<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549


                                   FORM 10-Q


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

               For the Quarterly Period Ended SEPTEMBER 30, 1996

                         Commission File Number 2-94725

                            REAL AMERICAN PROPERTIES
                       (A California Limited Partnership)

                 I.R.S. Employer Identification No. 95-3906164

                         9090 WILSHIRE BLVD., SUITE 201
                          BEVERLY HILLS, CALIF.  90211

                         Registrant's Telephone Number,
                       Including Area Code (310) 278-2191


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


                              Yes  X     No
                                 ------    ------
<PAGE>   2
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               INDEX TO FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1996



<TABLE>
<S>                                                                                                         <C>
PART I.  FINANCIAL INFORMATION

      Item 1.   Financial Statements
 
                Balance Sheets, September 30, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . .  1

                Statements of Operations,
                     Nine and Three Months Ended September 30, 1996 and 1995  . . . . . . . . . . . . . . .  2

                Statement of Partners' Equity (Deficiency),
                     Nine Months Ended September 30, 1996   . . . . . . . . . . . . . . . . . . . . . . . .  3

                Statements of Cash Flows
                      Nine Months Ended September 30, 1996 and 1995   . . . . . . . . . . . . . . . . . . .  4

                Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

       Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 11


PART II.  OTHER INFORMATION

      Item 1.   Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

      Item 6.   Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

      Signatures   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
</TABLE>
<PAGE>   3
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                    SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

                                     ASSETS

<TABLE>
<CAPTION>
                                                                            1996               1995
                                                                        (Unaudited)         (Audited)   
                                                                       --------------     --------------
<S>                                                                    <C>                <C>
RENTAL PROPERTY, at cost (Notes 1 and 3)
     Land                                                              $        -         $    2,170,920
     Buildings                                                                  -             12,360,101
     Furniture and equipment                                                    -                835,000 
                                                                       --------------     --------------
                                                                                -             15,366,021
     Less accumulated depreciation                                              -             (4,430,896)
                                                                       --------------     --------------
                                                                                -             10,935,125 
                                                                       --------------     --------------

CASH AND CASH EQUIVALENTS (Note 1)                                          1,992,796            442,803 
                                                                       --------------     --------------

RESTRICTED CASH (Note 1)                                                        -              5,236,780 
                                                                       --------------     --------------

INVESTMENT IN LIMITED PARTNERSHIP (Note 2)

OTHER  ASSETS:
     Due from rental agent, including restricted
          cash held for security deposits and reserves
          of $68,163 at December 31, 1995                                       -                114,728
     Other receivables and prepaid expenses (Note 5)                           86,735             96,525 
                                                                       --------------     --------------
                                                                               86,735            211,253 
                                                                       --------------     --------------

          TOTAL ASSETS                                                 $    2,079,531     $   16,825,961 
                                                                       ==============     ==============

                  LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
     Mortgage notes payable (Note 3)                                   $        -         $    9,649,180
     Accounts payable and accrued expenses (Notes 1 and 5)                        892            406,383
     Accrued interest payable (Note 1)                                          -              1,226,835
     Liability for earthquake loss (Note 1)                                     -              5,363,547
     Tenant security deposits                                                   -                 31,028 
                                                                       --------------     --------------
                                                                                  892         16,676,973 
                                                                       --------------     --------------

COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)

PARTNERS' EQUITY                                                            2,078,639            148,988 
                                                                       --------------     --------------

           TOTAL LIABILITIES AND PARTNERS' EQUITY                      $    2,079,531     $   16,825,961 
                                                                       ==============     ==============
</TABLE>

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





                                       1
<PAGE>   4
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS

            NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                          Nine months     Three months      Nine months     Three months
                                                             ended           ended             ended            ended
                                                         Sept. 30, 1996   Sept. 30, 1996   Sept. 30, 1995   Sept. 30, 1995
                                                         --------------   --------------   --------------   --------------
<S>                                                      <C>               <C>              <C>              <C>
RENTAL OPERATIONS:
     Revenues
     Rental income                                       $      246,417    $       -        $     506,300    $     172,554
     Other income                                                 7,050            -               23,360            6,229 
                                                         --------------    -------------    -------------    -------------
                                                                253,467            -              529,660          178,783 
                                                         --------------    -------------    -------------    -------------
     Expenses
     Operating expenses                                         178,621            -              373,972          133,431
     Management fees - affiliate in 1995 (Note 5)                 8,871            -               24,663           (7,668)
     Depreciation                                                34,872            -              104,616           34,872
     General and administrative expenses                         12,180            -               27,790            8,070
     Interest expense (Notes 1 and 3)                           360,093            -              256,949           85,383 
                                                         --------------    -------------    -------------    -------------

