

At December 31, 2002, the  Partnership has investments in thirteen Local Limited
Partnerships,  all of which own housing  projects  that were  substantially  all
rented.  The Partnership,  as a limited partner,  does not exercise control over
the activities and operations, including refinancing or selling decisions of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investment in the Local Limited  Partnerships using the equity method.  Thus the
individual  investments are carried at cost plus the Partnership's  share of the
Local Limited  Partnership's  profits less the Partnership's  share of the Local
Limited Partnership's losses and distributions and impairment charges.  However,
since the  Partnership  is not legally  liable for the  obligations of the Local
Limited  Partnerships,  or is not  otherwise  committed  to  provide  additional
support to them, it does not recognize losses once its investment in each of the
Local Limited  Partnerships  reaches zero.  Distributions from the Local Limited
Partnerships  are accounted for as a reduction of the  investment  balance until
the investment balance is reduced to zero. Subsequent distributions received are
recognized as income in the  accompanying  statements of  operations.  For those
investments  where the Partnership has determined that the carrying value of its
investments  approximates  the estimated  fair value of those  investments,  the
Partnership's  policy is to  recognize  equity  in  income of the Local  Limited
Partnerships  only to the extent of  distributions  received and amortization of
acquisition costs from those Local Limited Partnerships.

For those  investments  where the  Partnership  has determined that the carrying
value  of its  investments  approximates  the  estimated  fair  value  of  those
investments,  the  Partnership's  policy is to recognize equity in income of the
Local  Limited  Partnerships  only to the extent of  distributions  received and
amortization  of  acquisition  costs  from  those  Local  Limited  Partnerships.
Therefore,  the  Partnership  limits its  recognition of equity  earnings to the
amount it expects to ultimately  realize.  The Partnership  recognized equity in
loss of  limited  partnerships  of  approximately  $21,000  for the  year  ended
December 31, 2001, which was equal to the cash  contributed  during the year for
the respective Local Limited Partnerships. There was no recognition of equity in
losses from the Local Limited Partnerships for the year ended December 31, 2002,
as the  Partnership's  investment  in all Local Limited  Partnership's  had been
reduced to zero prior to January 1, 2002.

Distributions  from the Local Limited  Partnerships  in which the  Partnership's
investment  in the Local  Limited  Partnerships  has been  reduced  to zero were
approximately  $36,000 and $54,000  for the years  ended  December  31, 2002 and
2001, respectively.  These amounts were recognized as income on the accompanying
statements of operations, in accordance with the equity method of accounting.

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

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

Operating expenses,  other than management fees, consist of legal and accounting
fees for services rendered to the Partnership and administrative expenses. Legal
and accounting fees were approximately $105,000 and $126,000 for the years ended
December 31, 2002 and 2001,  respectively.  The decrease in legal and accounting
fees is due primarily to a decrease in the cost of the annual audit  required by
the Partnership Agreement.

Administrative  expenses  were  approximately  $33,000 and $89,000 for the years
ended December 31, 2002 and 2001,  respectively.  The decrease in administrative
expenses  is  attributable  to a  decrease  in the  costs  associated  with  the
preparation  and filing of the  Partnership's  quarterly  and  annual  financial
statements.  In  addition,   approximately  $32,000  was  incurred  during  2001
associated  with the sale of New Haven Plaza  Associates  in prior  years.  Such
expenses were not incurred during 2002. Included in administrative  expenses are
reimbursements to NAPICO for certain expenses, which totaled $20,000 and $19,000
for the years ended December 31, 2002 and 2001, respectively.

A recurring partnership expense is the annual management fee. The fee is payable
to the Corporate  General  Partner of the  Partnership  and is calculated at 0.4
percent of the Partnership's  original remaining invested assets. The management
fee is paid to the Corporate  General  Partner for its continuing  management of
partnership  affairs.  The fee is payable beginning with the month following the
Partnership's initial investment in a Local Limited Partnership. Management fees
were approximately $176,000 for both 2002 and 2001.

Total revenue for the Local Limited  Partnerships was  approximately  $9,944,000
and $9,895,000 for the years ended December 31, 2002 and 2001, respectively.

Total expenses for the Local Limited Partnerships were approximately  $9,542,000
and $9,455,000 for the years ended December 31, 2002 and 2001, respectively.

Total net income for the Local Limited Partnerships for 2002 and 2001 aggregated
approximately $402,000 and $440,000,  respectively.  The net income allocated to
the Partnership was $400,000 and $448,000 for 2002 and 2001, 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.

Other

AIMCO and its affiliates  owned 499 limited  partnership  units (the "Units") or
998 limited partnership  interests in the Partnership  representing 9.37% of the
outstanding  Units  at  December  31,  2002.  A Unit  consists  of  two  limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional units of limited partnership  interest in the Partnership in exchange
for cash or a  combination  of cash and units in the  operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Corporate  General Partner.  Although the Corporate General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
Corporate  General  partner  also  owes  fiduciary  duties  to AIMCO as its sole
stockholder.  As a result,  the  duties of the  Corporate  General  Partner,  as
corporate general partner,  to the Partnership and its limited partners may come
into conflict with the duties of the Corporate  General Partner to AIMCO, as its
sole stockholder.

Recent Accounting Pronouncements

In  January  2003,  the  FASB  issued  FASB  Interpretation  No.  46  ("FIN46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN46 requires  certain  variable  interest  entities to be  consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. FIN46 is effective
for all new variable  interest  entities  created or acquired  after January 31,
2003. For variable  interest  entities  created or acquired prior to February 1,
2003,  the  provisions  of FIN46 must be applied for the first interim or annual
period  beginning after June 15, 2003. The  Partnership is currently  evaluating
the  effect,  if any,  that the  adoption  of FIN46 will have on its  results of
operations and financial condition.

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

Method of Accounting for Investments in Limited Partnerships

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investments  in the Local  Limited  Partnerships  using the equity  method.  The
Partnership  is allocated  profits and losses of the Local Limited  Partnerships
based  upon  its  respective   ownership   percentage  (between  94%  and  99%).
Distributions  of surplus cash from  operations  from most of the Local  Limited
Partnerships  are  restricted  by the  Local  Limited  Partnerships'  Regulatory
Agreements  with the United States  Department of Housing and Urban  Development
("HUD") and /or are  restricted  by the terms of the mortgages  encumbering  the
Projects. These restrictions limit the distribution to a portion, generally less
than 10%, of the initial invested capital.  The excess surplus cash is deposited
into a residual  receipts  reserve,  of which the  ultimate  realization  by the
Partnership is uncertain as HUD  frequently  retains it upon sale or dissolution
of the Local  Limited  Partnership.  The  Partnership  is allocated  profits and
losses and receives distributions from refinancings and sales in accordance with
the Local Limited Partnerships' partnership agreements. These agreements usually
limit the Partnership's  distributions to an amount  substantially less than its
ownership percentage in the Local Limited Partnership.

