UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                           FORM 10-QSB

           Quarterly Report Under Section 13 or 15(d)
             of The Securities Exchange Act of 1934

           For the Quarter Ended:  September 30, 2004

               Commission file number:  000-30449


                   AEI INCOME & GROWTH FUND 23 LLC
(Exact Name of Small Business Issuer as Specified in its Charter)


          State of Delaware              41-1922579
(State or other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)        Identification No.)


    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
             (Address of Principal Executive Offices)

                       (651) 227-7333
                   (Issuer's telephone number)


                        Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)

Check  whether  the issuer (1) 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 reports), and  (2)
has  been  subject to such filing requirements for  the  past  90
days.

                          Yes [X]   No

         Transitional Small Business Disclosure Format:

                          Yes       No [X]


                 AEI INCOME & GROWTH FUND 23 LLC


                              INDEX




PART I.Financial Information

 Item 1. Balance Sheet as of September 30, 2004 and December 31, 2003

          Statements for the Periods ended September 30, 2004 and 2003:

           Operations

           Cash Flows

           Changes in Members' Equity

          Notes to Financial Statements

 Item 2. Management's Discussion and Analysis

 Item 3. Controls and Procedures

PART II.Other Information

 Item 1. Legal Proceedings

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

 Item 4. Submission of Matters to a Vote of Security Holders

 Item 5. Other Information

 Item 6. Exhibits

         Signatures


                 AEI INCOME & GROWTH FUND 23 LLC
                          BALANCE SHEET
            SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

                           (Unaudited)

                             ASSETS

                                                   2004           2003
CURRENT ASSETS:
  Cash and Cash Equivalents                    $ 1,296,933    $ 3,431,557

INVESTMENTS IN REAL ESTATE:
  Land                                           2,012,327      1,274,907
  Buildings and Equipment                        3,508,999      2,301,475
  Accumulated Depreciation                        (225,115)      (112,790)
                                                -----------    -----------
                                                 5,296,211      3,463,592
  Real Estate Held for Sale                      3,150,000      3,150,000
                                                -----------    -----------
      Net Investments in Real Estate             8,446,211      6,613,592
                                                -----------    -----------
          Total Assets                         $ 9,743,144    $10,045,149
                                                ===========    ===========

                      LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.         $    77,349    $    32,625
  Lessee Deposit                                   350,000              0
  Distributions Payable                            158,202        237,482
  Unearned Rent                                     12,484         19,666
                                                -----------    -----------
      Total Current Liabilities                    598,035        289,773
                                                -----------    -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members' Equity                         (28,193)       (20,054)
  Limited Members' Equity, $1,000 per Unit;
   24,000 Units authorized; 13,349 Units issued;
   13,298 Units outstanding                      9,173,302      9,775,430
                                                -----------    -----------
      Total Members' Equity                      9,145,109      9,755,376
                                                -----------    -----------
       Total Liabilities and Members' Equity   $ 9,743,144    $10,045,149
                                                ===========    ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 23 LLC
                     STATEMENT OF OPERATIONS
               FOR THE PERIODS ENDED SEPTEMBER 30

                           (Unaudited)

                               Three Months Ended        Nine Months Ended
                            9/30/04        9/30/03    9/30/04       9/30/03

RENTAL INCOME               $ 129,189    $  51,842   $  372,890   $  149,826

EXPENSES:
   LLC Administration -
    Affiliates                 31,463       35,020       95,106       98,055
   LLC Administration and
    Property Management -
    Unrelated Parties           1,840          846       48,519       14,195
   Depreciation                37,513        8,141      112,325       29,125
                             ---------    ---------   ----------   ----------
        Total Expenses         70,816       44,007      255,950      141,375
                             ---------    ---------   ----------   ----------

OPERATING INCOME               58,373        7,835      116,940        8,451

OTHER INCOME:
   Interest Income              3,215       33,371       10,411       57,515
   Gain on Sale of Real Estate      0            0            0      614,507
                             ---------    ---------   ----------   ----------
        Total Other Income      3,215       33,371       10,411      672,022
                             ---------    ---------   ----------   ----------
INCOME FROM CONTINUING
   OPERATIONS                  61,588       41,206      127,351      680,473

