UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  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, 2005



[ ]

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



|                                                    
|----------------------------------------------------
|For the transition period from _________to _________
|                                                    
|Commission file number 0-10412                      
|                                                    
|NATIONAL PROPERTY INVESTORS 4                       
|(Name of small business issuer in its charter)      



|                                |                     
|------------------------------- | --------------------
|California                      | 13-3031722          
|(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)                      
|                                                              
|Issuer's telephone number    (864) 239-1000                   
|                                                              
|Securities registered under Section 12(b) of the Exchange Act:
|                                                              
|None                                                          
|                                                              
|Securities registered under Section 12(g) of the Exchange Act:
|                                                              
|Limited Partnership Units                                     
|(Title of class)                                              



Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act [ ]



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. YesX 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 Partnership'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]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ]  No[X]



State issuer's revenues for its most recent fiscal year.  $7,973,000



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, 2005.  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. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission.



PART I



Item 1.

Description of Business



National Property Investors 4 (the "Partnership" or "Registrant") is a California limited partnership formed in July 1980. The Partnership is engaged in the business of operating and holding real estate properties for investment. NPI Equity Investments, Inc., a Florida corporation, became the Registrant's managing general partner (the "Managing General Partner" or "NPI Equity") on June 21, 1991. The Managing General Partner was a subsidiary of National Property Investors, Inc. ("NPI") until December 31, 1996, at which time Insignia Properties Trust ("IPT") acquired the stock of NPI Equity. On October 1, 1998, IPT merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. Therefore, the Managing General Partner is a wholly-owned subsidiary of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2022, unless terminated prior to such date.



The principal business of the Partnership is to hold for investment and ultimately sell income-producing multi-family residential properties.  The Partnership is a "closed" limited partnership real estate syndicate formed to acquire multi-family residential properties. In 1981, the Partnership offered, pursuant to a registration statement filed with the Securities Exchange Commission, 70,000 Limited Partnership units (the "Units") and sold 60,005 Units aggregating $30,002,500. The net proceeds of the offering were used to acquire seven income-producing residential properties. The Partnership's original property portfolio was geographically diversified. The Partnership's acquisition activities were completed in May 1982 and since then the principal activity of the Partnership has been managing its portfolio. Six of the properties were sold prior to 1997. The Partnership currently owns one residential property (see "Item 2. Description of Property"). Since its initial offering the Partnership has not received, nor are the Limited Partners required to make, additional capital contributions.



The Partnership has no employees. Management and administrative services are provided by the Managing General Partner and by agents retained by the Managing General Partner. Property management services are provided by an affiliate of the Managing General Partner.











Risk Factors



The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's property. The number and quality of competitive properties, including those which may be managed by an affiliate of the Managing General Partner, in such market area could have a material effect on the rental market for the apartments at the Partnership's property and the rents that may be charged for such apartments. While the Managing General Partner and its affiliates own and/or control a significant number of apartment units in the United States such units represent an insignificant percentage of the total apartment units in the United States and competition for the apartments is local.



Laws benefiting disabled persons may result in the Partnership's 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 Partnership's property, or restrict renovations of the property.  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 Managing General Partner believes that the Partnership's property is substantially in compliance with present requirements, the Partnership may incur unanticipated expenses to comply with the ADA and the FHAA.



Both the income and expenses of operating the property owned by the Partnership are subject to factors outside of the Partnership's control, these factors include, but are not limited to, changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users.  In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership.



From time to time, the Federal Bureau of Investigation, or FBI, and the United States Department of Homeland Security issue alerts regarding potential terrorist threats involving apartment buildings. Threats of future terrorist attacks, such as those announced by the FBI and the Department of Homeland Security, could have a negative effect on rent and occupancy levels at the Partnerships property. The effect that future terrorist activities or threats of such activities could have on the Partnerships operations is uncertain and unpredictable. If the Partnership were to incur a loss at the property as a result of an act of terrorism, the Partnership could lose all or a portion of the capital invested in the property, as well as the future revenue from the property.



There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the property owned by the Partnership.











The Partnership monitors its property for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed which resulted in no material adverse conditions or liabilities.  In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site.



A further description of the Partnership's business is included in "Item 6. Management's Discussion and Analysis or Plan of Operation" included in this Form 10-KSB.



Item 2.

Description of Property



The following table sets forth the Partnership's investment in its property:



|                                |          |                        |          
|------------------------------- | -------- | ---------------------- | ---------
|                                | Date of  |                        |          
|Property                        | Purchase | Type of Ownership      | Use      
|                                |          |                        |          
|Village of Pennbrook Apartments | 12/15/81 | Fee simple, subject to | Apartment
|Falls Township, Pennsylvania    |          | first mortgage         | 722 units



Schedule of Property



Set forth below for the Partnership's property is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation, and Federal tax basis.



|                     |                |              |             |                |          
|-------------------- | -------------- | ------------ | ----------- | -------------- | ---------
|                     | Gross          |              |             |                |          
|                     | Carrying       | Accumulated  | Depreciable | Method of      | Federal  
|Property             | Value          | Depreciation | Life        | Depreciation   | Tax Basis
|                     | (in thousands) |              |             | (in thousands)
|Village of Pennbrook |                |              |             |                |          
|Apartments           | $36,597        | $26,046      | 5-27.5 yrs  | S/L            | $10,321  



See "Item 7. Financial Statements - Note A" for a description of the Partnership's capitalization and depreciation policies.



Schedule of Property Indebtedness



The following table sets forth certain information relating to the fixed rate loan encumbering the Partnership's property.



|                     |                |         |          |           |                |          
|-------------------- | -------------- | ------- | -------- | --------- | -------------- | ---------
|                     | Principal      |         |          |           |                | Principal
|                     | Balance At     |         | Stated   |           |                | Balance  
|                     | December 31,   | Monthly | Interest | Period    | Maturity       | Due At   
|Property             | 2005           | Payment | Rate     | Amortized | Date           | Maturity 
|                     | (in thousands) |         |          |           | (in thousands)
|Village of Pennbrook |                |         |          |           |                |          
|Apartments           | $26,945        | $236    | 7.01%    | 20 yrs    | 09/01/21       | $--      



See "Item 7. Financial Statements - Note C" for information with respect to the Partnership's ability to prepay this fixed rate loan and other specific details about the loan.











Rental Rates and Occupancy



Average annual rental rates and occupancy for 2005 and 2004 for the property:



|                     |                |           |      |     
|-------------------- | -------------- | --------- | ---- | ----
|                     | Average Annual |          
|                     | Rental Rates   | Average  
|                     | (per unit)     | Occupancy
|Property             | 2005           | 2004      | 2005 | 2004
|Village of Pennbrook |                |           |      |     
|Apartments           | $11,205        | $11,104   | 93%  | 93% 



As noted under "Item 1. Description of Business", the real estate industry is highly competitive. The Partnership's property is subject to competition from other residential apartment complexes in the area. The Managing General Partner believes that the property is adequately insured. The property is an apartment complex which leases units for terms of one year or less.  No tenant leases 10% or more of the available rental space.