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

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

ITEM 7.  Financial Statements

REAL ESTATE ASSOCIATES LIMITED II

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Report of Deloitte & Touche LLP, Independent Auditors

      Balance Sheet - December 31, 2002

      Statements of Operations - Years ended December 31, 2002 and 2001

      Statements  of  Changes  in  Partners'  (Deficit)  Capital  - Years  ended
      December 31, 2002 and 2001

      Statements of Cash Flows - Years ended December 31, 2002 and 2001

      Notes to Financial Statements

                          Independent Auditors' Report



The Partners
Real Estate Associates Limited II

We have audited the accompanying balance sheet of Real Estate Associates Limited
II as of December 31, 2002, and the related statements of operations,  partners'
deficit,  and cash flows for the year then ended. These financial statements are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these financial  statements based on our audit. We did not
audit the financial statements of the limited  partnerships,  the investments in
which are reflected in the  accompanying  financial  statements using the equity
method of accounting. The investee information for these limited partnerships is
included  in Note 2 and  Note 5.  The  financial  statements  of  these  limited
partnerships  were audited by other auditors.  Their reports have been furnished
to us, and our opinion,  insofar as it relates to the amounts included for these
limited partnerships, is based solely on the reports of the other auditors.

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

In our opinion,  based on our audit and the reports of the other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the financial  position of Real Estate Associates  Limited II as of December 31,
2002,  and the  results of its  operations  and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States.

                                                            /s/Ernst & Young LLP


Greenville, SC
April 12, 2003


                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying  statements of operations,  partners' (deficit)
capital and cash flows of Real Estate  Associates  Limited II for the year ended
December 31, 2001.  These  financial  statements are the  responsibility  of the
management of the Partnership.  Our  responsibility  is to express an opinion on
these  financial  statements  based on our audit. 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 to the
financial  statements.  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 audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free 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 audit and the reports of other
auditors provide a reasonable basis for our opinion.

In our  opinion,  based on our  audit and the  reports  of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the results of operations  and cash flows of Real Estate  Associates  Limited II
for the year ended December 31, 2001 in conformity  with  accounting  principles
generally accepted in the United States of America.



DELOITTE & TOUCHE LLP

Los Angeles, California
April 5, 2002


                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                                  Balance Sheet

                                December 31, 2002
                                 (In Thousands)
<TABLE>
<CAPTION>


                                                                                2002
                           ASSETS

 Investments in and Advances to Local Limited Partnerships
<S>     <C>                                                                    <C>
  (Note 2)                                                                     $   --
 Cash and cash equivalents                                                         11
       Total Assets                                                             $ 11

              Liabilities and Partners' Deficit

Liabilities:
  Accounts payable                                                              $ 13
  Accrued fees due to affiliates (Note 3)                                         279
                                                                                  292

Commitments and Contingencies (Note 6)

Partners' Deficit:
  General partners                                               $(221)
  Limited partners                                                 (60)          (281)
       Total Liabilities and Partners' Deficit                                 $   11

                      See Accompanying Notes to Financial Statements.
</TABLE>


                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                            Statements of Operations
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>


                                                            Years Ended December 31,
                                                            2002                2001
Reserves:
<S>                                                          <C>                <C>
Interest Income                                              $ 3                $ 24

Operating Expenses:
  Legal and accounting                                        105                 126
  Management fees - general partner (Note 3)                  176                 176
  Administrative (Note 3)                                      33                  89
      Total operating expenses                                314                 391

Loss from partnership operations                             (311)               (367)

Distributions in excess of investment in
  Local Limited Partnerships (Note 2)                          36                  54

Equity in loss of Local Limited Partnerships
  and Amortization of Acquisition Costs (Note 2)               --                 (21)

Net Loss                                                   $ (275)             $ (334)

Net loss allocated to general partners (1%)                 $ (3)               $ (3)
Net loss allocated to limited partners (99%)                 (272)               (331)
                                                           $ (275)             $ (334)

Net Loss per Limited Partnership Interest (Note 1)         $ (26)              $ (31)

                      See Accompanying Notes to Financial Statements.
</TABLE>


                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    Statements of Partners' (Deficit) Capital
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>

                                                  General          Limited
                                                  Partners         Partners        Total

<S>                                      <C>                        <C>
             Partnership interests (Note 1)                         10,656

             Partners' (Deficit) Capital at
              January 1, 2001                     $ (215)         $    543       $  328
             Net loss for the year ended
              December 31, 2001                       (3)             (331)        (334)
             Partners' (Deficit) Capital at
              December 31, 2001                     (218)              212           (6)
             Net loss for the year ended
              December 31, 2002                       (3)             (272)        (275)
             Partners' Deficit at
              December 31, 2002                   $ (221)         $    (60)      $ (281)

                      See Accompanying Notes to Financial Statements.
</TABLE>


                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                            Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                  Year ended December 31,
                                                                    2002            2001
Cash Flows from Operating Activities:
<S>                                                                <C>             <C>
  Net loss                                                         $(275)          $(334)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Equity in loss of limited partnerships and
        amortization of acquisition costs                             --              21
      Increase in accrued fees due to affiliates                     179             100
      (Decrease) increase in accounts payable                        (33)             30
         Net cash used in operating activities                      (129)           (183)

Cash Flows from Investing Activities:
  Capital contributions                                               --             (21)
         Net cash used in investing activities                        --             (21)

Net decrease in cash and cash equivalents                           (129)           (204)

Cash and cash equivalents, beginning of year                         140             344

Cash and cash equivalents, end of year                              $ 11           $ 140


                      See Accompanying Notes to Financial Statements.
</TABLE>


                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


Note 1 - Organization and Summary of Significant Accounting Policies

Organization

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

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

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

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

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

Basis of Presentation

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

Use of Estimates

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

Method of Accounting for Investments in Limited Partnerships

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

Net 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 at the end of the year. The number of limited partnership  interests
was 10,656 for 2002 and 10,693 for 2001.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in bank accounts.  At certain
times,  the amount of cash  deposited  at a bank may exceed the limit on insured
deposits. Cash balances included approximately $11,000 at December 31, 2002 that
are  maintained  by an  affiliated  management  company on behalf of  affiliated
entities in a cash concentration account.

