<PAGE>
                      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, 1998
                       Commission File Number 33-06419-A

                       CONDEV LAND GROWTH FUND '86, LTD.
                       ---------------------------------
            (Exact name of registrant as specified in its charter)

               FLORIDA                                 59-2766359
               -------                                 ----------
    (State or other jurisdiction of                 (I.R.S. Employer
    incorporation of organization)                 Identification No.)



                               2479 Aloma Avenue
                          Winter Park, Florida 32792
                   (Address of principal executive offices)

Registrant's telephone number, including area code: (407) 679-1748


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.  YES  X     NO      .
                                       ------     -----
<PAGE>
                       CONDEV LAND GROWTH FUND '86, LTD.

                                     INDEX

PART I.    FINANCIAL INFORMATION:
           Statement of Assets, Liabilities and
           Partner's Capital - September 30, 1998
           and December 31, 1997                                      1
 
           Statement of Income & Expense -           
           Three Months Ended September 30, 1998     
           and September 30, 1997                                     2
 
           Statement of Income & Expense -       
           Nine Months Ended September 30, 1998 
           and September 30, 1997                                     3
 
           Statement of Cash Flows -            
           Nine months ended September 30, 1998 
           and September 30, 1997                                     4
 
           Notes to Financial Statements                              5 - 7
 
           Management's Discussion and Analysis
           of Financial Condition and Results of Operations           7 - 9
 

PART II.   OTHER INFORMATION:
 
           Item 1.     Legal Proceedings                              10
 
           Item 6      Exhibits and Reports on Form 8-K               10

Signatures                                                            11

Distribution Report to Limited Partners, September 4, 1998            12

Third Quarter 1998 report to Limited Partners                         13
<PAGE>
                        PART I.  FINANCIAL INFORMATION


                       CONDEV LAND GROWTH FUND '86, LTD.
            STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
                   SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
 
                                   ASSETS
                             -------------------
 
                             September 30, 1998   December 31, 1997
                             ------------------   -----------------
                                 (Unaudited)              *
<S>                              <C>                 <C>
 
Cash & Cash Equivalents           $   59,728          $   19,062
Accounts Receivable                    1,222               1,682
Land, at Cost (Note 2)               312,820           1,450,453
Investment in Joint          
  Venture  (Note 3)                1,530,290           1,533,035
Organization Costs, Net               20,794              20,794
                                  ----------          ----------
                             
             Total Assets         $1,924,854          $3,025,026
                                  ==========          ==========
 
 
</TABLE>
                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------
<TABLE>
<CAPTION>
<S>                              <C>                 <C>
 
Deposits on land                  $        -          $    2,100
Accounts Payable                           -               1,242
                                  ----------          ----------
 
    Total Liabilities                      -               3,342
                                  ----------          ----------
 
Partners' Capital -
  General Partner                      6,712               3,505
  Limited Partners                 1,918,142           3,018,179
                                  ----------          ----------

    Total Partners' Capital       $1,924,854          $3,021,684
                                  ----------          ----------
 
Total Liabilities and
          Partners' Capital       $1,924,854          $3,025,026
                                  ==========          ==========
</TABLE>
* Condensed from audited financial statements

    The accompanying notes are an integral part of these financial statements

                                       1
<PAGE>
                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
         THREE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
                                  (UNAUDITED)


                               September 30, 1998    September 30, 1997
                               ------------------    ------------------
INCOME
------

Interest and Other Income           $      775          $     919

Net Gain on sale of Land                33,171                  -
                                    ----------          ---------

Total Income                        $   33,946          $     919
                                    ----------          ---------
 
 
OPERATING EXPENSES
------------------
 
Equity in loss of joint venture    (       443)               275
 
Management Fees                          2,124              2,124
 
Taxes                                    2,534                  0
 
Other Expense                              851                 20
 
Office Expense                           1,959              1,056
                                    ----------         ----------
 
Total Operating Expense             $    7,025         $    3,475
                                    ----------         ----------
 
Net Income/(Loss)                   $   26,921        ($    2,556)
                                    ==========         ==========

The accompanying notes are an integral part of these financial statements

                                       2
<PAGE>
                       CONDEV LAND GROWTH FUND '86, LTD.
                        STATEMENT OF INCOME AND EXPENSE
          NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
                                   (UNAUDITED)


                               September 30, 1998   September 30, 1997
                               ------------------   ------------------


INCOME
------

Interest and Other Income           $    4,132          $   3,227

Gain on Sale of Land                   347,668                  0
                                    ----------          ---------