Real Estate Taxes and Rates



Real estate taxes and rate in 2005 for the property:



|                     |                |       
|-------------------- | -------------- | ------
|                     | 2005           | 2005  
|                     | Billing        | Rate  
|                     | (in thousands) |       
|Village of Pennbrook |                |       
|Apartments           | $647           | 14.98%



Capital Improvements



During the year ended December 31, 2005, the Partnership completed approximately $5,843,000 of capital improvements at Village of Pennbrook Apartments including approximately $5,213,000 arising from the redevelopment of the property. These improvements consisted primarily of building improvements, window, floor covering and appliance replacements, heating and air conditioning upgrades, exterior painting, roof replacement, enhanced security equipment, interior lighting upgrades, and furniture and fixtures. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The Partnership regularly evaluates the capital improvement needs of the property. The Partnership has commenced with a $6,700,000 redevelopment project at Village of Pennbrook Apartments.  The redevelopment project is to consist of major landscaping, exterior upgrades and structural improvements. At December 31, 2005 the project was approximately 94% complete and is currently estimated to be completed in the first half of 2006.  The project has been financed with operating cash flow and advances from an affiliate of the Managing General Partner which accrue interest at prime plus 2%.  Additional routine capital expenditures are anticipated during 2006.  Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.











Item 3.

Legal Proceedings



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement.  On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the Court held a hearing on the various matters pending before it and has ordered additional briefing from the parties and Objector.











The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.











AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present.  Notices have been sent out to all current and former hourly maintenance workers.  The opt-in period has not yet closed.  Defendants will have the opportunity to move to decertify the collective action.  Because the court denied plaintiffs motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and on November 5, 2005 in Montgomery County Maryland Circuit Court.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships financial condition or results of operations.



Item 4.

Submission of Matters to a Vote of Security Holders



During the quarter ended December 31, 2005, no matters were submitted to a vote of the Unit holders through the solicitation of proxies or otherwise.









PART II



Item 5.

Market for the Registrant's Common Equity and Related Security Holder Matters



The Partnership, a publicly-held limited partnership, offered 70,000 and sold 60,005 limited partnership units (the Units) aggregating $30,002,500. As of December 31, 2005, the Partnership had 60,005 Units outstanding held by 938 limited partners of record. Affiliates of the Managing General Partner owned 47,710 Units or 79.51% at December 31, 2005. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future.



The Partnership distributed the following amounts during the years ended December 31, 2005 and 2004 (in thousands, except per unit data):



|           |                   |             |                   |            
|---------- | ----------------- | ----------- | ----------------- | -----------
|           |                   | Per Limited |                   | Per Limited
|           | Year Ended        | Partnership | Year Ended        | Partnership
|           | December 31, 2005 | Unit        | December 31, 2004 | Unit       
|           |                   |             |                   |            
|Operations | $--               | $--         | $1,158            | $19.09     



Future cash distributions will depend on the levels of cash generated from operations, sale of the property and/or refinancing. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance that the Partnership will generate sufficient funds from operations after required capital expenditures to permit distributions to its partners in 2006 or subsequent periods. As a result of the costs associated with the redevelopment project at the Partnerships investment property, it is not expected that the Partnership will generate sufficient funds from operations to permit distributions until the advances associated with the redevelopment project are satisfied. See "Item 2. Description of Property  Capital Improvements" for information relating to capital expenditures at the property.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 47,710 Units in the Partnership representing 79.51% of the outstanding Units at December 31, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 79.51% of the outstanding Units, AIMCO is in a position to influence all such voting decisions with respect to the Partnership. With respect to 26,466 Units, AIMCO IPLP, L.P. an affiliate of AIMCO, is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by non-tendering unitholders. Except for the foregoing, no other limitations are imposed on AIMCO's or AIMCO IPLP, L.P.'s ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing 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 Partnerships financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the Managing General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnerships financial results.



Results of Operations



The Partnership recognized net income of approximately $1,341,000 for the year ended December 31, 2005 compared to net income of approximately $1,742,000 for the year ended December 31, 2004. The decrease in net income is due to an increase in total expenses partially offset by an increase in total revenues. Total revenues increased due to an increase in rental income partially offset by a decrease in other income. Rental income increased due to an increase in the average rental rate at the Partnerships investment property.  Other income decreased due to decreases in utility and cable television reimbursements and lease cancellation fees.



Total expenses increased due to increases in operating, depreciation, property tax and interest expenses partially offset by a decrease in general and administrative expenses. Operating expense increased due to an increase in advertising, property, administrative and maintenance expenses at the Partnerships property. Advertising expense increased due to an increase in web advertising. Property expenses increased due to increases in salaries and other related benefits and utility expenses. Administrative expenses increased due to an increase in temporary agency help and tenant call center processing fees at the Partnerships investment property. Maintenance expense increased due to an increase in contract services and general repairs at the Partnerships investment property. Depreciation expense increased due to property improvements and replacements being placed into service during the past twelve months which are now being depreciated. Interest expense increased due to an increase in interest on advances from affiliates partially offset by a decrease in interest expense on the mortgage encumbering the Partnerships investment property due to the payment of scheduled principal payments which has reduced the average outstanding balance over the past twelve months. Property tax expense increased due to an increase in the tax rate, partially offset by a decrease in the assessed value, by the local taxing authorities for the Partnerships investment property.











The decrease in general and administrative expense is due to a decrease in Partnership Management Fees and non-accountable reimbursements associated with distributions allowed under the Partnership Agreement. Also included in general and administrative expenses for the years ended December 31, 2005 and 2004 are reimbursements to the Managing General Partner allowed under the Partnership Agreement associated with its management of the Partnership, costs associated with the quarterly and annual communications with investors and regulatory agencies, and the annual audit required by the Partnership Agreement.



Liquidity and Capital Resources



At December 31, 2005 the Partnership had cash and cash equivalents of approximately $123,000 compared to approximately $134,000 at December 31, 2004, a decrease of approximately $11,000.  This decrease was due to approximately $5,565,000 of cash used in investing activities partially offset by approximately $2,260,000 and $3,294,000 of cash provided by operating and financing activities, respectively. Cash used in investing activities consisted of property improvements and replacements.  Cash provided by financing activities consisted of advances from affiliates partially offset by payments of principal on the mortgage encumbering Village of Pennbrook Apartments. The Partnership invests its working capital reserves in interest bearing accounts.