Impairment of Long-Lived Assets

The  Partnership  reviews its  investments in long-lived  assets to determine if
there  has  been  any  permanent   impairment  whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable.  If the sum of the  expected  future  cash  flows is less  than the
carrying amount of the assets, the Partnership recognizes an impairment loss. No
impairment  losses were recognized  during the years ended December 31, 2002 and
2001.

Segment Reporting

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

Fair Value of Financial Instruments

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

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144
provides  accounting  guidance for  financial  accounting  and reporting for the
impairment or disposal of long-lived  assets.  SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years  beginning
after December 15, 2001. The Partnership  adopted SFAS No. 144 effective January
1,  2002.  The  adoption  did not have an effect on the  financial  position  or
results of operations of the Partnership.

In  January  2003,  the  FASB  issued  FASB  Interpretation  No.  46  ("FIN46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN46 requires  certain  variable  interest  entities to be  consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. FIN46 is effective
for all new variable  interest  entities  created or acquired  after January 31,
2003. For variable  interest  entities  created or acquired prior to February 1,
2003,  the  provisions  of FIN46 must be applied for the first interim or annual
period  beginning after June 15, 2003. The  Partnership is currently  evaluating
the  effect,  if any,  that the  adoption  of FIN46 will have on its  results of
operations and financial condition.

Note 2 - Investments in and Advances to Limited Partnerships

As of December 31, 2002, the Partnership holds limited partnership  interests in
thirteen limited partnerships ("Local Limited  Partnerships").  All of the Local
Limited  Partnerships  owned,  as of December 31, 2002,  residential  low income
rental projects consisting of 1,078 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  another
partnership.

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local  Limited  Partnerships.  Accordingly,  the  Partnership  accounts  for its
investments  in the Local  Limited  Partnerships  using the equity  method.  The
Partnership  is allocated  profits and losses of the Local Limited  Partnerships
based  upon  its  respective   ownership   percentage  (between  94%  and  99%).
Distributions  of surplus cash from  operations  from most of the Local  Limited
Partnerships  are  restricted  by the  Local  Limited  Partnerships'  Regulatory
Agreements  with the United States  Department of Housing and Urban  Development
("HUD")  and/or are  restricted  by the terms of the mortgages  encumbering  the
Projects. These restrictions limit the distribution to a portion, generally less
than 10%, of the initial invested capital.  The excess surplus cash is deposited
into a residual  receipts  reserve,  of which the  ultimate  realization  by the
Partnership is uncertain as HUD  frequently  retains it upon sale or dissolution
of the Local  Limited  Partnership.  The  Partnership  is allocated  profits and
losses and receives distributions from refinancings and sales in accordance with
the Local Limited Partnerships' partnership agreements. These agreements usually
limit the Partnership's  distributions to an amount  substantially less than its
ownership percentage in the Local Limited Partnership.

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

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

The   Partnership  has  no  carrying  value  in  investments  in  Local  Limited
Partnerships as of December 31, 2002.

The difference  between the investment  per the  accompanying  balance sheets at
December  31,  2002,  and the  deficiency  per the Local  Limited  Partnerships'
combined financial statements is due primarily to cumulative unrecognized equity
in losses of certain limited  partnerships,  costs capitalized to the investment
account,  cumulative  distributions  recognized  as income  and  recognition  of
impairment losses.

Summaries of the condensed  combined balance sheet of the  aforementioned  Local
Limited  Partnerships  as of December  31,  2002,  and the  combined  results of
operations  for each of the two years in the period ended  December 31, 2002 are
as follows:

                        Condensed Combined Balance Sheet
                        of the Local Limited Partnerships

                                                December 31, 2002

                                                 (in thousands)
Assets:
   Land                                              $ 2,350
   Buildings and improvements, net of

     accumulated depreciation of
     approximately $33,143                            13,068
   Other Assets                                       10,865
     Total Assets                                    $26,283

Liabilities and Partners' Deficit:

 Liabilities:
  Mortgage Notes Payable                             $32,388
  Notes Payable                                          262
  Other Liabilities                                    1,121
      Total Liabilities                               33,771
Partners' Deficit                                     (7,488)
      Total Liabilities & Partners' Deficit          $26,283

                    Condensed Combined Results of Operations
                        of the Local Limited Partnerships

                                                          December 31,
                                                     2002              2001
                                                         (in thousands)
Revenues:
  Rental and other                                  $ 9,944          $9,895

Expenses:
  Operating                                           5,373           5,349
  Financial                                           2,637           2,721
  Depreciation and amortization                       1,532           1,385
     Total Expenses                                   9,542           9,455

Net Income                                           $ 402          $   440

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

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

Note 3 - Transactions with Affiliated Parties

Under the terms of the Restated  Certificate and Agreement of Limited  Partners,
the  Partnership  is liable to NAPICO for an annual  management fee equal to 0.4
percent of the original  invested assets of the limited  partnerships.  Invested
assets are defined as the costs of acquiring  project  interests,  including the
proportionate  amount  of  the  mortgage  loans  related  to  the  Partnership's
interests in the capital  accounts of the respective  partnerships.  For both of
the years ended December 31, 2002 and 2001, the fee was approximately $176,000.

The Partnership  reimburses  NAPICO for certain  expenses.  The reimbursement to
NAPICO was approximately $20,000 and $19,000 in 2002 and 2001, respectively, and
is included in administrative expenses.

As of December 31, 2002, the fees and expenses due the Corporate General Partner
exceeded the  Partnership's  cash.  The Corporate  General  Partner,  during the
forthcoming  year, will not demand payment of amounts due in excess of such cash
or such that the Partnership would not have sufficient  operating cash; however,
the Partnership will remain liable for all such amounts.

AIMCO and its affiliates  owned 499 limited  partnership  units (the "Units") or
998 limited partnership  interests in the Partnership  representing 9.37% of the
outstanding  Units  at  December  31,  2002.  A Unit  consists  of  two  limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional units of limited partnership  interest in the Partnership in exchange
for cash or a  combination  of cash and units in the  operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Corporate  General Partner.  Although the Corporate General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
Corporate  General  partner  also  owes  fiduciary  duties  to AIMCO as its sole
stockholder.  As a result,  the  duties of the  Corporate  General  Partner,  as
corporate general partner,  to the Partnership and its limited partners may come
into conflict with the duties of the Corporate  General Partner to AIMCO, as its
sole stockholder.