Income (Loss) from
  Discontinued Operations       2,612      569,124     (152,970)     787,212
                             ---------    ---------   ----------   ----------
NET INCOME (LOSS)           $  64,200    $ 610,330   $  (25,619)  $1,467,685
                             =========    =========   ==========   ==========
NET INCOME (LOSS) ALLOCATED:
   Managing Members         $     642    $  10,606   $     (256)  $   24,733
   Limited Members             63,558      599,724      (25,363)   1,442,952
                             ---------    ---------   ----------   ----------
                            $  64,200    $ 610,330   $  (25,619)  $1,467,685
                             =========    =========   ==========   ==========
INCOME (LOSS) PER LLC UNIT:
   Continuing Operations    $    4.58    $    3.00   $     9.48   $    50.21
   Discontinued Operations        .20        42.03       (11.39)       58.09
                             ---------    ---------   ----------   ----------
        Total               $    4.78    $   45.03   $    (1.91)  $   108.30
                             =========    =========   ==========   ==========
Weighted Average
  Units Outstanding            13,298       13,317       13,298       13,324
                             =========    =========   ==========   ==========
 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 23 LLC
                     STATEMENT OF CASH FLOWS
          FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30

                           (Unaudited)

                                                       2004          2003
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss)                              $   (25,619)   $ 1,467,685

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                     112,325        134,569
     Gain on Sale of Real Estate                            0     (1,079,117)
     Increase in Receivables                                0        (58,058)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                      44,724        (35,112)
     Increase in Lessee Deposit                       350,000              0
     Decrease in Unearned Rent                         (7,182)             0
                                                   -----------    -----------
        Total Adjustments                             499,867     (1,037,718)
                                                   -----------    -----------
        Net Cash Provided By
           Operating Activities                       474,248        429,967
                                                   -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                      (1,944,944)    (2,107,926)
   Proceeds from Sale of Real Estate                        0      3,679,645
                                                   -----------    -----------
        Net Cash Provided By (Used For)
            Investing  Activities                  (1,944,944)     1,571,719
                                                   -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in Distributions Payable                  (79,280)       (68,052)
   Distributions to Members                          (584,648)      (717,726)
   Redemption Payments                                      0        (14,951)
                                                   -----------    -----------
        Net Cash Used For
           Financing Activities                      (663,928)      (800,729)
                                                   -----------    -----------
NET INCREASE (DECREASE) IN CASH
     AND  CASH EQUIVALENTS                         (2,134,624)     1,200,957

CASH AND CASH EQUIVALENTS, beginning of period      3,431,557      2,454,033
                                                   -----------    -----------
CASH AND CASH EQUIVALENTS, end of period          $ 1,296,933    $ 3,654,990
                                                   ===========    ===========
 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 23 LLC
             STATEMENT OF CHANGES IN MEMBERS' EQUITY
               FOR THE PERIODS ENDED SEPTEMBER 30

                           (Unaudited)


                                                                    Limited
                                                                     Member
                             Managing     Limited                    Units
                             Members      Members      Total      Outstanding


BALANCE, December 31, 2002  $  3,369   $10,728,076   $10,731,445   13,337.59

  Distributions              (16,886)     (700,840)     (717,726)

  Redemption Payments           (448)      (14,503)      (14,951)     (20.71)

  Net Income                  24,733     1,442,952     1,467,685
                             --------   -----------   -----------  ----------
BALANCE, September 30, 2003 $ 10,768   $11,455,685   $11,466,453    13,316.88
                             ========   ===========   ===========  ==========


BALANCE, December 31, 2003  $(20,054)  $ 9,775,430   $ 9,755,376    13,298.07

  Distributions               (7,883)     (576,765)     (584,648)

  Net Loss                      (256)      (25,363)      (25,619)
                             --------   -----------   -----------  ----------
BALANCE, September 30, 2004 $(28,193)  $ 9,173,302   $ 9,145,109    13,298.07
                             ========   ===========   ===========  ==========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                       SEPTEMBER 30, 2004

                           (Unaudited)

(1)  The  condensed  statements included herein have been  prepared
     by  the  Company,  without audit, pursuant to  the  rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to  such  rules and regulations, although the Company believes
     that  the  disclosures  are adequate to make  the  information
     presented   not  misleading.   It  is  suggested  that   these
     condensed  financial  statements be read in  conjunction  with
     the  financial  statements  and  the  summary  of  significant
     accounting  policies  and  notes  thereto  included   in   the
     Company's latest annual report on Form 10-KSB.