NPI Equity, on behalf of the Partnership and certain affiliated partnerships, has established a revolving credit facility (the "Partnership Revolver") to be used to fund deferred maintenance and working capital needs of the Partnership and certain other affiliated partnerships in the National Property Investors Partnership Series. The maximum draw available to the Partnership under the Partnership Revolver is $300,000. Loans under the Partnership Revolver will have a term of 365 days, be unsecured and bear interest at the prime rate plus 2% per annum (9.25% at December 31, 2005). The maturity date of any such borrowing accelerates in the event of: (i) the removal of NPI Equity as the managing general partner (whether or not for cause); (ii) the sale or refinancing of the property by the Partnership (whether or not a borrowing under the Partnership Revolver was made with respect to such property); or (iii) the liquidation of the Partnership. During the year ended December 31, 2005, the Managing General Partner agreed to advance funds in excess of the Partnership Revolver to fund redevelopment work and real estate taxes at Village of Pennbrook Apartments and advanced approximately $4,204,000. During the year ended December 31, 2004, the Partnership advanced the property approximately $320,000.  Interest expense for the years ended December 31, 2005 and 2004 amounted to approximately $179,000 and $3,000, respectively. The balance payable at December 31, 2005 including accrued interest is approximately $4,706,000 and is included in due to affiliates on the Partnerships balance sheet included in Item 7. Financial Statements. Subsequent to December 31, 2005, the Managing General Partner advanced the Partnership, approximately $314,000 to fund redevelopment work at Village of Pennbrook Apartments.











The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the property to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The Managing General Partner monitors developments in the area of legal and regulatory compliance. For example, 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. The Partnership regularly evaluates the capital improvement needs of the property. The Partnership has commenced with a $6,700,000 redevelopment project at Village of Pennbrook Apartments.  The redevelopment project is to consist of major landscaping, exterior upgrades and structural improvements. At December 31, 2005 the project was approximately 94% complete and is currently estimated to be completed in the first half of 2006.  The project has been financed with operating cash flow and advances from an affiliate of the Managing General Partner which accrue interest at prime plus 2%.  Additional routine capital expenditures are anticipated during 2006.  Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.



The Partnership's assets are thought to be generally sufficient for any near-term needs (exclusive of capital improvements and potential redevelopment costs) of the Partnership.  The mortgage indebtedness of approximately $26,945,000 is being amortized over 20 years and will mature in September 2021 at which time the mortgage is scheduled to be fully amortized.



The Partnership distributed the following amounts during the years ended December 31, 2005 and 2004 (in thousands, except per unit data):



|           |                   |             |                   |            
|---------- | ----------------- | ----------- | ----------------- | -----------
|           |                   | Per Limited |                   | Per Limited
|           | Year Ended        | Partnership | Year Ended        | Partnership
|           | December 31, 2005 | Unit        | December 31, 2004 | Unit       
|           |                   |             |                   |            
|Operations | $--               | $--         | $1,158            | $19.09     



Future cash distributions will depend on the levels of net cash generated from operations, sale of the property and/or refinancing. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance that the Partnership will generate sufficient funds from operations after required capital improvements to permit distributions to its partners during 2006 or subsequent periods.  As a result of the costs associated with the redevelopment project at the Partnerships investment property, it is not expected that the Partnership will generate sufficient funds from operations to permit distributions until the advances associated with the redevelopment project are satisfied.











Other



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 47,710 limited partnership units (the "Units") in the Partnership representing 79.51% of the outstanding Units at December 31, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 79.51% of the outstanding Units, AIMCO is in a position to influence all such voting decisions with respect to the Partnership. With respect to 26,466 Units, AIMCO IPLP, L.P. an affiliate of AIMCO, is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by non-tendering unitholders. Except for the foregoing, no other limitations are imposed on AIMCO's or AIMCO IPLP, L.P.'s ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.



Critical Accounting Policies and Estimates



A summary of the Partnerships significant accounting policies is included in "Note A  Organization and Significant Accounting Policies" which is included in the financial statements in "Item 7. Financial Statements". The ManagingGeneral 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 Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.



Impairment of Long-Lived Assets



Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable.  If events or circumstances indicate that the carrying amount of a property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnerships estimate of the undiscounted future cash flows, excluding interest charges, of the property.   If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.











Real property investment is subject to varying degrees of risk.  Several factors may adversely affect the economic performance and value of the Partnerships investment property.  These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing.  Any adverse changes in these factors could cause impairment of the Partnerships asset.



Revenue Recognition



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.









Item 7.

Financial Statements



NATIONAL PROPERTY INVESTORS 4



LIST OF FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm



Balance Sheet - December 31, 2005



Statements of Operations - Years ended December 31, 2005 and 2004



Statements of Changes in Partners' Deficit - Years ended December 31, 2005 and 2004



Statements of Cash Flows - Years ended December 31, 2005 and 2004



Notes to Financial Statements









Report of Independent Registered Public Accounting Firm







The Partners

National Property Investors 4





We have audited the accompanying balance sheet of National Property Investors 4 as of December 31, 2005, and the related statements of operations, changes in partners' deficit, and cash flows for each of the two years in the period ended December 31, 2005. 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 the standards of the Public Company Accounting Oversight Board (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.  We were not engaged to perform an audit of the Partnerships internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnerships internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 National Property Investors 4 at December 31, 2005, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.





/s/ERNST & YOUNG LLP







Greenville, South Carolina

March 6, 2006













|                                
|--------------------------------
|NATIONAL PROPERTY INVESTORS 4   
|                                
|BALANCE SHEET                   
|(in thousands, except unit data)
|                                
|December 31, 2005               







|                                          |           |         
|----------------------------------------- | --------- | --------
|Assets:                                   |           |         
|Cash and cash equivalents                 |           | $    123
|Receivables and deposits                  |           | 75      
|Other assets                              |           | 1,078   
|Investment property (Notes C and D):      |           |         
|Land                                      | $  1,980  |         
|Buildings and related personal property   | 34,617    |         
|                                          | 36,597    |         
|Less accumulated depreciation             | (26,046)  | 10,551  
|                                          |           |         
|                                          |           | $11,827 
|Liabilities and Partners' Deficit         |           |         
|                                          |           |         
|Liabilities:                              |           |         
|Accounts payable                          |           | $    559
|Tenant security deposit liabilities       |           | 402     
|Other liabilities                         |           | 325     
|Due to affiliates (Note B)                |           | 4,857   
|Mortgage note payable (Note C)            |           | 26,945  
|                                          |           |         
|Partners' Deficit:                        |           |         
|General partner                           | $   (358) |         
|Limited partners (60,005 units issued and |           |         
|outstanding)                              | (20,903)  | (21,261)
|                                          |           |         
|                                          |           | $11,827 