Note 4 - Income Taxes

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

A reconciliation is as follows:

                                                  Years Ended December 31,
                                                     2002            2001
                                                       (in thousands)

Net loss per financial statements                 $  (275)         $  (334)

  Other                                               176              120
  Partnership's share of limited local
   Partnership                                      1,253              712

Income per tax return                             $ 1,154          $   498
Income per limited partnership interest           $107.22          $ 46.16

The following is a reconciliation between the Partnership's reported amounts and
the federal tax basis of net liabilities:

                                                   December 31, 2002
                                                     (in thousands)

      Net liabilities as reported                      $   (281)
      Add (deduct):
       Investment in Partnerships                       (14,212)
       Deferred offering costs                            3,516
       Other                                                316
      Net deficit - federal tax basis                  $(10,661)


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



                         Gross Amount At Which
                                Carried
                              At December 31, 2002
                                 (in thousands)

<TABLE>
<CAPTION>

                                    Buildings
                                       And
                                     Related
                                        Personal             Accumulated   Date of
    Description     Encumbrances Land   Property    Total    DepreciationConstruction
<S>                  <C>        <C>      <C>       <C>         <C>       <C>   <C>
Azalea Court         $1,457     $   62   $1,868    $1,930      $   961   10/80-3/81

Branford Elderly        760        138    1,607     1,745         787     6/80-4/81

Cherrywood/Saturn     2,858        146    2,623     2,769       2,012     9/79-4/80
Apartments

Clearfield Manor      1,065         50    1,272     1,322         662    10/80-10/81

Crystal Springs         607         36      796       832         642     7/80-3/81

Lakeside              1,817        115    1,612     1,727       1,554    10/80-6/81
Apartments
Landmark Towers         678         39    1,646     1,685       1,466    4/79-10/80

Magnolia State        1,174         57    1,647     1,704       1,154     3/80-8/80

Redfern Grove           953        246    2,803     3,049       2,204     7/80-7/81
Apartments

Sugar River Mills     6,711        310    9,393     9,703       6,316     2/81-4/82

Valebrook             2,674         89    5,235     5,324       4,324     2/79-2/80

Westward Ho          11,212      1,040   15,085    16,125      10,543    4/80-12/81
Apartments

Willow Wick             422         22      624       646         518     9/80-5/81
Apartments

  Totals            $32,388     $2,350  $46,211   $48,561      $33,143
</TABLE>

 Reconciliation of real estate

                                                 Years Ended December 31,
                                                   2002           2001
                                                      (in thousands)

Balance at beginning of period                    $47,629       $47,497
Improvements during the period                        932           132
Balance at end of period                          $48,561       $47,629

Reconciliation of accumulated depreciation

                                                 Years Ended December 31,
                                                   2002           2001
                                                      (in thousands)
Balance at beginning of period                    $31,844       $30,761
Depreciation expense for the period                 1,299         1,083
Balance at end of period                          $33,143       $31,844

Note 6 - Contingencies

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests  in Real Estate  Associates  Limited  III (an  affiliated
partnership in which NAPICO is the corporate  general partner) and two investors
holding an  aggregate  of five units of limited  partnership  interests  in Real
Estate Associates Limited VI (another affiliated  partnership in which NAPICO is
the corporate general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other  defendants.  The complaint  alleged that the defendants  breached
their  fiduciary  duty  to  the  limited  partners  of  certain  NAPICO  managed
partnerships  and  violated  securities  laws by  making  materially  false  and
misleading statements in the consent solicitation statements sent to the limited
partners  of  such  partnerships   relating  to  approval  of  the  transfer  of
partnership interests in limited partnerships, owning certain of the properties,
to affiliates of Casden  Properties  Inc.,  organized by an affiliate of NAPICO.
The plaintiffs  sought  equitable  relief,  as well as compensatory  damages and
litigation  related costs.  On August 4, 1999, one investor  holding one unit of
limited  partnership  interest in Housing Programs  Limited (another  affiliated
partnership  in which  NAPICO is the  corporate  general  partner)  commenced  a
virtually  identical  action in the United States District Court for the Central
District  of  California  against  the  Partnership,  NAPICO and  certain  other
entities.  The second action was subsumed in the first action, and was certified
as a  class  action.  On  August  21,  2001,  plaintiffs  filed  a  supplemental
complaint,  which added new claims,  including a  rescission  of the transfer of
partnership  interests  and an  accounting.  The matter was tried in October and
November  2002. In November  2002, the jury returned  special  verdicts  against
NAPICO and certain other defendants in the amount of approximately $25.2 million
for  violations of securities  laws and against NAPICO for  approximately  $67.3
million for  breaches of  fiduciary  duty.  In  addition,  the jury  awarded the
plaintiffs  punitive damages against NAPICO of approximately  $92.5 million.  On
April  3,  2003,  the  judge  entered  certain  orders  in  connection  with the
litigation that denied defendants' motion for a new trial and set April 28, 2003
as the date for entry of judgment against NAPICO and certain other defendants in
the amount of $25.2 million for violations of securities laws and against NAPICO
for $67.3 million for breaches of fiduciary  duty,  both amounts plus  interest,
subject to plaintiffs' agreement to reducing the jury award for punitive damages
against NAPICO from $92.5 million to $2.6 million. While the case is expected to
be appealed,  the entire matter is the responsibility of the former shareholders
of  Casden  Properties  Inc.  pursuant  to  the  documents  related  to  AIMCO's
acquisition of Casden Properties Inc., which was completed in March 2002.

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

Note 7 - Abandonment of Limited Partnership Units

During 2002, the number of limited  partnership  units decreased by 37 units due
to limited  partners  abandoning  their units.  In abandoning his or her Limited
Partnership  Unit(s),  a limited  partner  relinquishes  all right,  title,  and
interest in the partnership as of the date of abandonment.  However, the limited
partner is allocated  his or her share of net income or loss for that year.  The
income or loss per limited  partnership unit in the  accompanying  statements of
operations is calculated based on the number of units  outstanding at the end of
the year. There were no units abandoned during 2001.