Total Income                        $  351,800          $   3,227
                                    ----------          ---------
 
OPERATING EXPENSES
------------------
 
Professional Services                    9,200              9,699
 
Equity in loss of joint venture            386              1,456
 
Management Fees                          6,372              6,972
 
Taxes                                    8,718                  0
 
Other Expense                            2,146              1,191
 
Office Expense                           4,308              4,544
                                    ----------         ----------
 
Total Operating Expense             $   31,130         $   23,862
                                    ----------         ----------
 
Net Income/(Loss)                   $  320,670        ($   20,635)
                                    ==========         ==========

   The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
                       CONDEV LAND GROWTH FUND '86, LTD.
                            STATEMENT OF CASH FLOWS
          NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
 
                                         Sept. 30, 1998   Sept. 30, 1997
                                         ---------------  ---------------
<S>                                      <C>              <C>    
 
Cash flows from operating activities:
  Net Income (Loss)                        $    320,670     ($    20,635)
    Adjustments to reconcile net loss
    to net cash used for operating
     activities:
        Net Gain on sale of Real Estate   (     347,668)               -
        Equity in loss of Joint
         Venture, net                               386            1,456
        Cash used for changes:
         Deposits on land                 (       2,100)               -
         Accounts payable                 (       1,242)               -
         Accounts Receivable                        460     (      1,682)
                                           ------------      -----------
  Net cash used in operating
   activities:                            (      29,494)    (     20,861)
                                           ------------      ----------- 
Cash flows from investing activities:
  Land development costs                          5,830     (     33,072) 
  Investment in Joint Venture             (       2,359)    (     29,443)
  Proceeds from land sale                     1,484,189                0
                                           ------------      -----------
Net cash from investing activities:           1,487,660     (     62,515)
                                           ------------      -----------
 
Cash flows from financing activities:
  Distributions to partners               (   1,417,500)    (          0)
                                           ------------      -----------
Net cash used in financing activities:    (   1,417,500)    (          0)
                                           ------------      -----------
 
Net increase (decrease) in cash                  40,666     (     83,376)
 
Cash and cash equivalents at beginning
 of year                                         19,062          144,871
                                           ------------      -----------
 
Cash and cash equivalents at end of
 period                                    $     59,728      $    61,495
                                           ============      ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       4
<PAGE>
                       CONDEV LAND GROWTH FUND '86, LTD.

                         NOTES TO FINANCIAL STATEMENTS


Note 1         BASIS OF PRESENTATION
               ---------------------

               The accompanying financial statements, in the opinion of Condev
               Associates, the general partner of Condev Land Growth Fund '86,
               Ltd., reflect all adjustments (which include only normal
               recurring adjustments) necessary to a fair statement of the
               financial position, the results of operations and the changes in
               cash position for the periods presented. For a full description
               of accounting policies, see notes to financial statements in the
               1997 annual report on Form 10-K.
 
Note 2         INVESTMENT IN LAND:
               -------------------

               At September 30, 1998, land and related assets consisted of the
               following:

                         Sewer capacity for land in              
                         southeast Orange County, Florida   $    6,078(a)
                    6.00 acre parcel (zoned commercial) in
                         Brevard County, Florida               306,742(b)
                    1.00 acre parcel (zoned commercial) in
                         Orange County, Florida                      0(c)
                                                            ----------   
                                                            $  312,820
                                                            ==========
 
               (a)  This represents the cost of prepaid sewer capacity for a
               site sold to Amoco Oil Company during the second quarter, less
               that portion sold to another user (see note (c) below). The
               remaining 3.799 ERU's are being sold back to Orange County for
               the original cost of $1,600 per ERU.
 
               (b) On June 15, 1998, the Partnership sold one acre of this
               parcel to a nationally recognized fast food restaurant
               franchisee. The contract on the remaining six acres at this
               location was allowed to expire when the contract holder was
               unable to attract an anchor tenant for its project. This property
               was immediately placed under another contract with a different
               developer. Terms of the contract, signed October 10, 1998,
               include an inspection period of up to 180 days, with appropriate
               performance standards, and a closing following issuance of
               required development permits.

               (c) During the third quarter of 1997, the Partnership entered
               into two contracts for sale of the remaining 5.39 acres at this
               location. Closing on approximately 4.4 acres was concluded on
               April 30, 1998. Sale of the remaining 1-acre parcel was concluded
               on August 26, 1998 with an effective date of July 31, 1998. The
               buyer was Pebbles Restaurants Properties, Ltd., who intends to
               construct and operate a 5 & Diner Restaurant on the site. In
               addition the Partnership sold part of the sewer capacity which
               was reserved for the Curry Ford/Chickasaw Trail site but not
               purchased by Amoco Oil Company in a previous transaction.