See Accompanying Notes to Financial Statements













|                                    
|------------------------------------
|NATIONAL PROPERTY INVESTORS 4       
|                                    
|STATEMENTS OF OPERATIONS            
|(in thousands, except per unit data)







|                                               |                          |        
|---------------------------------------------- | ------------------------ | -------
|                                               | Years Ended December 31,
|                                               | 2005                     | 2004   
|Revenues:                                      |                          |        
|Rental income                                  | $ 7,457                  | $ 7,352
|Other income                                   | 516                      | 572    
|Total revenues                                 | 7,973                    | 7,924  
|                                               |                          |        
|Expenses:                                      |                          |        
|Operating                                      | 3,031                    | 2,703  
|General and administrative                     | 175                      | 265    
|Depreciation                                   | 634                      | 576    
|Interest                                       | 2,145                    | 2,026  
|Property taxes                                 | 647                      | 612    
|Total expenses                                 | 6,632                    | 6,182  
|                                               |                          |        
|Net income (Note E)                            | $1,341                   | $1,742 
|                                               |                          |        
|Net income allocated to general partner (1%)   | $    13                  | $    17
|Net income allocated to limited partners (99%) | 1,328                    | 1,725  
|                                               |                          |        
|                                               | $1,341                   | $1,742 
|                                               |                          |        
|Net income per limited partnership unit        | $22.13                   | $28.75 
|                                               |                          |        
|Distributions per limited partnership unit     | $--                      | $19.09 



See Accompanying
Notes to Financial Statements











|                                          
|------------------------------------------
|NATIONAL PROPERTY INVESTORS 4             
|                                          
|STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
|(in thousands, except unit data)          







|                               |             |          |           |          
|------------------------------ | ----------- | -------- | --------- | ---------
|                               | Limited     |          |           |          
|                               | Partnership | General  | Limited   |          
|                               | Units       | Partner  | Partners  | Total    
|                               |             |          |           |          
|Original capital contributions | 60,005      | $1       | $30,003   | $30,004  
|                               |             |          |           |          
|Partners' deficit at           |             |          |           |          
|December 31, 2003              | 60,005      | $  (376) | $(22,810) | $(23,186)
|                               |             |          |           |          
|Distributions to partners      | --          | (12)     | (1,146)   | (1,158)  
|                               |             |          |           |          
|Net income for the year ended  |             |          |           |          
|December 31, 2004              | --          | 17       | 1,725     | 1,742    
|                               |             |          |           |          
|Partners' deficit at           |             |          |           |          
|December 31, 2004              | 60,005      | (371)    | (22,231)  | (22,602) 
|                               |             |          |           |          
|Net income for the year ended  |             |          |           |          
|December 31, 2005              | --          | 13       | 1,328     | 1,341    
|                               |             |          |           |          
|Partners' deficit at           |             |          |           |          
|December 31, 2005              | 60,005      | $(358)   | $(20,903) | $(21,261)





See Accompanying
Notes to Financial Statements









|                             
|-----------------------------
|NATIONAL PROPERTY INVESTORS 4
|                             
|STATEMENTS OF CASH FLOWS     
|(in thousands)               





|                                                         |                          |        
|-------------------------------------------------------- | ------------------------ | -------
|                                                         | Years Ended December 31,
|                                                         | 2005                     | 2004   
|Cash flows from operating activities:                    |                          |        
|Net income                                               | $ 1,341                  | $ 1,742
|Adjustments to reconcile net income to net cash provided |                          |        
|by operating activities:                                 |                          |        
|Depreciation                                             | 634                      | 576    
|Amortization of loan costs                               | 43                       | 43     
|Change in accounts:                                      |                          |        
|Receivables and deposits                                 | (11)                     | 1      
|Other assets                                             | 6                        | (111)  
|Accounts payable                                         | (1)                      | (18)   
|Tenant security deposit liabilities                      | 7                        | (4)    
|Due to affiliates                                        | 308                      | 3      
|Other liabilities                                        | (67)                     | (66)   
|Net cash provided by operating activities                | 2,260                    | 2,166  
|                                                         |                          |        
|Cash flows used in investing activities:                 |                          |        
|Property improvements and replacements                   | (5,565)                  | (1,108)
|                                                         |                          |        
|Cash flows from financing activities:                    |                          |        
|Distributions to partners                                | --                       | (1,158)
|Advances from affiliate                                  | 4,204                    | 320    
|Payments on mortgage note payable                        | (910)                    | (846)  
|Net cash provided by (used in) financing activities      | 3,294                    | (1,684)
|                                                         |                          |        
|Net decrease in cash and cash equivalents                | (11)                     | (626)  
|Cash and cash equivalents at beginning of year           | 134                      | 760    
|Cash and cash equivalents at end of year                 | $123                     | $134   
|                                                         |                          |        
|Supplemental disclosure of cash flow information:        |                          |        
|Cash paid for interest                                   | $1,924                   | $1,985 
|                                                         |                          |        
|Supplemental disclosure of non-cash information:         |                          |        
|Property improvements and replacements included in       |                          |        
|accounts payable                                         | $547                     | $269   



See Accompanying
Notes to Financial Statements

















|                             
|-----------------------------
|NATIONAL PROPERTY INVESTORS 4
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|December 31, 2005            





Note A - Organization and Significant Accounting Policies



Organization



National Property Investors 4, a California Limited Partnership (the "Partnership" or "Registrant"), was formed on July 1, 1980 to acquire, hold for investment, and ultimately sell income producing real estate property. Capital contributions of $30,002,500 ($500 per unit) were made by the limited partners. In addition, the general partner contributed $1,000. The Partnership owns one apartment complex located in Falls Township, Pennsylvania. The managing general partner is NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General Partner"). The Managing General Partner is a wholly-owned subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2022, unless terminated prior to such date.



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.



Investment Property



Investment property consists of one apartment complex and is stated at cost.  The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components.  Costs associated with redevelopment projects are capitalized in accordance with Statement of Financial Accounting Standards (SFAS) No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties.  Costs incurred in connection with capital projects are capitalized where the costs of the project exceed $250.  Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.  The Partnership capitalizes interest, property taxes and operating costs in accordance with SFAS No. 34 Capitalization of Interest Costs during periods in which redevelopment and construction projects are in progress. The Partnership did not capitalize any costs related to interest, property taxes or operating costs during the years ended December 31, 2005 and 2004. Capitalized costs are depreciated over the useful life of the asset.  Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred.



In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  No adjustments for impairment of value were necessary for the years ending December 31, 2005 and 2004.

















Depreciation



Depreciation is provided by the straight-line method over the estimated lives of the apartment property and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used for real property over 19 years for additions after May 8, 1985, and before January 1, 1987.  As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27.5 years and (2) personal property additions over 5 years.



Cash and Cash Equivalents



Cash and cash equivalents include cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances include approximately $103,000 at December 31, 2005 that are maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts.



Deferred Costs



Loan costs of approximately $858,000 are included in other assets in the accompanying balance sheet and are amortized over the term of the related loan agreement. At December 31, 2005, accumulated amortization is approximately $182,000. Amortization of loan costs is included in interest expense. Amortization expense is expected to be approximately $43,000 for each of the years 2006 through 2010.



Leasing commissions and other direct costs incurred in connection with successful leasing efforts are deferred and amortized over the terms of the related leases.  Amortization of these costs is included in operating expenses.



Tenant Security Deposits



The Partnership requires security deposits from lessees for the duration of the lease. Deposits are refunded when the tenant vacates, provided the tenant has not damaged the space and is current on rental payments.