                                                                594,637            -              787,990          254,088 
                                                         --------------    -------------    -------------    -------------

     Loss from rental operations                               (341,170)           -             (258,330)         (75,305)
                                                         --------------    -------------    -------------    -------------

PARTNERSHIPS OPERATIONS:
     Interest income ( Note 5 )                                 160,123           40,298           15,427            3,997 
                                                         --------------    -------------    -------------    -------------

     Expenses
     General and administrative expenses                         20,696            8,587           34,105           11,475
     Professional fees (Note 5)                                 107,966            8,600           44,613            9,842 
                                                         --------------    -------------    -------------    -------------

                                                                128,662           17,187           78,718           21,317 
                                                         --------------    -------------    -------------    -------------

     Income (loss) from partnership operations                   31,461           23,111          (63,291)         (17,320)
                                                         --------------    -------------    -------------    -------------

GAIN (LOSS) ON SALE OF RENTAL PROPERTIES
     (Note 1)                                                 2,239,360          (41,623)           -                 -      
                                                         --------------    -------------    -------------    -------------

NET INCOME (LOSS)                                        $    1,929,651    $     (18,512)   $    (321,621)   $     (92,625)
                                                         ==============    =============    =============    =============

NET INCOME (LOSS) PER LIMITED
     PARTNERSHIP INTEREST (Note 5)                       $           90    $          (1)   $         (16)   $          (5)
                                                         ==============    =============    =============    =============
</TABLE>


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





                                       2
<PAGE>   5
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   STATEMENT OF PARTNERS' EQUITY (DEFICIENCY)

                      NINE MONTHS ENDED SEPTEMBER 30, 1996

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                     General         Limited
                                                     Partners        Partners         Total    
                                                   ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
PARTNERSHIP INTERESTS,
   September 30, 1996                                        1           21,500          21,501 
                                                   ============    ============    ============

EQUITY (DEFICIENCY), January 1, 1996               $  (184,571)    $    333,559    $    148,988

   Net income for the nine months
   ended September 30, 1996                             19,297       1,910,354        1,929,651 
                                                   ------------    ------------    ------------

EQUITY (DEFICIENCY), September 30, 1996            $  (165,274)    $  2,243,913    $  2,078,639 
                                                   ============    ============    ============
</TABLE>

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





                                       3
<PAGE>   6
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS

                 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                    1996                1995   
                                                                ------------       ------------
<S>                                                             <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                             $  1,929,651       $   (321,621)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
        Depreciation                                                  34,872            104,616
        Gain on sale of rental properties                         (2,239,360)            -
  Changes in operating assets and liabilities:
       (Increase) decrease in:
            Due from affiliated rental agent                         114,728            (24,108)
            Other receivables and prepaid expenses                     9,790              1,680
      (Decrease) increase  in:
             Accounts payable and accrued expenses                  (405,491)            80,004
             Accrued interest payable                             (1,226,835)            -
             Tenant security deposit                                 (31,028)            -      
                                                                ------------       ------------

             Net cash used in operating activities                (1,813,673)          (159,429)
                                                                ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease (increase) in restricted cash                           5,236,780            (79,346)
  Decrease in liability for earthquake loss                       (5,363,547)            79,346
  Proceeds from sale of rental properties                         13,139,613             -      
                                                                ------------       ------------

             Net cash provided by investing activities            13,012,846             -      
                                                                ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on mortgage notes payable                    (9,649,180)           (27,411)
                                                                ------------       ------------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                             1,549,993           (186,840)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                       442,803            659,440 
                                                                ------------       ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                        $  1,992,796       $    472,600 
                                                                ============       ============

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid during the period for interest                    $    360,093       $    256,949 
                                                                ============       ============
</TABLE>

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





                                       4
<PAGE>   7
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                         NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         GENERAL

         The information contained in the following notes to the financial
         statements is condensed from that which would appear in the annual
         audited financial statements; accordingly, the financial statements
         included herein should be reviewed in conjunction with the financial
         statements and related notes thereto contained in the annual report
         for the year ended December 31, 1995 of REAL American Properties (the
         "Partnership").  Accounting measurements at interim dates inherently
         involve greater reliance on estimates than at year end.  The results
         of operations for the interim periods presented are not necessarily
         indicative of the results for the entire year.