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

Effective  August 29,  2002,  the  Registrant  dismissed  its prior  Independent
Auditors,  Deloitte & Touche LLP and retained as its new  Independent  Auditors,
Ernst & Young LLP.  Deloitte & Touche LLP  Independent  Auditors'  Report on the
Registrant's  financial statements for the calendar year ended December 31, 2001
did not  contain an adverse  opinion or a  disclaimer  of  opinion,  and was not
qualified or modified as to uncertainty,  audit scope or accounting  principles.
The  decision to change  Independent  Auditors  was  approved  by the  Corporate
General  Partner's  directors.  During the calendar  year ended 2001 and through
August 29, 2002, there were no disagreements between the Registrant and Deloitte
& Touche LLP on any matter of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure which disagreements if not
resolved to the  satisfaction of D&T Deloitte & Touche LLP, would have caused it
to make reference to the subject matter of the  disagreements in connection with
its reports.

Effective  August 29,  2002,  the  Registrant  engaged  Ernst & Young LLP as its
Independent Auditors.  During the last two calendar years and through August 29,
2002,  the  Registrant  did not consult  Ernst & Young LLP  regarding any of the
matters or events set forth in Item 304 (a)(2)(i) and (ii) of Regulation S-B.

                                    PART III

ITEM 9.  Directors and Executive Officers of the Registrant

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

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

Peter K. Kompaniez              58    Director
David R. Robertson              37    President, Chief Executive Officer
                                      and Director
Michael J. Hornbrook            48    Executive Vice President and Chief
                                      Operating Officer
Jeffrey H. Sussman              37    Senior Vice President, General
                                       Counsel and Secretary
Brian H. Shuman                 40    Senior Vice President and Chief
                                       Financial Officer

Peter K.  Kompaniez  has been a Director  of NAPICO  since  April 1,  2000.  Mr.
Kompaniez  has been  Vice  Chairman  of the  Board  of  Directors  of  Apartment
Investment and Management  Company  ("AIMCO")  since July 1994 and was appointed
President of AIMCO in July 1997.

David R. Robertson has been President, Chief Executive Officer and a Director of
NAPICO since October 2002.  Mr.  Robertson is also  Executive  Vice President of
AIMCO  and  is  responsible  for  property  operations,   asset  management  and
transaction   activities   within  AIMCO   Capital's   portfolio  of  affordable
properties. Prior to joining AIMCO, Mr. Robertson was a member of the investment
banking group at Smith Barney from 1991 to 1996,  where he was  responsible  for
real estate investment  banking  transactions in the western United States,  and
was part of the Smith Barney team that managed  AIMCO's  initial public offering
in 1994.  From February 1996 until  February  2002,  when Mr.  Robertson  joined
AIMCO, he was the Chairman and Chief Executive Officer of Robeks Corporation,  a
privately held chain of specialty food stores.

Michael J.  Hornbrook has been  Executive Vice President of NAPICO since January
2002 and became Chief Operating  Officer of NAPICO in April 2002. Mr.  Hornbrook
is also  Senior  Vice  President  of AIMCO  and is  responsible  for tax  credit
placement activities and transactions involving properties in AIMCO's affordable
housing portfolio  located in the western United States.  Prior to January 2002,
Mr.  Hornbrook  was a partner in the law firm of McGuire Woods LLP in the firm's
Chicago office and  specialized in the area of real estate law with a particular
focus on affordable  housing and tax credits.  Mr. Hornbrook was the Chairman of
the firm's Affordable Housing Group.

Jeffrey H.  Sussman is Senior Vice  President,  General  Counsel and  Secretary,
having joined NAPICO in 1998. Mr.  Sussman is responsible  for the legal affairs
of NAPICO and its affiliates. 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.

Brian H. Shuman is Senior Vice  President and Chief  Financial  Officer,  having
joined NAPICO in 2000.  Mr. Shuman 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,  Mr.  Shuman  was  the
Controller  for DVI Business  Credit  Corporation,  which  provides  asset based
lending to a wide range of health concerns.

The executive  officers and directors of the Corporate  General  Partner fulfill
the obligations of the Audit Committee and oversee the  Partnership's  financial
reporting process on behalf of the Corporate General Partner. Management has the
primary  responsibility  for the financial  statements and the reporting process
including  the  systems  of  internal  controls.  In  fulfilling  its  oversight
responsibilities,  the executive officers and directors of the Corporate General
Partner reviewed the audited  financial  statements with management  including a
discussion  of the  quality,  not  just  the  acceptability,  of the  accounting
principles,  the  reasonableness  of significant  judgments,  and the clarity of
disclosures in the financial statements.

The executive  officers and directors of the Corporate  General Partner reviewed
with the independent auditors,  who are responsible for expressing an opinion on
the conformity of those audited  financial  statements  with generally  accepted
accounting  principles,  their  judgments  as  to  the  quality,  not  just  the
acceptability,  of the Partnership's accounting principles generally accepted in
the United  States and such other  matters as are required to be discussed  with
the  Audit  Committee  or its  equivalent  under  auditing  standards  generally
accepted in the United States.  In addition,  the Partnership has discussed with
the  independent  auditors the auditors'  independence  from  management and the
Partnership  including  the matters in the written  disclosures  required by the
Independence  Standards  Board and  considered  the  compatibility  of non-audit
services with the auditors' independence.

The executive  officers and directors of the Corporate General Partner discussed
with the  Partnership's  independent  auditors  the overall  scope and plans for
their audit. In reliance on the reviews and discussions  referred to above,  the
executive  officers and directors of the Corporate General Partner have approved
the  inclusion of the audited  financial  statements  in the Form 10-KSB for the
year  ended  December  31,  2002 for filing  with the  Securities  and  Exchange
Commission.

The Corporate  General Partner has reappointed  Ernst & Young LLP as independent
auditors to audit the financial statements of the Partnership for 2003. Fees for
2002  were  annual  audit  of  approximately   $28,000  and  non-audit  services
(principally tax-related) of approximately $20,000.

ITEM 10.   Executive Compensation

None of the directors and officers of the Corporate General Partner received any
remuneration from the Partnership during the year ended December 31, 2002.

ITEM 11.   Security Ownership of Certain Beneficial Owners and Management

(a)    Security Ownership of Certain Beneficial Owners

       The  General  Partners  own all of the  outstanding  general  partnership
       interests of REAL II.  Except as noted below as of December 31, 2002,  no
       person or  entity  is known to the  Partnership  to own  beneficially  in
       excess of 5 percent of the outstanding limited partnership interests.