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, for which it is practicable to estimate fair value. 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 amounts of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The Partnership estimates the fair value of its long-term debt by discounting future cash flows using a discount rate commensurate with that currently believed to be available to the Partnership for similar term, fully amortizing debt. The fair value of the Partnership's long term debt at the Partnerships incremental borrowing rate approximates its carrying balance.

















Leases



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.



Allocation of Profits, Gains, and Losses



Profits, gains, and losses of the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement.



Income Taxes



Taxable income or loss of the Partnership is reported in the income tax returns of its partners.  No provision for income taxes is made in the financial statements of the Partnership.



Advertising Costs



The Partnership expenses the cost of advertising as incurred. Advertising costs of approximately $86,000 and $50,000 during the years ended December 31, 2005 and 2004, respectively, were charged to expense as incurred and are included in operating expenses.



Reclassifications



Certain reclassifications were made to the 2004 balances to conform to the 2005 presentation.



Segment Reporting



SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way 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.  SFAS No. 131 also establishes 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.



Recent Accounting Pronouncement: In May 2005, the Financial Accounting Standards Board issued SFAS No. 154 Accounting Changes and Error Corrections, which replaces APB Opinion No. 20 and SFAS No. 3, and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, although early adoption is permitted for accounting changes and corrections of errors made in fiscal years beginning after the date SFAS No. 154 was issued. The Partnership does not anticipate that the adoption of SFAS No. 154 will have a material effect on the Partnerships financial condition or results of operations.

















Note B - Transactions with Affiliated Parties



The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for property management services based on a percentage of revenue and for reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.



Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership's property as compensation for providing property management services. The Partnership paid or accrued to such affiliates approximately $399,000 and $390,000 for the years ended December 31, 2005 and 2004, respectively, which is included in operating expenses. At December 31, 2005, approximately $3,000 was owed for property management services and is included in due to affiliates.



Affiliates of the Managing General Partner charged the Partnership reimbursement of accountable administrative expenses amounting to approximately $415,000 and $162,000 for the years ended December 31, 2005 and 2004, respectively, which is included in general and administrative expenses and investment property. The portion of these reimbursements included in investment property for the years ended December 31, 2005 and 2004 are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $279,000 and $26,000,  respectively. At December 31, 2005, approximately $148,000 was owed for accountable administrative expenses and is included in due to affiliates.



For services relating to the administration of the Partnership and operation of the Partnership's property, the Managing General Partner is entitled to receive payment for non-accountable expenses up to a maximum of $100,000 per year based upon the number of Partnership units sold, subject to certain limitations. The Managing General Partner received approximately $78,000 for the year ended December 31, 2004 which is included in general and administrative expenses. There were no such fees paid in 2005.



In addition to the amounts discussed above, as compensation for services rendered in managing the Partnership, the Managing General Partner is entitled to receive a Partnership Management Fee in conjunction with distributions of cash from operations, subject to certain limitations. During the year ended December 31, 2004, approximately $25,000 was paid in conjunction with the operating distributions.  These fees are included in general and administrative expenses. There were no such fees paid in 2005, as there were no distributions from operations.

















NPI Equity, on behalf of the Partnership and certain affiliated partnerships, has established a revolving credit facility (the "Partnership Revolver") to be used to fund deferred maintenance and working capital needs of the Partnership and certain other affiliated partnerships in the National Property Investors Partnership Series. The maximum draw available to the Partnership under the Partnership Revolver is $300,000. Loans under the Partnership Revolver will have a term of 365 days, be unsecured and bear interest at the prime rate plus 2% per annum (9.25% at December 31, 2005). The maturity date of any such borrowing accelerates in the event of: (i) the removal of NPI Equity as the managing general partner (whether or not for cause); (ii) the sale or refinancing of the property by the Partnership (whether or not a borrowing under the Partnership Revolver was made with respect to such property); or (iii) the liquidation of the Partnership. During the year ended December 31, 2005, the Managing General Partner agreed to advance funds in excess of the Partnership Revolver to fund redevelopment work and real estate taxes at Village of Pennbrook Apartments and advanced approximately $4,204,000. During the year ended December 31, 2004, the Partnership advanced the property approximately $320,000.  Interest expense for the years ended December 31, 2005 and 2004 amounted to approximately $179,000 and $3,000, respectively. The balance payable at December 31, 2005 including accrued interest is approximately $4,706,000 and is included in due to affiliates on the Partnerships balance sheet. Subsequent to December 31, 2005, the Managing General Partner advanced the Partnership approximately $314,000 to fund redevelopment work at Village of Pennbrook Apartments.



The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $85,000 and $78,000, respectively, for insurance coverage and fees associated with policy claims administration.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 47,710 limited partnership units (the "Units") in the Partnership representing 79.51% of the outstanding Units at December 31, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 79.51% of the outstanding Units, AIMCO is in a position to influence all such voting decisions with respect to the Partnership. With respect to 26,466 Units, AIMCO IPLP, L.P., an affiliate of AIMCO, is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by non-tendering unitholders. Except for the foregoing, no other limitations are imposed on AIMCO's or AIMCO IPLP, L.P.'s ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.

















Note C - Mortgage Note Payable



The terms of the mortgage note payable are as follows:



|                     |                |         |          |                |          
|-------------------- | -------------- | ------- | -------- | -------------- | ---------
|                     | Principal      |         |          |                | Principal
|                     | Balance At     |         | Stated   |                | Balance  
|                     | December 31,   | Monthly | Interest | Maturity       | Due At   
|Property             | 2005           | Payment | Rate     | Date           | Maturity 
|                     | (in thousands) |         |          | (in thousands)
|Village of Pennbrook |                |         |          |                |          
|Apartments           | $26,945        | $236    | 7.01%    | 09/01/21       | $--      



The mortgage note payable is a fixed rate mortgage that is non-recourse and is secured by a pledge of the Partnerships rental property and by a pledge of revenues from the respective rental property.  The mortgage note payable includes a prepayment penalty if repaid prior to maturity.  Further, the property may not be sold subject to existing indebtedness.