         In the opinion of NAPICO, the accompanying unaudited financial
         statements contain all adjustments (consisting primarily of normal
         recurring accruals) necessary to present fairly the financial position
         of the Partnership as of September 30, 1996, and the results of
         operations for the nine and three months then ended and changes in
         cash flows for the nine months then ended.

         ORGANIZATION

         The Partnership was formed under the California Limited Partnership
         Act on March 9, 1984.  The general partners are National Partnership
         Investments Corp. ("NAPICO"), a California corporation, and Real
         Estate Services XIII Inc., a Delaware corporation.  Casden Investment
         Corporation owns 100 percent of NAPICO's stock.  LB I Group Inc. owns
         100 percent of the stock of Real Estate Services XIII Inc.  The
         Partnership was formed to invest in a diversified portfolio of  five
         residential apartment projects, one of which was foreclosed on by the
         lender in 1993.  Two of the Partnership's properties were contributed
         to a separate unaffiliated limited partnership in 1992, and were
         subsequently sold by such limited partnership in 1995 as more
         particularly described in Note 2.  The remaining two apartment
         complexes were sold in April and May 1996.  Accordingly, the
         Partnership's sole assets as of September 30, 1996 consist of cash, a
         contingent note receivable from the purchaser of the Partnership's
         Northridge property, and an interest in a publicly traded real estate
         investment trust described below.  After the interest in the real
         estate investment trust is converted to cash (Note 2), NAPICO intends
         to cause the Partnership to dissolve in accordance with the
         Partnership Agreement.

         The Partnership offered 45,000 limited partnership interests ("Units")
         at $1,000 each, of which 21,500 were sold through a public offering.
         The terms of the Partnership's Amended and Restated Certificate and
         Agreement of Limited Partnership (the "Partnership Agreement")
         provide, among other things, for allocation to the partners of
         profits, losses and any special allocations with respect thereto.
         Under the terms of the Partnership Agreement, cash available for
         distribution is allocated 90 percent to the limited partners as a
         group and 10 percent to the general partners.

         Net proceeds from sale or refinancing are distributed 100 percent to
         the limited partners until they have received an amount equal to the
         aggregate adjusted capital values, as defined, plus a cumulative
         non-compounded 8 percent annual return.  The balance is distributed 85
         percent to the limited partners and 15 percent to the general
         partners.





                                       5
<PAGE>   8
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1996


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         USE OF ESTIMATES

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

         RENTAL PROPERTY AND DEPRECIATION

         There are no remaining rental properties owned by the Partnership,
         therefore no rental property cost and accumulated depreciation are
         included in the September 30, 1996 financial statements.

         At December 31, 1995, the rental properties were stated at cost.
         Depreciation was provided on the straight-line method over the
         estimated useful lives of the buildings and equipment.  The buildings
         and furniture and equipment were depreciated over 30 years and 5
         years, respectively.

         On January 17, 1994, the Partnership's  property located in
         Northridge, California sustained major damage due to the severe
         earthquake in the Los Angeles area and the entire property was vacated
         and remained vacant from the time of the earthquake until the time of
         sale.  The casualty insurance policy insuring the Northridge property
         covered to a limited extent property damage and loss of rental income
         due to the earthquake.  In August 1994, a partial settlement for
         property damage in the amount of approximately $3,909,000 was
         allocated to the Partnership under a master umbrella insurance policy,
         covering earthquake damage for this and other properties managed by an
         affiliate of NAPICO.