                                         Number of Limited
      Entity                           Partnership Interests     Percentage
      AIMCO Properties, LP
        (an affiliate of AIMCO)            998                       9.37%

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

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

ITEM 12.    Certain Relationships and Related Transactions

Under the terms of the Restated  Certificate and Agreement of Limited  Partners,
the  Partnership  is liable to NAPICO for an annual  management fee equal to 0.4
percent of the original  invested assets of the limited  partnerships.  Invested
assets are defined as the costs of acquiring  project  interests,  including the
proportionate  amount  of  the  mortgage  loans  related  to  the  Partnership's
interests in the capital  accounts of the respective  partnerships.  For both of
the years ended December 31, 2002 and 2001, the fee was approximately $176,000.

The Partnership  reimburses  NAPICO for certain  expenses.  The reimbursement to
NAPICO was approximately $20,000 and $19,000 in 2002 and 2001, respectively, and
is included in administrative expenses.

As of December 31, 2002, the fees and expenses due the Corporate General Partner
exceeded the  Partnership's  cash.  The Corporate  General  Partner,  during the
forthcoming  year, will not demand payment of amounts due in excess of such cash
or such that the Partnership would not have sufficient  operating cash; however,
the Partnership will remain liable for all such amounts.

AIMCO and its affiliates  owned 499 limited  partnership  units (the "Units") or
998 limited partnership  interests in the Partnership  representing 9.37% of the
outstanding  Units  at  December  31,  2002.  A Unit  consists  of  two  limited
partnership interests.  It is possible that AIMCO or its affiliates will acquire
additional units of limited partnership  interest in the Partnership in exchange
for cash or a  combination  of cash and units in the  operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action with  respect to a variety of matters,  which
would  include  voting on certain  amendments to the  Partnership  Agreement and
voting to remove the Corporate  General Partner.  Although the Corporate General
Partner owes fiduciary duties to the limited  partners of the  Partnership,  the
Corporate  General  partner  also  owes  fiduciary  duties  to AIMCO as its sole
stockholder.  As a result,  the  duties of the  Corporate  General  Partner,  as
corporate general partner,  to the Partnership and its limited partners may come
into conflict with the duties of the Corporate  General Partner to AIMCO, as its
sole stockholder.

ITEM 13.    Exhibits and Reports on Form 8-K

(a) Exhibits:

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

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

      Exhibit 16 Letter  dated  August 29, 2002 from  Deloitte  and Touche,  LLP
      filed as an exhibit to the  Registrant's  Current Report on Form 8-K dated
      August 29, 2002 and incorporated herein by reference.

      Exhibit 99.0 Certification of Chief Executive Office and Chief Financial
                   Officer

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

      Exhibit 99.2 Independent Auditors Report for Branford Development
                   Associates

      Exhibit 99.3 Independent Auditors Report for Cherrywood Associates

      Exhibit 99.4 Independent Auditors Report for Crystal Springs Associates,
                   Ltd

      Exhibit 99.5 Independent Auditors Report for Lakeside Apartments

      Exhibit 99.6 Independent Auditors Report for Landmark Associates

      Exhibit 99.7 Independent Auditors Report for Gulfport Associates, Ltd

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

      Exhibit 99.9 Independent Auditors Report for Valebrook Associates

      Exhibit 99.10 Independent Auditors Report for Westward Ho Associates

      Exhibit 99.11 Independent Auditors Report for Alabama Properties, Ltd. II

      Exhibit 99.12 Independent Auditors Report for Clearfield Manor Associates,
                    Ltd.

(b) Reports on Form 8-K:
      No reports on Form 8-K were filed for the quarter ended December 31, 2002.

Item 14.    Controls and Procedures

The principal executive officer and principal financial officer of the Corporate
General Partner, who are the equivalent of the Partnership's principal executive
officer and principal financial officer,  respectively,  have, within 90 days of
the filing  date of this  annual  report,  evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls
and  procedures  are  adequate.  There have been no  significant  changes in the
Partnership's  internal  controls or in other  factors that could  significantly
affect the  Partnership's  internal  controls since the date of evaluation.  The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.


                                   SIGNATURES



In accordance with the  requirements of Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                    REAL ESTATE ASSOCIATES LIMITED II
                                    (a California limited partnership)


                                    By:   National Partnership Investments Corp.
                                          Corporate General Partner

                                    By:   /s/Peter K. Kompaniez
                                          Peter K. Kompaniez
                                           Director

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

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

                                    Date: April 18, 2003

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

/s/Peter K. Kompaniez         Director                    Date:  April 18, 2003
Peter K. Kompaniez



/s/David R. Robertson         President, Chief Executive  Date: April 18, 2003
David R. Robertson             Officer and Director



/s/Brian H. Shuman            Senior Vice President and    Date: April 15, 2003
Brian H. Shuman                 Chief Financial Officer






                                  CERTIFICATION


I, David R. Robertson, certify that:


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


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


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


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


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


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      annual report (the "Evaluation Date"); and


      c) Presented in this annual report our conclusions about the effectiveness
      of the disclosure  controls and  procedures  based on our evaluation as of
      the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  April 18, 2003

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

                                  CERTIFICATION


I, Brian H. Shuman, certify that:


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


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


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


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


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


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      annual report (the "Evaluation Date"); and


      c) Presented in this annual report our conclusions about the effectiveness
      of the disclosure  controls and  procedures  based on our evaluation as of
      the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date:  April 18, 2003

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

                        REAL ESTATE ASSOCIATES LIMITED II
                                  EXHIBIT INDEX


Exhibit     Description of Exhibit

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

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

     16   Letter dated August 29, 2002 from Deloitte and Touche, LLP filed as an
          exhibit to the  Registrant's  Current  Report on Form 8-K dated August
          29, 2002 and incorporated herein by reference.

99.0        Certification of Chief Executive Officer and Chief Financial Officer

99.1        Independent Auditors Report for Azalea Court Investment Group, Ltd

99.2        Independent Auditors Report for Branford Development Associates

99.3        Independent Auditors Report for Cherrywood Associates

99.4        Independent Auditors Report for Crystal Springs Associates, Ltd

99.5        Independent Auditors Report for Lakeside Apartments

99.6        Independent Auditors Report for Landmark Associates

99.7        Independent Auditors Report for Gulfport Associates, Ltd

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

99.9        Independent Auditors Report for Valebrook Associates

99.10       Independent Auditors Report for Westward Ho Associates

99.11       Independent Auditors Report for Alabama Properties, Ltd. II

99.12       Independent Auditors Report for Clearfield Manor Associates, Ltd.


Exhibit 99.0


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



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

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

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


                                    /s/ David R. Robertson
                              Name: David R. Robertson
                              Date: April 18, 2003


                                    /s/ Brian H. Shuman
                              Name: Brian H. Shuman
                              Date: April 18, 2003


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

Exhibit 99.1
                          INDEPENDENT AUDITOR'S REPORT

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

We have  audited the  accompanying  balance  sheets of Azalea  Court  Investment
Group,  Ltd., a limited  partnership,  RHS Project No.:  01-049-630805993  as of
December 31, 2002 and 2001, and the related statements of operations,  partners'
deficit and cash flows for the years then ended. These financial  statements are
the  responsibility of the partnership's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Azalea Court Investment Group,
Ltd.,  RHS Project No.:  01-049-630805993  as of December 31, 2002 and 2001, and
the  results  of its  operations  and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2002 and  2001,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 29, 2003 on our  consideration of Azalea Court  Investment  Group,
Ltd.'s  internal  control  over  financial  reporting  and on our  tests  of its
compliance with certain provisions of laws and regulations.