Scheduled principal payments subsequent to December 31, 2005 are as follows (in thousands):

|           |        
|---------- | -------
|2006       | $   972
|2007       | 1,043  
|2008       | 1,118  
|2009       | 1,199  
|2010       | 1,286  
|Thereafter | 21,327 
|           | $26,945



Note D  Investment Property and Accumulated Depreciation



|                                |                |                |             |               
|------------------------------- | -------------- | -------------- | ----------- | --------------
|                                |                | Initial Cost   |            
|                                |                | To Partnership |            
|                                |                | (in thousands) |            
|                                |                |                |             |               
|                                |                |                | Buildings   | Cost          
|                                |                |                | and Related | Capitalized   
|                                |                |                | Personal    | Subsequent to 
|Description                     | Encumbrances   | Land           | Property    | Acquisition   
|                                | (in thousands) |                |             | (in thousands)
|Village of Pennbrook Apartments |                |                |             |               
|Falls Township, Pennsylvania    | $26,945        | $1,972         | $18,245     | $16,380       

















|                     |                               |             |         |                |          |            
|-------------------- | ----------------------------- | ----------- | ------- | -------------- | -------- | -----------
|                     | Gross Amount At Which Carried |             |         |               
|                     | At December 31, 2005          |             |         |               
|                     | (in thousands)                |             |         |               
|                     |                               |             |         |                |          |            
|                     |                               | Buildings   |         |                |          |            
|                     |                               | And Related |         |                |          |            
|                     |                               | Personal    |         | Accumulated    | Date     | Depreciable
|Description          | Land                          | Property    | Total   | Depreciation   | Acquired | Life-Years 
|                     |                               |             |         | (in thousands) |          |            
|Village of Pennbrook |                               |             |         |                |          |            
|Apartments           | $1,980                        | $34,617     | $36,597 | $(26,046)      | 12/81    | 5-27.5 yrs 



The Partnership regularly evaluates the capital improvement needs of the property. The Partnership has commenced with a $6,700,000 redevelopment project at Village of Pennbrook Apartments.  The redevelopment project is to consist of major landscaping, exterior upgrades and structural improvements. At December 31, 2005 the project was approximately 94% complete and is currently estimated to be completed in the first half of 2006.  The project has been financed with operating cash flow and advances from an affiliate of the Managing General Partner which accrue interest at prime plus 2%.



Reconciliation of "Investment Property and Accumulated Depreciation":



|                             |                |        
|---------------------------- | -------------- | -------
|                             | December 31,  
|                             | 2005           | 2004   
|                             | (in thousands)
|Investment Property          |                |        
|Balance at beginning of year | $30,754        | $29,377
|Property improvements        | 5,843          | 1,377  
|Balance at end of year       | $36,597        | $30,754
|                             |                |        
|Accumulated Depreciation     |                |        
|Balance at beginning of year | $25,412        | $24,836
|Additions charged to expense | 634            | 576    
|Balance at end of year       | $26,046        | $25,412



The aggregate cost of the investment property for Federal income tax purposes at December 31, 2005 and 2004 is approximately $14,000,000 and $8,060,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2005 and 2004 is approximately $3,679,000 and $3,025,000, respectively.



Note E - Income Taxes



The Partnership has received a ruling from the Internal Revenue Service that it will be classified as a partnership for Federal income tax purposes.  Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners.

















The following is a reconciliation of reported net income and Federal taxable income (in thousands, except per unit data):



|                                   |              |        
|---------------------------------- | ------------ | -------
|                                   | December 31,
|                                   | 2005         | 2004   
|                                   |              |        
|Net income as reported             | $ 1,341      | $ 1,742
|Add (deduct):                      |              |        
|Depreciation differences           | (20)         | (53)   
|Prepaid rent                       | (6)          | (51)   
|Other                              | (45)         | (114)  
|                                   |              |        
|Federal taxable income             | $1,270       | $1,524 
|                                   |              |        
|Federal taxable income per limited |              |        
|partnership unit                   | $91.76(1)    | $25.14 



(1)

For 2005 allocations under the Internal Revenue Code section 704(b) result in the limited partners being allocated a non-prorata amount of taxable income.



The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net liabilities (in thousands):



|                                    |           
|----------------------------------- | ----------
|                                    | 2005      
|                                    |           
|Net liabilities as reported         | $ (21,261)
|Land and buildings                  | (22,597)  
|Accumulated depreciation            | 22,367    
|Syndication and distribution costs  | 3,735     
|Other                               | 309       
|                                    |           
|Net liabilities - Federal tax basis | $(17,807) 

















Note F - Contingencies



In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint.  Plaintiffs took an appeal from this order.



On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the Appeal) seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the courts use of a referee and its order requiring Objector to pay those fees.



On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.  With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial courts order and remanded to the trial court for further findings on the basis that the state of the record is insufficient to permit meaningful appellate review.  The matter was transferred back to the trial court on June 21, 2005.  With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial courts order striking the first amended complaint.



On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005, both of which were ultimately denied and/or struck by the trial court.  On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement.  On November 14, 2005, Plaintiffs filed a Motion For Further Findings pursuant to the remand ordered by the Court of Appeals. Defendants joined in that motion.  On February 3, 2006, the Court held a hearing on the various matters pending before it and has ordered additional briefing from the parties and Objector.

















The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnerships overall operations.



AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present.  Notices have been sent out to all current and former hourly maintenance workers.  The opt-in period has not yet closed.  Defendants will have the opportunity to move to decertify the collective action.  Because the court denied plaintiffs motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and on November 5, 2005 in Montgomery County Maryland Circuit Court.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships financial condition or results of operations.



The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.



Environmental



Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.

















Mold



The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the Managing General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the Managing General Partner believes that these measures will minimize the effects that mold could have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnerships financial condition or results of operations.



SEC Investigation



On December 19, 2005, AIMCO announced that the Central Regional Office of the Securities and Exchange Commission (the Commission) has informed AIMCO that its investigation has been recommended for termination and no enforcement action has been recommended to the Commission regarding AIMCO.















Item 8.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures



None.



Item 8a.

Controls and Procedures



(a)

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



(b)

Internal Control Over Financial Reporting. There have not been any changes in the Partnerships internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.



Item 8b.

Other Information



On December 22, 2005 the Managing General Partner amended the Partnership Agreement to extend the termination date of the Partnership from December 31, 2005 to December 31, 2022.













PART III



Item 9.

Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act



The Partnership has no officers or directors.  NPI Equity, the Managing General Partner, manages substantially all of the Partnership's affairs and has general responsibility in all matters affecting its business.  NPI Equity is a wholly owned subsidiary of AIMCO.



The names of the directors and officers of the Managing General Partner, their age and the nature of all positions with NPI Equity presently held by them are set forth below. There are no family relationships between or among any officers and directors.



|                     |     |                                           
|-------------------- | --- | ------------------------------------------
|Name                 | Age | Position                                  
|                     |     |                                           
|Martha L. Long       | 46  | Director and Senior Vice President        
|Harry G. Alcock      | 43  | Director and Executive Vice President     
|Miles Cortez         | 62  | Executive Vice President, General Counsel 
|                     |     | and Secretary                             
|Patti K. Fielding    | 42  | Executive Vice President                  
|Thomas M. Herzog     | 43  | Executive Vice President and Chief        
|                     |     | Financial Officer                         
|Robert Y. Walker, IV | 40  | Senior Vice President and Chief Accounting
|                     |     | Officer                                   
|Stephen B. Waters    | 44  | Vice President                            



Martha L. Long has been a Director and Senior Vice President of the Managing General Partner since February 2004. Ms. Long has been with AIMCO since October 1998 and has served in various capacities.  From 1998 to 2001, Ms. Long served as Senior Vice President and Controller of AIMCO and the Managing General Partner.  During 2002 and 2003, Ms. Long served as Senior Vice President of Continuous Improvement for AIMCO.