         In November 1995, the Partnership received a final settlement payment
         from its insurance company in the amount of $1,368,000 related to the
         earthquake loss.  This amount was held in an escrow account by the
         Northridge property lender.  Pursuant to the terms of the loan
         documents between the Partnership and the lender, the lender had a
         security interest in and other rights to the insurance proceeds.  All
         insurance proceeds were included in restricted cash and liability for
         earthquake loss at December 31, 1995.  Unpaid interest of $1,345,000
         and property taxes of $354,000 relating to the Northridge property
         were accrued as of December 31, 1995.

         On May 15, 1996, the Partnership sold the Northridge property.  The
         Partnership realized a gain of approximately $1,796,000, net of
         additional costs of $41,623 recognized in the third quarter of 1996.
         Pursuant to a contingent note received from the purchaser at the
         closing, the Partnership is entitled to additional proceeds under
         certain conditions.

         On April 19, 1996, the Partnership sold West Colonial Apartments for
         $4,070,000 and realized and a gain of approximately $444,000.





                                       6
<PAGE>   9
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1996


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         The Partnership authorized a $1,526,500 distribution to the limited
         partners, which is expected to be made in November 1996.  This
         distribution represents proceeds received from the sale of West
         Colonial and Northridge Apartments.

         NET LOSS PER LIMITED PARTNERSHIP INTEREST

         Net loss per limited partnership interest was computed by dividing the
         limited partners' share of net loss by 21,500, the number of limited
         partnership interests outstanding for the periods presented.

         AMORTIZATION OF LOAN FEES

         Loan fees are being amortized on the straight-line method over a
         fifteen-year period.

         CASH AND CASH EQUIVALENTS

         Cash and cash equivalents consist of cash and bank certificates of
         deposit, with an original maturity of three months or less.

NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIP

         In September 1992, the Partnership completed an exchange transaction
         involving the Del Coronado I and II properties.  The Partnership
         transferred the Del Coronado properties to an unaffiliated Arizona
         limited partnership, 843 South Longmore Limited Partnership, in
         exchange for a subordinated 20 percent limited partnership interest in
         843 South Longmore Limited Partnership.  In August 1995, the Del
         Coronado properties were sold by 843 South Longmore Limited
         Partnership to an affiliate of Equity Residential Properties ("EQR"),
         a publicly held Real Estate Investment Trust ("REIT").  The net
         proceeds of $5,682,262 paid to 843 South Longmore Limited Partnership
         was in the form of limited partnership units in the operating
         partnership controlled by the REIT.  Of the net proceeds, the
         Partnership received an allocation of 23,524 units, which were
         converted to REIT stock and sold in November 1996 at prices ranging
         from $37.875 to $38.125 per share, or approximately $891,000
         (excluding brokerage commissions), on the New York Stock Exchange.

NOTE 3 - MORTGAGE NOTES PAYABLE

         The Partnership had three notes payable separately secured by its two
         remaining properties as of December 31, 1995, as follows:





                                       7
<PAGE>   10
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1996


NOTE 3 - MORTGAGE NOTES PAYABLE (CONTINUED)

         a.      The Northridge property was encumbered as of December 31, 1995
                 by a first deed of trust securing a note in the approximate
                 principal balance of $6,073,000, and a second deed of trust in
                 the approximate principal balance of $410,000.  The first note
                 bore interest at 9.25% per annum and was payable in monthly
                 installments of approximately $53,500.  The entire balance of
                 the note was due and payable on or before August 1, 1996.  The
                 Northridge second note bore interest at 10% per annum and was
                 payable in monthly installments of approximately $3,400.  The
                 entire balance of the Northridge second note matured on
                 November 15, 1995.  In February 1994, the Partnership ceased
                 making payments to both of the lenders with respect to the
                 Northridge property.  Both the first and second notes were
                 repaid upon the sale of the property in May 1996, however, the
                 second note was paid at a discount of approximately $100,000.

         b.      The West Colonial Apartments was encumbered by a first deed of
                 trust securing a note in the approximate principal balance of
                 $3,167,000 as of December 31, 1995.  The note bore interest at
                 10.7% per annum and was payable in monthly installments of
                 approximately $32,000.  The entire balance of the note was due
                 and payable on or before July 31, 1996.  The loan was repaid
                 upon sale of the property on April 19, 1996.