(2)  Organization -

     AEI  Income  & Growth Fund 23 LLC (the Company),  a  Limited
     Liability Company, was formed on October 14, 1998 to acquire
     and  lease commercial properties to operating tenants.   The
     Company's operations are managed by AEI Fund Management XXI,
     Inc.  (AFM),  the Managing Member.  Robert P.  Johnson,  the
     President  and sole director of AFM, serves as  the  Special
     Managing  Member.  AFM is a wholly owned subsidiary  of  AEI
     Capital  Corporation of which Mr. Johnson  is  the  majority
     shareholder.  AEI Fund Management, Inc. (AEI), an  affiliate
     of  AFM, performs the administrative and operating functions
     for the Company.

     The  terms of the offering call for a subscription price  of
     $1,000 per LLC Unit, payable on acceptance of the offer. The
     Company  commenced  operations on September  30,  1999  when
     minimum  subscriptions of 1,500 LLC Units ($1,500,000)  were
     accepted.  The offering terminated March 22, 2001  when  the
     extended  offering  period expired.   The  Company  received
     subscriptions for 13,349.321 LLC Units.  Under the terms  of
     the  Operating Agreement, the Limited Members  and  Managing
     Members   contributed  funds  of  $13,349,321  and   $1,000,
     respectively.  The Company shall continue until December 31,
     2048,  unless dissolved, terminated and liquidated prior  to
     that date.

     During operations, any Net Cash Flow, as defined, which  the
     Managing Members determine to distribute will be distributed
     97%  to  the Limited Members and 3% to the Managing Members.
     Distributions to Limited Members will be made  pro  rata  by
     Units.

                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of properties which the Managing Members determine
     to distribute will, after provisions for debts and reserves,
     be  paid  in  the following manner: (i) first,  99%  to  the
     Limited  Members  and 1% to the Managing Members  until  the
     Limited  Members  receive  an amount  equal  to:  (a)  their
     Adjusted Capital Contribution plus (b) an amount equal to 7%
     of their Adjusted Capital Contribution per annum, cumulative
     but not compounded, to the extent not previously distributed
     from  Net  Cash  Flow; (ii) any remaining  balance  will  be
     distributed  90%  to  the Limited Members  and  10%  to  the
     Managing Members.  Distributions to the Limited Members will
     be made pro rata by Units.

     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing  or  other  disposition  of  property,  will  be
     allocated  first  in the same ratio in  which,  and  to  the
     extent, Net Cash Flow is distributed to the Members for such
     year.  Any additional profits will be allocated in the  same
     ratio  as  the  last dollar of Net Cash Flow is distributed.
     Net  losses  from operations will be allocated  99%  to  the
     Limited Members and 1% to the Managing Members.

      For tax purposes, profits arising from the sale, financing,
     or  other  disposition  of property  will  be  allocated  in
     accordance  with  the Operating Agreement  as  follows:  (i)
     first,  to  those  Members with deficit  balances  in  their
     capital  accounts  in an amount equal to  the  sum  of  such
     deficit  balances; (ii) second, 99% to the  Limited  Members
     and  1%  to the Managing Members until the aggregate balance
     in  the Limited Members' capital accounts equals the sum  of
     the Limited Members' Adjusted Capital Contributions plus  an
     amount  equal  to 7% of their Adjusted Capital Contributions
     per  annum, cumulative but not compounded, to the extent not
     previously  allocated;  (iii)  third,  the  balance  of  any
     remaining  gain  will then be allocated 90% to  the  Limited
     Members  and  10% to the Managing Members.  Losses  will  be
     allocated 98% to the Limited Members and 2% to the  Managing
     Members.