Harry G. Alcock was appointed as a Director of the Managing General Partner in October 2004 and was appointed Executive Vice President of the Managing General Partner in February 2004 and has been Executive Vice President and Chief Investment Officer of AIMCO since October 1999.  Mr. Alcock has had responsibility for acquisition and financing activities of AIMCO since July 1994, serving as Vice President from July 1996 to October 1997 and as Senior Vice President from October 1997 to October 1999.



Miles Cortez was appointed Executive Vice President, General Counsel and Secretary of the Managing General Partner in February 2004 and of AIMCO in August 2001. Prior to joining AIMCO, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through September 2001.



Patti K. Fielding was appointed Executive Vice President - Securities and Debt of the Managing General Partner in February 2004 and of AIMCO in February 2003.  Ms. Fielding was appointed Treasurer of AIMCO in January 2005.  Ms. Fielding is responsible for debt financing and the treasury department.  Ms. Fielding previously served as Senior Vice President - Securities and Debt of AIMCO from January 2000 to February 2003.  Ms. Fielding joined AIMCO in February 1997 as a Vice President.















Thomas M. Herzog was appointed Chief Financial Officer of the Managing General Partner and AIMCO in November 2005 and was appointed Executive Vice President of the Managing General Partner and AIMCO in July 2005.  In January 2004, Mr. Herzog joined AIMCO as Senior Vice President and Chief Accounting Officer and of the Managing General Partner in February 2004.
Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002.  Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 to 2000.



Robert Y. Walker, IV was appointed Senior Vice President of the Managing General Partner and AIMCO in August 2005 and became the Chief Accounting Officer of the Managing General Partner and AIMCO in November 2005.  From June 2002, until he joined AIMCO, Mr. Walker served as senior vice president and chief financial officer at Miller Global Properties, LLC, a Denver-based private equity, real estate fund manager.  From May 1997 to June 2002, Mr. Walker was employed by GE Capital Real Estate, serving as global controller from May 2000 to June 2002.



Stephen B. Waters was appointed Vice President of the Managing General Partner in April 2004.
Mr. Waters previously served as a Director of Real Estate Accounting since joining AIMCO in September 1999.  Mr. Waters has responsibility for partnership accounting with AIMCO.



One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act: Further, one or more of the above persons are also officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act.



The board of directors of the Managing General Partner does not have a separate audit committee. As such, the board of directors of the Managing General Partner fulfills the functions of an audit committee. The board of directors has determined that Martha L. Long meets the requirement of an "audit committee financial expert".



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



Item 10.

Executive Compensation



Neither the directors nor the officers of the Managing General Partner received any remuneration from the Registrant during the years ended December 31, 2005 and 2004.















Item 11.

Security Ownership of Certain Beneficial Owners and Management



Except as noted below, as of December 31, 2005, no person or entity was known to own of record or beneficially more than five percent of the Units of the Partnership.



|                        |           |         
|----------------------- | --------- | --------
|                        | Number of | Percent 
|                        | Units     | of Total
|AIMCO IPLP, L.P.        | 32,525    | 54.20%  
|(an affiliate of AIMCO) |           |         
|IPLP Acquisition I, LLC | 4,452     | 7.42%   
|(an affiliate of AIMCO) |           |         
|AIMCO Properties, L.P.  | 10,733    | 17.89%  
|(an affiliate of AIMCO) |           |         



AIMCO IPLP, L.P. and IPLP Acquisition I, LLC are indirectly ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC 29602. AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO.  Its business address is Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, Denver, CO 80237.



No director or officer of the Managing General Partner owns any Units.



Item 12.

Certain Relationships and Related Transactions



The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for property management services based on a percentage of revenue and for reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.



Affiliates of the Managing General Partner receive 5% of gross receipts from the Partnership's property as compensation for providing property management services. The Partnership paid or accrued to such affiliates approximately $399,000 and $390,000 for the years ended December 31, 2005 and 2004, respectively, which is included in operating expenses. At December 31, 2005, approximately $3,000 was owed for property management services and is included in due to affiliates.



Affiliates of the Managing General Partner charged the Partnership reimbursement of accountable administrative expenses amounting to approximately $415,000 and $162,000 for the years ended December 31, 2005 and 2004, respectively, which is included in general and administrative expenses and investment property. The portion of these reimbursements included in investment property for the years ended December 31, 2005 and 2004 are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $279,000 and $26,000,  respectively. At December 31, 2005, approximately $148,000 was owed for accountable administrative expenses and is included in due to affiliates.



For services relating to the administration of the Partnership and operation of the Partnership's property, the Managing General Partner is entitled to receive payment for non-accountable expenses up to a maximum of $100,000 per year based upon the number of Partnership units sold, subject to certain limitations. The Managing General Partner received approximately $78,000 for the year ended December 31, 2004 which is included in general and administrative expenses. There were no such fees paid in 2005.















In addition to the amounts discussed above, as compensation for services rendered in managing the Partnership, the Managing General Partner is entitled to receive a Partnership Management Fee in conjunction with distributions of cash from operations, subject to certain limitations. During the year ended December 31, 2004, approximately $25,000 was paid in conjunction with the operating distributions.  These fees are included in general and administrative expenses. There were no such fees paid in 2005, as there were no distributions from operations.



NPI Equity, on behalf of the Partnership and certain affiliated partnerships, has established a revolving credit facility (the "Partnership Revolver") to be used to fund deferred maintenance and working capital needs of the Partnership and certain other affiliated partnerships in the National Property Investors Partnership Series. The maximum draw available to the Partnership under the Partnership Revolver is $300,000. Loans under the Partnership Revolver will have a term of 365 days, be unsecured and bear interest at the prime rate plus 2% per annum (9.25% at December 31, 2005). The maturity date of any such borrowing accelerates in the event of: (i) the removal of NPI Equity as the managing general partner (whether or not for cause); (ii) the sale or refinancing of the property by the Partnership (whether or not a borrowing under the Partnership Revolver was made with respect to such property); or (iii) the liquidation of the Partnership. During the year ended December 31, 2005, the Managing General Partner agreed to advance funds in excess of the Partnership Revolver to fund redevelopment work and real estate taxes at Village of Pennbrook Apartments and advanced approximately $4,204,000. During the year ended December 31, 2004, the Partnership advanced the property approximately $320,000.  Interest expense for the years ended December 31, 2005 and 2004 amounted to approximately $179,000 and $3,000, respectively. The balance payable at December 31, 2005 including accrued interest is approximately $4,706,000 and is included in due to affiliates on the Partnerships balance sheet. Subsequent to December 31, 2005, the Managing General Partner advanced the Partnership approximately $314,000 to fund redevelopment work at Village of Pennbrook Apartments.



The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the years ended December 31, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $85,000 and $78,000, respectively, for insurance coverage and fees associated with policy claims administration.