NOTE 4 - INCOME TAXES

         No provision has been made for income taxes in the accompanying
         financial statements as such taxes, if any, are the liability of the
         individual partners.

NOTE 5 - RELATED PARTY TRANSACTIONS

         a.      The Partnership had entered into agreements with an affiliate
                 of NAPICO to manage the operations of the West Colonial and
                 Northridge rental properties owned by the Partnership.  The
                 agreements changed to a month-to-month basis and provided,
                 among other things, for a management fee equal to 5% of  gross
                 revenue for West Colonial through July 23, 1995 and
                 approximately $2,450 per month for the Northridge property
                 through the date of sale.  Management fees charged by the
                 NAPICO affiliate under these agreements were approximately
                 $9,800 and $32,000 for the nine months ended September 30,
                 1996 and 1995, respectively.  Included in the management fees
                 is approximately $9,800 with respect to the Northridge
                 property in 1996 which has been included in earthquake costs.
                 On July 24, 1995, management of West Colonial was transferred
                 to an independent property management firm.  The management
                 agreement was on a month-to-month basis and provided for a
                 management fee of 3.5% of gross revenue, equal to $8,900 for
                 the nine months ended September 30, 1996.

                 Included in other receivables and prepaid expenses at
                 September 30, 1996 and December 31, 1995, is $86,194 due from
                 the affiliated company of NAPICO that served as the rental
                 agent for a property that was owned by the Partnership.





                                       8
<PAGE>   11
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                               SEPTEMBER 30, 1996


NOTE 5 - RELATED PARTY TRANSACTIONS

         b.      The Partnership reimburses NAPICO for certain expenses.  The
                 reimbursement to NAPICO was $4,196 and $9,440 for the nine
                 months ended September 30, 1996 and 1995, respectively and is
                 included in the Partnership's operating expenses.

         c.      Under the terms of the Partnership Agreement, the Partnership
                 may be obligated to pay the general partners or their
                 affiliates a liquidation fee equal to 15% of the net proceeds
                 from sale or refinancing of a project.  No part of such fee
                 shall be paid unless the limited partners have first received
                 certain amounts as stated in the Partnership Agreement.

         d.      Certain other fees may be payable to the general partners,
                 under certain circumstances, as stated in the Partnership
                 Agreement.

         e.      Pursuant to a Memorandum of Understanding entered into on
                 August 11, 1995, an affiliate of NAPICO that served as the
                 management company for properties owned by the Partnership,
                 paid $66,706 to the Partnership on May 1, 1996.  Such amount
                 represents interest on Partnership funds maintained in a
                 master disbursement account by the management company.  In
                 addition, on May 1, 1996 the Partnership reimbursed Real
                 Estate Services XIII Inc. $50,000 for professional fees, which
                 were estimated to have been paid on behalf of the Partnership
                 in connection with issues raised in the Memorandum of
                 Understanding.

NOTE 6 - CONTINGENCIES

         NAPICO is a plaintiff in various lawsuits and has also been named as
         defendant in other lawsuits arising from transactions in the ordinary
         course of business.  In the opinion of NAPICO, the claims will not
         result in any material liability to the Partnership.

NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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





                                       9
<PAGE>   12
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1996


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
         OF OPERATIONS

CAPITAL RESOURCES AND LIQUIDITY

The Partnership received a total of $10,750,000 in subscriptions for units of
limited partnership interests (at $1,000 per unit) during the period September
12, 1985 to February 28, 1986, pursuant to a registration statement on Form
S-11.  $10,750,000 in subscriptions were received pursuant to the exercise of
warrants and the sale of additional limited partnership interests from April 1,
1986 to May 31, 1986.

The Partnership's primary sources of funds are income from rental operations
and interest income on money market funds and certificates of deposit.

The Partnership acquired five apartment complexes since its inception, one of
which was foreclosed by the lender in 1993.  In 1992, two of the Partnership's
properties (the Del Coronado Properties) were contributed to 843 South Longmore
Limited Partnership, an unaffiliated limited partnership, and such buildings
were thereafter sold by said partnership for REIT shares in August of 1995.
The Partnership's remaining two apartment complexes of West Colonial and
Northridge were sold in April 1996 and May 1996, respectively.