                                       5
<PAGE>
Note 3         INVESTMENT IN JOINT VENTURE:
               ----------------------------

               The Partnership owns a 59% interest in West 50 Joint Venture (A
               Florida Joint Venture) whose purpose is to acquire and hold a
               133-acre parcel of land in Lake County, Florida for investment
               purposes.  The remaining 41% interest is owned by Condev West 50,
               Ltd., an affiliate of the general partner.  The operations of
               West 50 Joint Venture consist primarily of bringing sewer and
               water utilities to the site and preliminary engineering and
               development activities with the intent of bringing the property
               closer to a marketable state. The Partnership's investment is
               carried at its equity in the net underlying assets.  A summary of
               the assets, liabilities, and venturers' capital of West 50 Joint
               Venture as of September 30, 1998 is as follows:
 
 
                                        Assets
                                        ------
 
               Cash                                                  $     5,038
               Investment in land                                      2,684,538
                                                                     -----------
                                                                     $ 2,689,576
                                                                     ===========
 
                           Liabilities and Venturers' Capital
                           ----------------------------------
 
                                     Liabilities
                                     -----------
 
               Mortgage note payable                                 $   95,865 
               Other liabilities                                              -
                                                                     ---------- 
               Total liabilities                                         95,865
                                                                     ----------


                                 Venturers' Capital
                                 ------------------
 
               Venturers' capital                                     2,594,366
               Current profit (loss)                                (       655)
                                                                     ----------

               Total Venturers' capital                               2,593,711
                                                                     ----------

               Total liabilities and venturers' capital              $2,689,576
                                                                     ==========


Note 4         DISTRIBUTIONS TO PARTNERS:
               --------------------------

               Pursuant to the partnership agreement, cash flow generated each
               year by the Partnership is to be distributed 99% to the limited
               partners and 1% to the general partner.  There were no cash flow
               distributions during the first nine months of 1998.

                                       6
<PAGE>
               Pursuant to the partnership agreement, proceeds realized from the
               sale of properties, after the establishment of reserves for
               future operating costs, are to be distributed at least annually.
               During the third quarter of 1998, a total of $315,000 was
               distributed to limited partners. For the first nine months of
               1998 a total of $1,417,500 was distributed to limited partners.

Note 5         RELATED PARTY TRANSACTIONS:
               ---------------------------

               The Partnership Agreement provides for the reimbursement to the
               general partner of administrative expenses incurred in the direct
               operation of the partnership.  For the nine months ended
               September 30, 1998, $3,106 was reimbursed to the general partner
               for direct expenses incurred.

               When properties are sold, under certain circumstances an
               affiliate of the general partner may be paid real estate
               commissions in amounts customarily charged by others rendering
               similar services with such commissions plus commissions paid to
               nonaffiliates not to exceed 10% of the gross sales price.  No
               real estate commissions have been paid to the general partner or
               any affiliate of the general partner during the first nine months
               of 1998.

               The general partner is obligated to loan up to $100,000 to the
               Partnership during its term to meet working capital requirements.
               The General Partner has previously advanced $156,048.27 of
               working capital to the Partnership, which advance was repaid in
               December, 1993. Since the General Partner has met its obligation
               to advance funds, it is not required to make further advances.

Item 2         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               ---------------------------------------------------------------
               RESULTS OF OPERATIONS
               ---------------------

               During the quarter ended September 30, 1998, the Partnership
               continued to manage the portfolio properties with the objective
               of selling the properties at fair market prices.  One sale was
               concluded during the third quarter, and one additional contract
               for sale is pending.

               Sale of Properties
               ------------------

               The delayed closing of the remaining one-acre parcel at the
               Woodbury Road location occurred on August 26, 1998, with an
               effective date of July 31, 1998. The buyer was Pebbles
               Restaurants Properties, Ltd., who intends to construct and
               operate a 5 & Diner Restaurant on the site. The sales price was
               $350,000. In addition, the Partnership sold part of the sewer
               capacity which was reserved for the Curry Ford/Chickasaw Trail
               site but not purchased by Amoco Oil Company in a previous
               transaction. Total gross proceeds of the transaction were
               $370,800. After expenses of the sale, which included $35,000 in
               real estate brokerage commissions paid to non-affiliated brokers,

                                       7
<PAGE>
               net proceeds were $342,970. A total of $315,000 was distributed
               to Limited Partners on September 4, 1998. In accordance with the
               terms of the Partnership Agreement, the balance was added to
               Partnership reserves.