     The  Managing Members are not required to currently  fund  a
     deficit capital balance.  Upon liquidation of the Company or
     withdrawal  by a Managing Member, the Managing Members  will
     contribute to the Company an amount equal to the  lesser  of
     the  deficit balances in their capital accounts or 1.01%  of
     the  total capital contributions of the Limited Members over
     the amount previously contributed by the Managing Members.

(3)Reclassification -

     Certain items in the prior year's financial statements  have
     been  reclassified  to conform to 2004 presentation.   These
     reclassifications  had  no effect on Members'  capital,  net
     income or cash flows.

                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate -

     During  the first quarter of 2003, the Company sold 99.6316%
     of  the  Johnny Carino's restaurant in Victoria,  Texas,  in
     eight  separate  transactions, to unrelated  third  parties.
     The  Company received total net sale proceeds of $2,161,939,
     which  resulted in a net gain of $614,507.   The total  cost
     and  related accumulated depreciation of the interests  sold
     was $1,656,473 and $109,041, respectively.

     During  the first nine months of 2004 and 2003, the  Company
     distributed  $482,860 and $232,323 of net sale  proceeds  to
     the  Limited  and Managing Members as part of their  regular
     quarterly  distributions,  which  represented  a  return  of
     capital  of  $35.94  and $17.28 per LLC Unit,  respectively.
     The Company anticipates the remaining net sale proceeds will
     either  be  reinvested in additional property or distributed
     to the Members in the future.

     On  April 4, 2003, the Company purchased a parcel of land in
     Parker,  Colorado for $794,250.  The Company obtained  title
     to the land in the form of an undivided fee simple interest.
     The  land is leased to Kona Restaurant Group (KRG)  under  a
     Lease  Agreement with a primary term of 17 years and  annual
     rental   payments  of  $79,425.   Simultaneously  with   the
     purchase of the land, the Company entered into a Development
     Financing  Agreement under which the Company advanced  funds
     to  KRG for the construction of a Johnny Carino's restaurant
     on the site.  Pursuant to the Lease, any improvements to the
     land during the term of the Lease become the property of the
     lessor.   The Company charged interest on the advances at  a
     rate  of  10%.  On December 18, 2003, after the  development
     was  completed, the Lease Agreement was amended  to  require
     annual  rental  payments  of  $236,000.   Total  acquisition
     costs, including the cost of the land, were $2,346,107.

     On February 6, 2004, the Company purchased a 48% interest in
     a  Jared  Jewelry  store  in Madison Heights,  Michigan  for
     $1,944,944.  The property is leased to Sterling Jewelers LLC
     under a Lease Agreement with a primary term of 20 years  and
     annual rental payments of $149,808.  The purchase price  and
     annual rental payments shown are approximately 10% less than
     amounts  reported prior to June 30, 2004.   As  part  of  an
     agreement between the lessee and the property developer, the
     monthly  rent was reduced by approximately 10%  based  on  a
     final  accounting of the development costs.  As part of  the
     purchase  agreement between the property developer  and  the
     Company, the purchase price paid by the Company was  reduced
     by the same percentage so the rate of return realized by the
     Company  remains the same.  The remaining interests  in  the
     property were purchased by AEI Income & Growth Fund  25  LLC
     and  AEI  Accredited Investor Fund 2002 Limited Partnership,
     affiliates of the Company.

                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(5)  Payable to AEI Fund Management, Inc. -

     AEI  Fund  Management, Inc. performs the administrative  and
     operating  functions for the Company.  The  payable  to  AEI
     Fund   Management  represents  the  balance  due  for  those
     services.    This  balance  is  non-interest   bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.

(6)  Lessee Deposit -

     In  July  2004,  the  lessee  of the  Tumbleweed  restaurant
     requested  permission  to  remodel  the  interior   of   the
     building,  enclose the patio space and add a "to  go"  area.
     The   Company  agreed  to  the  remodeling  plans  with  the
     stipulation  that  the Company act as the  escrow/disbursing
     agent  for  the construction work.  This was done to  enable
     the  Company  to  ensure  the work  was  completed  and  the
     subcontractors  were  paid.   In  August  2004,  the  lessee
     deposited  the estimated remodeling budget of $350,000  with
     the  Company.  The work was completed in September 2004  and
     the deposit was returned to the lessee in October 2004.