In August 1995, the Del Coronado properties were sold by 843 South Longmore
Limited Partnership to an affiliate of Equity Residential Properties ("EQR"), a
publicly held Real Estate Investment Trust ("REIT").  The net proceeds of
$5,682,262 paid to 843 South Longmore Limited Partnership was in the form of
limited partnership units in the operating partnership controlled by the REIT.
Of the net proceeds, the Partnership received an allocation of 23,524 units,
which were converted to REIT stock and sold in November 1996 at prices ranging
from $37.875 to $38.125 per share, or approximately $891,000 (excluding
brokerage commissions), on the New York Stock Exchange.

RESULTS OF OPERATIONS

Rental operations consist primarily of rental income and depreciation expense,
debt service, and normal operating expenses to maintain the properties.
Depreciation is provided on the straight-line method over the estimated useful
lives of the buildings and equipment.  Substantially all of the rental units in
the West Colonial apartment project were leased on a month-to-month basis.  The
Partnership's statements of operations  included rental operations through the
day the properties were sold.





                                       10
<PAGE>   13
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1996


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
         OF OPERATIONS (CONTINUED)

RESULTS OF OPERATION (CONTINUED)

On January 17, 1994, the Northridge rental property sustained major damage due
to the severe earthquake in the Los Angeles area and the entire property was
vacated and remained vacant from the time of the earthquake until the time of
sale.  The casualty insurance policy insuring the Northridge property covered,
to a limited extent, property damage and loss of rentals as a result of the
earthquake.  In August 1994, a partial settlement for property damage in the
amount of approximately $3,909,000 was allocated to the Partnership under a
master umbrella insurance policy, covering earthquake damage for this and other
properties managed by a related party of NAPICO.

In November 1995, the Partnership received a final settlement from its
insurance company in the amount of $1,368,000 related to the earthquake loss.
This amount was held in an escrow account by the Northridge property lender
until the time of sale.  Pursuant to the terms of the loan documents between
the Partnership and the lender, the lender had a security interest in and other
rights to the insurance proceeds.  All insurance proceeds were included in
restricted cash and liability for earthquake loss at December 31, 1995.  Unpaid
interest of $1,345,000 and property taxes of $354,000 relating to the
Northridge property were accrued as of December 31, 1995.

On May 15, 1996, the Partnership sold the Northridge property.  The Partnership
realized a net gain of approximately $1,796,000, net of additional costs of
$41,623 recognized in the third quarter of 1996.  The Partnership may be
entitled to additional proceeds from property tax refunds and/or a contingent
promissory note from the buyer of the Northridge property.

On April 19, 1996, the Partnership sold West Colonial Apartments for $4,070,000
and realized a gain of approximately $444,000.

Partnership operations consist primarily of interest ficates of deposit and
other temporary investment of funds.  Included in interest income for the nine
months ended September 30, 1996 is $66,706 in interest related to funds
maintained in the master disbursement account and received on May 1, 1996.
Operating expenses of the Partnership consist substantially of recurring
general and administrative expenses and professional fees for services rendered
to the Partnership.  Included in professional fees in 1996 is $50,000 paid to
Real Estate Services XIII Inc. as reimbursement for professional fees paid on
behalf of the Partnership in connection with issues raised in the Memorandum of
Understanding.

The Partnership did not make cash distributions during the first nine months of
1996.





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<PAGE>   14
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1996


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS:

As of September 30, 1996, NAPICO was a plaintiff or a defendant in several
lawsuits.  None of these suits were related to the Partnership.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

 (a)     No exhibits are required per the provision of item 601 of regulation
                                      S-K





                                       12
<PAGE>   15
                            REAL AMERICAN PROPERTIES
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               SEPTEMBER 30, 1996


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                REAL AMERICAN PROPERTIES
                                (a California limited partnership)



                                By:    National Partnership Investments Corp.
                                       a General Partner


                                Date:                                        
                                      ---------------------------------------



                                By:                                          
                                       --------------------------------------
                                       Bruce Nelson
                                       President



                                Date:                                        
                                      ---------------------------------------



                                By:                                          
                                       --------------------------------------
                                       Shawn Horwitz
                                       Executive Vice President and
                                       Chief Financial Officer





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