               This sale represents the final sale of the Woodbury Road parcel.


               Offer to Purchase Units. In September, LP Investors, LLC, an
               -----------------------                                     
               investment company based in Atlanta, Georgia, exercised their
               rights as a limited partner and requested a list of all
               beneficial owners and the number of units owned by each. As
               required by the Partnership Agreement, this information was
               provided. LP Investors paid a fee of $100 to the Partnership in
               reimbursement of the Partnership's costs associated with
               providing the list. LP Investors subsequently wrote to each
               beneficial owner offering to purchase their units for $103.75 per
               unit, less the $25 transfer fee charged by the Partnership. As of
               September 30, 1998, there have been no transfers as a result of
               this offer. Neither the Partnership, the General Partner, nor any
               of its officers, employees or affiliates is in any way connected
               with this offer.

               Results of Operations
               ---------------------

               Total revenues for the nine months ended September 30, 1998 were
               $351,800, compared with total revenues of $3,227 for the nine
               months ended September 30, 1997. The 1998 figures include a net
               gain on the sale of Land in the amount of $347,668. Operating
               expenses (excluding equity in the losses of the Partnership's
               joint venture) for the nine months ended September 30, 1998 were
               $31,130, an increase from $23,862 for the nine months ended
               September 30, 1997. The primary reason for the increase was real
               estate taxes in the amount of $8,718 in the 1998 period which
               were charged upon the sale of property rather than at he end of
               the year when they are normally paid. In both periods, operating
               expenses represent the normal costs of operating the Partnership
               and managing the Partnership properties.

               West 50 Joint Venture, in which the Partnership holds a 59%
               interest, had a loss of $655 for the nine months ended September
               30, 1998 compared with a loss of $2,468 for the nine months ended
               September 30, 1997. As discussed under Liquidity and Capital
                                                      ---------------------
               Resources and West 50 Joint Venture below, the joint venture has
               ---------     ---------------------                             
               borrowed money under a secured line of credit with a commercial
               bank to pay for engineering, planning and construction expenses
               related to the extension of water and sewer facilities to the
               property. Therefore, future results will be impacted by interest
               charges incurred on outstanding debt. These additional expenses
               are expected to be offset by higher sales prices for the Joint
               Venture's land.

                                       8
<PAGE>
               Liquidity and Capital Resources at September 30, 1998
               -----------------------------------------------------
 
               Total assets decreased from $3,025,026 at December 31, 1997 to
               $1,924,854 at September 30, 1998. This reflects the sale of four
               properties during the period less distributions to limited
               partners and the net results of operations for the nine month
               period. Assets can be expected to decline in the future as
               properties are sold and distributions are made to limited
               partners. The Partnership currently holds one contract for sale
               of portfolio properties, which is expected to close during the
               first half of 1999.

               Liquidity has been restored to a level which the general partner
               believes to be adequate by adding to reserves from property
               sales. Cash and equivalents increased from $19,062 at 1997 year-
               end to $59,728 at September 30, 1998. As provided in the
               Partnership Agreement, the general partner may add to reserves
               from the net proceeds of closings as they occur.

               West 50 Joint Venture
               ---------------------

               The area of Lake County, Florida in which the West 50 Joint
               Venture's 132.7-acre parcel is located has experienced heightened
               activity in recent months, with significant new residential
               development beginning in the immediate area. The City of Clermont
               has committed to extend sewer and water facilities to one such
               development which is directly across from the property on the
               south side of State Road 50. In order to insure that the Joint
               Venture's property has adequate sewer and water capacity for
               future development of its property, the Joint Venture entered
               into an agreement with the City of Clermont to upgrade the
               facilities installed. The Joint Venture has paid $38,623 to the
               City of Clermont as its share of the upgrades, which have been
               completed. In addition, the Partnership has engaged an engineer
               to design a master site plan for the site to permit future
               division of the property into more useable parcels for potential
               users. This plan is currently under review by Lake County. The
               Joint Venture has arranged a $500,000 secured line of credit with
               a commercial bank to pay for the Joint Venture's cost of these
               improvements.  Borrowings under the line of credit will be repaid
               from future land sales.