/s/Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 30, 2003


Exhibit 99.2
                          INDEPENDENT AUDITOR'S REPORT

To the Partners
Branford Development Associates
Branford, Connecticut

We  have  audited  the  accompanying  balance  sheets  of  Branford  Development
Associates (A Limited Partnership),  Project No. 78-055M,(the "Project"),  as of
December 31, 2002 and 2001,  and the related  statements of income and partner's
capital,  changes in partners' capital, and cash flows for the years then ended.
These  financial   statements  are  the   responsibility  of  the  partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  The 2000 financial  statements were audited by
other  auditors  whose report dated  January 25, 2001  expressed an  unqualified
opinion on those financial statements.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of the Project at December 31,
2002 and 2001, and the results of its operations,  changes in partners' capital,
and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

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

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


/s/Kimball, Paris & Gugliotti, P.C.
January 14, 2003

Exhibit 99.3

INDEPENDENT AUDITOR'S REPORT


January 24, 2003

To the Partners of
Cherrywood Associates:

We have audited the  accompanying  balance  sheets of  Cherrywood  Associates (a
limited  partnership)  as of  December  31,  2002  and  2001,  and  the  related
statements of  operations,  partners'  deficit and cash flows for the years then
ended.  These  financial  statements  are  the  responsibility  of  the  General
Partners.  Our  responsibility  is to  express  an  opinion  on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Cherrywood  Associates as of
December 31, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.

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

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 24, 2003, on our consideration of Cherrywood  Associates' internal
control and a report dated  January 24, 2003,  on its  compliance  with laws and
regulations.  Those  reports  are an  integral  part of the audit  performed  in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

/s/Leavitt, Christensen & Co.

Exhibit 99.4

                          INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying  balance sheets of Crystal Springs  Associates,
Ltd., a limited partnership,  RHS Project No.:  28-015-6308066036 as of December
31, 2002 and 2001, and the related  statements of operations,  partners' deficit
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Crystal Springs  Associates,
Ltd., RHS Project No.:  28-015-6308066036  as of December 31, 2002 and 2001, and
the  results  of its  operations  and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  12 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2002 and  2001,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information has been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated  January  29, 2003 on our  consideration  of Crystal  Springs  Associates,
Ltd.'s  internal  control  over  financial  reporting  and on our  tests  of its
compliance with certain provisions of laws and regulations.

/s/Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 29, 2003

      Exhibit 99.5

                                       INDEPENDENT AUDITORS' REPORT

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

      We have audited the  accompanying  balance  sheets of Lakeside  Apartments
      (Partnership)  as of December  31,  2002,  and the related  statements  of
      changes in partners' deficit, profit and loss, and cash flows for the year
      then ended.  These  financial  statements  are the  responsibility  of the
      Partnership's  management.  Our responsibility is to express an opinion on
      these financial statements based on our audits.

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

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

      In accordance  with  Government  Auditing  Standards,  we have also issued
      reports dated January 24, 2003 on our  consideration of the  Partnership's
      internal  control  and  on  our  tests  of  its  compliance  with  certain
      provisions of laws,  regulations,  contracts and grants. Those reports are
      an integral  part of an audit  performed in accordance  with  Governmental
      Auditing  Standards and should be read in conjunction  with this report in
      considering the results of our audit.

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

      /s/Crowe, Chizek and Company LLP
      South Bend, Indiana
      January 24, 2003


      Exhibit 99.6
                                      INDEPENDENT AUDITORS' REPORT

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

      We have audited the accompanying  balance sheets of Landmark Associates (a
      limited  partnership)  as of December  31, 2002 and 2001,  and the related
      statements of income,  Partners' capital (deficit), and cash flows for the
      years then ended. These financial statements are the responsibility of the
      Partnership's  management.  Our responsibility is to express an opinion on
      these financial statements based on our audits.

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

      In our opinion, the financial statements referred to above present fairly,
      in all material respects, the financial position of Landmark Associates as
      of December 31, 2002 and 2001,  and the results of its  operations and its
      cash  flows  for the  years  then  ended  in  conformity  with  accounting
      principles generally accepted in the United States of America.

      In accordance  with  Government  Auditing  Standards and the  Consolidated
      Audit Guide for Audits of HUD Programs (the "Guide"),  we have also issued
      resports  dated  February  7,  2003  on  our   consideration  of  Landmark
      Associates  (a limited  partnership's)  internal  control  structure,  its
      compliance with specific requirements.  Those reports are an integral part
      of an audit performed in accordance with Governmental  Auditing  Standards
      and should be read in  conjunction  with this  report in  considering  the
      results of our audit.

      /s/ Leavitt, Christensen & Co.

Exhibit 99.7

                                    INDEPENDENT AUDITORS' REPORT

      To the Partners
      Gulfport Associates, Ltd.
      Gulfport, Mississippi

      We have audited the  accompanying  balance sheets of Gulfport  Associates,
      Ltd.,  a limited  partnership,  RHS Project  No.:  28-024-630806037  as of
      December  31, 2002 and 2001,  and the related  statements  of  operations,
      partners' deficit and cash flows for the years then ended. These financial
      statements are the  responsibility  of the partnership's  management.  Our
      responsibility  is to express an  opinion  on these  financial  statements
      based on our audits.

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

      In our opinion, the financial statements referred to above present fairly,
      in all material respects,  the financial position of Gulfport  Associates,
      Ltd., RHS Project No.:  28-024-630806037 as of December 31, 2002 and 2001,
      and the  results of its  operations  and its cash flows for the years then
      ended in conformity with accounting  principles  generally accepted in the
      United States of America.