In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 47,710 limited partnership units (the "Units") in the Partnership representing 79.51% of the outstanding Units at December 31, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 79.51% of the outstanding Units, AIMCO is in a position to influence all such voting decisions with respect to the Partnership. With respect to 26,466 Units, AIMCO IPLP, L.P., an affiliate of AIMCO, is required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by non-tendering unitholders. Except for the foregoing, no other limitations are imposed on AIMCO's or AIMCO IPLP, L.P.'s ability to influence voting decisions with respect to the Partnership. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder.



Item 13.

Exhibits



See Exhibit Index.



Item 14.

Principal Accountant Fees and Services



The Managing General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for 2006.  The aggregate fees billed for services rendered by Ernst & Young LLP for 2005 and 2004 are described below.



Audit Fees.  Fees for audit services totaled approximately $27,000 and $28,000 for 2005 and 2004, respectively. Fees for audit services also include fees for the reviews of the Partnerships Quarterly Reports on Form 10-QSB.



Tax Fees.  Fees for tax services totaled approximately $6,000 for both 2005 and 2004, respectively.















SIGNATURES





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



| |                                   
| | ----------------------------------
| | NATIONAL PROPERTY INVESTORS 4     
| |                                   
| | By:   NPI EQUITY INVESTMENTS, INC.
| | Managing General Partner          
| |                                   
| | By:   /s/Martha L. Long           
| | Martha L. Long                    
| | Senior Vice President             
| |                                   
| | By:   /s/Stephen B. Waters        
| | Stephen B. Waters                 
| | Vice President                    
| |                                   
| | Date: March 28, 2006              



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



|                     |                        |                     
|-------------------- | ---------------------- | --------------------
|/s/Harry G. Alcock   | Director and Executive | Date: March 28, 2006
|Harry G. Alcock      | Vice President         |                     
|                     |                        |                     
|/s/Martha L. Long    | Director and Senior    | Date: March 28, 2006
|Martha L. Long       | Vice President         |                     
|                     |                        |                     
|/s/Stephen B. Waters | Vice President         | Date: March 28, 2006
|Stephen B. Waters    |                        |                     













NATIONAL PROPERTY INVESTORS 4



EXHIBIT INDEX



Exhibit

Description of Exhibit



2.1

NPI, Inc. Stock Purchase Agreement dated as of August 17, 1995, incorporated by reference to the Partnership's Current Report on Form 8-K dated August 17, 1995.



2.2

Partnership Units Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia Financial Group, Inc. ("Insignia") with the Securities and Exchange Commission on September 1, 1995.



2.3

Management Purchase Agreement dated as of August 17, 1995, incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.



3.4

Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Partnership dated September 20, 1983, as amended on June 13 1989, and as thereafter supplemented contained in the Partnership's Registration Statement on Form S-11 (Reg. No. 2-63733).



3.4a

Amendment to the Limited Partnership Agreement dated December 22, 2005 is incorporated herein.



10.1

Agreement to Purchase Village of Pennbrook Apartments dated November 25, 1981 between the Partnership and SB Partners, incorporated by reference to the Exhibits to the Partnership's Current Report on Form 8-K dated November 25, 1981.



10.7

Multifamily Note dated August 30, 2001, by and between National Property Investors 4, a California limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation initially filed as Exhibit 10.7 to the Registrant's Form 10-QSB for the quarter ended September 30, 2001 and incorporated herein by reference.



31.1

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



31.2

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



32.1

Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.













Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

1.

I have reviewed this annual report on Form 10-KSB of National Property Investors 4;

2.

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



3.

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



4.

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



(a)

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



(b)

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



(c)

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



5.

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



(a)

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



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:  March 28, 2006

/s/Martha L. Long

Martha L. Long

Senior Vice President of NPI Equity Investments, Inc., equivalent of the chief executive officer of the Partnership













Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

1.

I have reviewed this annual report on Form 10-KSB of National Property Investors 4;

2.

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



3.

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



4.

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



(a)

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



(b)

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



(c)

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



5.

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



(a)

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



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date:  March 28, 2006

/s/Stephen B. Waters

Stephen B. Waters

Vice President of NPI Equity Investments, Inc., equivalent of the chief financial officer of the Partnership













Exhibit 32.1





Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002







In connection with the Annual Report on Form 10-KSB of National Property Investors 4 (the "Partnership"), for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the Chief Executive Officer of the Partnership, and Stephen B. Waters, 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/Martha L. Long      
| | Name: Martha L. Long   
| | Date: March 28, 2006   
| |                        
| | /s/Stephen B. Waters   
| | Name: Stephen B. Waters
| | Date: March 28, 2006   





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













Exhibit 3.4a





NATIONAL PROPERTY INVESTORS 4

AMENDMENT TO THE PARTNERSHIP AGREEMENT





This AMENDMENT (this Amendment) dated as of December 22, 2005, to the PARTNERSHIP AGREEMENT (the Partnership Agreement) of NATIONAL PROPERTY INVESTORS 4, a California limited partnership (the Partnership), is entered into by the undersigned.

WITNESSETH:



WHEREAS, pursuant to Section 16 of the Partnership Agreement, limited partners who own more than 50% of the outstanding units of limited partnership interest in the Partnership (Units) hereby consent in writing to this Amendment to the Partnership Agreement; and



WHEREAS, pursuant to the Partnership Agreement the General Partner may execute this Amendment to the Partnership Agreement on behalf of the Partnership and the Limited Partners;



NOW, THEREFORE, the parties agree as follows:

Section 4.1 of the Partnership Agreement is hereby amended and restated to read in its entirety as follows:



The Partnership will have a term commencing on July 1, 1980, and continuing until December 31, 2022, unless previously terminated in accordance with the provisions of the Partnership Agreement.



2.

Except as amended and modified by this Amendment, all other terms of the Partnership Agreement shall remain unchanged.



3.

This Amendment shall be governed by and construed as to validity, enforcement, interpretations, construction, effect and in all other respects by the internal laws of the State of California.



4.

All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Partnership Agreement.













IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and their respective signatures to be hereunto affixed and attested, all as of the day and year first above written.



Managing General Partner:



NPI EQUITY INVESTMENTS, INC.





By:

/s/Martha L. Long

Name:

Martha L. Long

Title:

Senior Vice President





Limited Partners:



AIMCO PROPERTIES, L.P.



By: AIMCO-GP, Inc., its General Partner



By:

/s/Martha L. Long

Name:

Martha L. Long

Title:

Senior Vice President





AIMCO IPLP, L.P.



By: AIMCO/IPT, Inc., its general partner



By:

/s/Martha L. Long

Name:

Martha L. Long

Title:

Senior Vice President





IPLP ACQUISITION I, L.L.C.



By: AIMCO IPLP, L.P., its sole member

By: AIMCO/IPT, Inc., its general partner



By:

/s/Martha L. Long

Name:

Martha L. Long

Title:

Senior Vice President