                                       9
<PAGE>
                                    PART II


Item 1.  LEGAL PROCEEDINGS
         -----------------

             As of September 30, 1998, there were no legal proceedings in
             process, nor to the knowledge of the general partner, threatened
             against the Partnership

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K:
         ---------------------------------

         (A)  Exhibits:
 
              Distribution Report to Limited Partners, September 4, 1998

              Third Quarter 1998 Report to Limited Partners

         (B)  Reports on Form 8-K:

              There were no reports of Form 8-K for the period ended September
              30, 1998

                                       10
<PAGE>
                           CONDEV LAND FUND II, LTD.
                                   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.


                       CONDEV LAND GROWTH FUND `86, LTD.
                       BY: Condev Associates, General Partner




 October 22, 1998             /s/ Robert N. Gardner
-------------------          ----------------------------------
      DATE                    Robert N. Gardner, Partner



 October 22, 1998             /s/ Joseph J. Gardner
-------------------          ----------------------------------
      DATE                    Joseph J. Gardner, Partner



                                       11
<PAGE>
                                                               September 4, 1998

Condev Land Growth Fund '86, Ltd.
Distribution Report

Dear Limited Partner:

     Enclosed is a distribution check representing your pro rata share of the
net proceeds relating to a recent sale of property by the Partnership. If your
                                                                       -------
investment is held by a custodian, enclosed is a copy of the distribution check
-------------------------------------------------------------------------------
which was sent to the custodian.
--------------------------------

     The delayed closing of the remaining one-acre parcel at the Woodbury Road
location occurred on August 26, 1998, with an effective date of July 31, 1998.
The buyer was Pebbles Restaurants Properties, Ltd., who intends to construct and
operate a 5 & Diner Restaurant on the site. The sales price was $350,000. In
addition, the Partnership sold part of the sewer capacity which was reserved for
the Curry Ford/Chickasaw Trail site but not purchased by Amoco in a previous
transaction. Total gross proceeds of the transaction were $370,800. After
expenses of the sale, which included $35,000 in real estate brokerage
commissions paid to non-affiliated brokers, net proceeds were $342,970. A total
of $315,000 is being distributed to Limited Partners at this time. In accordance
with the terms of the Partnership Agreement, the balance is being added to
Partnership reserves.

     This sale represents the final sale of the Woodbury Road parcel.

     The Partnership has two remaining parcels of land in its portfolio. The
status of these assets will be reviewed in the quarterly report due out in the
middle of October.

Sincerely yours,


CONDEV ASSOCIATES
General Partner

                                       12
<PAGE>
                                                                October 15, 1998

Condev Land Growth Fund '86, Ltd.
Third Quarter 1998

Dear Limited Partner:

The financial statement, on the reverse side hereof, shows a net profit for the
nine months ended September 30, 1998 of $320,670. This includes a net gain on
the sale of real estate in the amount of $347,668. Detailed information on the
sale, which was concluded during the quarter, was included in the September 4,
1998 Distribution Report. Distributions to limited partners totaled $315,000 or
$42 per unit during the quarter. For the year to date, the Partnership has had
four sales and has distributed a total of $1,417,500. As of September 30, 1998,
the net asset value per unit of limited partner interest was $255.75. As of
September 30, 1998, the Partnership owned or had an interest in two remaining
properties:

NASA Causeway, Titusville.  As previously reported, the sale of approximately
-------------------------                                                    
one acre of this site was concluded on June 15, 1998. The contract on the
remaining six acres at this location was allowed to expire when the contract
holder was unable to attract an anchor tenant for its project. This property was
immediately placed under another contract with a different developer. Terms of
the contract, signed on October 10, 1998, include an inspection period of up to
180 days, with appropriate performance standards, and a closing following
issuance of required development permits.

West Hwy 50, Lake County.  During the quarter, work on extending utilities to
------------------------                                                     
this site by the City of Clermont continued, with completion expected later this
month. This has generated considerable purchaser interest in the site. We are
revising our development plan in accordance with recommendations from Lake
County so that we can grade the site and sell smaller parcels to the growing
number of potential users for land in this location.

Many of the Limited Partners have called with questions regarding the recent
tender offer for their units made by LP Investors, LLC. Please be advised that
neither Condev nor any of its officers, employees or affiliates is in any way
connected with this offer. The decision on whether or not to sell is entirely up
to each limited partner. We will be pleased to answer any questions you may have
regarding this offer or any other matters relating to the Partnership.


Sincerely yours,



CONDEV ASSOCIATES

                                       13