      The  audits  were made for the  purpose of forming an opinion on the basic
      financial  statements taken as a whole.  The  supplemental  information on
      pages 10 through 13 is presented for purposes of  additional  analysis and
      is not a required part of the basic financial statements. The supplemental
      information  presented in the Multiple  Family  Housing  Borrower  Balance
      Sheet (Form FmHA 1930-8)  Parts I and II for the years ended  December 31,
      2002  and  2001,  is  presented   for  purposes  of  complying   with  the
      requirements of the Rural Housing Services and is also not a required part
      of the basic financial statements.  Such information has been subjected to
      the  audit  procedures  applied  in  the  audit  of  the  basic  financial
      statements and in our opinion is fairly stated in all material respects in
      relation to the basic financial statements taken as a whole.

      In accordance with Government  Auditing  Standards,  we have also issued a
      report dated February 1, 2003 on our consideration of Gulfport Associates,
      Ltd.'s internal  control over financial  reporting and on our tests of its
      compliance with certain provisions of laws and regulations.

      /s/DONALD W. CAUSEY & ASSOCIATES, P.C.
      Gadsden, Alabama
      February 1, 2003


Exhibit 99.8

                          INDEPENDENT AUDITOR'S REPORT


To the Partners
Sugar River Mills Associates, L.P.                    HUD Area Office
Braintree, MA                                         Manchester, NH


We have audited the  accompanying  balance sheet of Sugar River Mills Associates
Limited  Partnership,  (a Massachusetts  limited  partnership) HUD Project.  No.
024-35052-PM-L8,  as of  December  31,  2002,  and  the  related  statements  of
operations,  partners'  equity (deficit) and cash flows for the year then ended.
These  financial   statements  are  the   responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Sugar River Mills Associates,
Limited  Partnership as of December 31, 2002, and the results of its operations,
the changes in partners'  equity  (deficit) and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.


/s/Ercolini & Company LLP

January 21, 2003

      Exhibit 99.9
                                      INDEPENDENT AUDITORS' REPORT

      To the Partners of
      Valebrook Associates

      We have audited the accompanying  balance sheet of Valebrook Associates (A
      Limited Partnership),  as of December 31, 2002, and the related statements
      of income,  partners'  equity  (deficit)  and cash flows for the year then
      ended.   These  financial   statements  are  the   responsibility  of  the
      partnership's  management.  Our responsibility is to express an opinion on
      these financial statements based on our audit.

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

      In our opinion, the financial statements referred to above present fairly,
      in all material respects,  the financial position of Valebrook  Associates
      (A Limited  Partnership)  at  December  31,  2002,  and the results of its
      operations  and its cash flows for the year then ended in conformity  with
      accounting principles generally accepted in the United States of America.


      /s/BDO Seidman, LLP
      Boston, Massachusetts
      February 3, 2003


Exhibit 99.10

                          Independent Auditor's Report

To the Partners
Westward Ho Associates
Phoenix, Arizona


We have audited the accompanying balance sheets of FHA Project  123-35106-PM-L8,
Westward Ho  Associates  (A Limited  Partnership),  as of December  31, 2002 and
2001, and the related  statements of operations,  partners' equity  (deficiency)
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Westward Ho Associates as of
December  31,  2002 and 2001,  and the  results  of its  operations,  changes in
partners'  equity  (deficiency)  and its cash  flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

In accordance  with Government  Auditing  Standards and the  Consolidated  Audit
Guide for Audits of HUD Programs  issued by the U.S.  Department  of Housing and
Urban  Development,  we have also issued a report dated  January 24, 2003 on our
consideration  of Westward Ho's  internal  control and reports dated January 24,
2003 on its  compliance  with  specific  requirements  applicable  to major  HUD
programs,   and   specific   requirements   applicable   to  Fair   Housing  and
Non-Discrimination.  Those reports are an integral part of an audit performed in
accordance with Government  Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was  conducted  for the  purpose  of  forming  an opinion on the basic
financial statement taken as a whole. The accompanying  supplementary data shown
on pages 17 to 22 is presented for purposes of additional  analysis and is not a
required part of the basic financial statements of Westward Ho Associates.  Such
information has been subjected to the auditing  procedures  applied in the audit
of the basic financial  statements and, in our opinion,  is fairly stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

                        /s/Grass, Coffey & Scharlau, C.P.A.'s

Phoenix, Arizona
January 24, 2003

Exhibit 99.11

                          INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying balance sheets of Alabama Properties,  ltd. II,
a limited partnership,  RHS Project No. 01-010-630805991 as of December 31, 2002
and 2001, and the related  statements of operations,  partners' deficit and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Alabama  Properties,  Ltd. II,
RHS  Project No.  01-010-630805991  as of  December  31, 2002 and 2001,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental  information on pages 10
through  13 is  presented  for  purposes  of  additional  analysis  and is not a
required part of the basic financial  statements.  The supplemental  information
presented in the  Multiple  Family  Housing  Borrower  Balance  Sheet (Form FmHA
1930-8)  Parts I and II for the  year  ended  December  31,  2002 and  2001,  is
presented for purposes of complying with the  requirements  of the Rural Housing
Services and is also not a required part of the basic financial statements. Such
information  hs been subjected to the audit  procedures  applied in the audit of
the basic  financial  statements  and,  in our  opinion is fairly  stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

In accordance with Government Auditing  Standards,  we have also issued a report
dated January 29, 2003 on our  consideration  of Alabama  Properties,  Ltd. II's
internal  control over  financial  reporting and on our tests of its  compliance
with certain provisions of laws and regulations.

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

Donald W. Causey & Associates, P.C.
Gadsden, Alabama
January 29, 2003


Exhibit 99.12


                          INDEPENDENT AUDITORS' REPORT


To the Partners of
Clearfield Manor Associates, Ltd.

We have audited the accompanying  balance sheet of Clearfield Manor Associates,
Ltd. (a Kentucky  limited  partnership) as of December 31, 2002, and the related
statement of results of operations, changes in partners' capital and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the  partnership's  management.  Our  responsibility is to express an opinion on
these  financial  statements  based on our audit.

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

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

In accordance with Government Auditing  Standards,  we have also issued a report
dated March 6, 2003, on our consideration of Clearfield Manor Associates, Ltd.'s
internal  control over  financial  reporting  and tests of its  compliance  with
certain  provisions of laws and regulations.  That report is an integral part of
an audit performed in accordance with Government  Auditing  Standards and should
be read in conjunction with this report in considering the results of our audit.


/s/Morgan Franklin, LLC
March 6, 2003