(7)  Discontinued Operations -

     During  the third quarter of 2003, the Company sold its  48%
     interest  in the Johnny Carino's restaurant in San  Antonio,
     Texas,  in  five  separate transactions, to unrelated  third
     parties.   The Company received total net sale  proceeds  of
     $1,517,706,  which resulted in a net gain of $464,610.   The
     total  cost  and  related accumulated  depreciation  of  the
     interests sold was $1,105,231 and $52,135, respectively.

     In  July 2003, the lessee of the Razzoo's restaurants in San
     Antonio, Texas and Alpharetta, Georgia notified the  Company
     that  they  were experiencing financial difficulty  stemming
     from lower than expected sales and might not be able to  pay
     future  rents.  During the summer of 2003, the lessee closed
     the  restaurant  in San Antonio.  In late 2003,  the  lessee
     closed  the restaurant in Alpharetta and said that  they  no
     longer  intended to operate restaurants at  the  sites.   On
     December 5, 2003, the Company terminated the lease  for  the
     property  in San Antonio, effective December 31,  2003,  and
     was  prepared to commence a legal action against the  lessee
     and  the  majority shareholder of the lessee, who guaranteed
     the lease until December 19, 2003.  Before the Company filed
     its  legal action, the lessee filed suit against the Company
     with respect to the Company's lease termination.  The lessee
     paid  the  rent due for the property in San Antonio  through
     December  31, 2003.  Due to the lease termination, they  did
     not pay any rent for 2004.


                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(7)  Discontinued Operations - (Continued)

     Subsequent  to  September 30, 2004, the parties  reached  an
     agreement  to  terminate their legal actions, terminate  the
     lease  for  the property in Alpharetta and return possession
     of  the property to the Company.  Rents were current through
     the date of termination for the property in Alpharetta.   As
     part  of  the  agreement the Company received  a  settlement
     payment  of  $610,142, of which $288,040 were  allocated  to
     rental  income,  representing rent for the property  in  San
     Antonio  for  the  period from January 1, 2004  through  the
     settlement date and $322,102 were allocated as reimbursement
     of certain property management and legal expenses related to
     the two properties.  These amounts will be recognized in the
     fourth quarter of 2004.  The Company has listed the property
     for  sale with a real estate broker in the Alpharetta  area.
     The  Company  previously listed the property in San  Antonio
     for  sale  or  lease with a real estate broker  in  the  San
     Antonio  area.  While the properties are vacant, the Company
     is  responsible  for  real  estate  taxes  and  other  costs
     required to maintain the properties.

     As  of  December  31, 2003, based on an analysis  of  market
     conditions   in   the  area,  the  Company  determined   the
     properties were impaired in accordance with the requirements
     of  Statement  of  Financial Accounting Standards  No.  144,
     Accounting  for  the  Impairment or Disposal  of  Long-Lived
     Assets.   As  a  result, in the fourth quarter  of  2003,  a
     charge to discontinued operations for real estate impairment
     of  $1,148,880  was  recognized  for  the  property  in  San
     Antonio, which was the difference between the book value  at
     December 31, 2003 of $3,198,880 and the estimated fair value
     of $2,050,000.  A charge to discontinued operations for real
     estate  impairment  of  $451,513  was  recognized  for   the
     property in Alpharetta, which was the difference between the
     book  value  at  December 31, 2003  of  $1,551,513  and  the
     estimated  fair  value  of  $1,100,000.   The  charges  were
     recorded  against  the  cost  of  the  land,  buildings  and
     equipment.  At September 30, 2004 and December 31, 2003, the
     properties were classified as Real Estate Held for Sale.

     Subsequent  to September 30, 2004, the Company entered  into
     an  agreement with a subsidiary of Darden Restaurants,  Inc.
     (DRI) to lease the property in San Antonio.  DRI intends  to
     remodel  the  building to operate it as a Smokey  Bones  BBQ
     restaurant.  The lease agreement has a primary term  of  ten
     years, which may be renewed for up to four consecutive terms
     of  five  years.   The annual rent for the primary  term  is
     $165,000.  Under the Lease, DRI has a feasibility period  of
     a maximum of 150 days during which DRI will pursue licenses,
     permits and governmental approvals for the contemplated  use
     of the property and perform other due diligence on the site.
     If DRI is unable to obtain these items or finds other issues
     with  the  property, it has the right to cancel  the  lease.
     Assuming successful completion of the feasibility work,  DRI
     will  commence  paying  rent and property  expenses  on  the
     earlier  of the date the restaurant opens to the public  for
     business  or  120  days  after the end  of  the  feasibility
     period.   DRI indicated it will attempt to complete work  on
     the  property in a timely manner and may not need the entire
     period allowed under the Lease.


                 AEI INCOME & GROWTH FUND 23 LLC
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(7)  Discontinued Operations - (Continued)

     The financial results for these properties are reflected  as
     Discontinued   Operations  in  the  accompanying   financial
     statements.   The following are the results of  discontinued
     operations for the periods ended September 30:

                                Three Months Ended       Nine Months Ended
                                9/30/04      9/30/03    9/30/04      9/30/03

Rental Income                 $  41,351    $ 140,596   $ 123,505   $ 451,312
Property Management Expenses    (38,739)      (3,738)   (276,475)    (23,266)
Depreciation                          0      (32,344)          0    (105,444)
Gain on Disposal of Real Estate       0      464,610           0     464,610
                               ---------    ----------  ---------   --------
   Income (Loss) from
     Discontinued Operations  $   2,612    $ 569,124   $(152,970)  $ 787,212
                               =========    ==========  =========   ========

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  which  represent management's  expectations  or
beliefs  concerning future events, including statements regarding
anticipated  application of cash, expected  returns  from  rental
income,  growth  in revenue, taxation levels, the sufficiency  of
cash to meet operating expenses, rates of distribution, and other
matters.  These, and other forward looking statements made by our
managers, must be evaluated in the context of a number of factors
that   may   affect  our  financial  condition  and  results   of
operations, including the following:

    Market and economic conditions which affect the value
    of the properties we own and the cash from rental
    income such properties generate;

    the federal income tax consequences of rental income,
    deductions, gain on sales and other items and the
    affects of these consequences for members;

    resolution by our managers of conflicts with which they
    may be confronted;

    the success of our managers of locating properties with
    favorable risk return characteristics;

    the effect of tenant defaults; and

    the condition of the industries in which the tenants of
    properties owned by the Company operate.


ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

The Application of Critical Accounting Policies

        The  preparation  of  the Company's financial  statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses to the Company as opposed to other funds they manage.

        The Company purchases properties and records them in  the
financial statements at the lower of cost or estimated realizable
value.   The  Company  initially records the properties  at  cost
(including  capitalized acquisition expenses).   The  Company  is
required   to  periodically  evaluate  the  carrying   value   of
properties  to  determine  whether  their  realizable  value  has
declined.   For  properties the Company will  hold  and  operate,
management   determines  whether  impairment  has   occurred   by
comparing the property's probability-weighted cash flows  to  its
current carrying value.  For properties held for sale, management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.  A change
in  these assumptions or analysis could cause material changes in
the carrying value of the properties.

       AEI Fund Management Inc. allocates expenses to each of the
funds  they manage primarily on the basis of the number of  hours
devoted  by  their employees to each fund's affairs.   They  also
allocate  expenses at the end of each month that are not directly
related to a fund's operations based upon the number of investors
in the fund and the fund's capitalization relative to other funds
they  manage.  The Company reimburses these expenses  subject  to
detailed limitations contained in the Operating Agreement.

        Management  of the Company has discussed the  development
and   selection  of  the  above  accounting  estimates  and   the
management  discussion  and analysis disclosures  regarding  them
with the managing member of the Company.

Results of Operations

       For the nine months ended September 30, 2004 and 2003, the
Company  recognized rental income from continuing  operations  of
$372,890  and  $149,826, respectively.  In  2004,  rental  income
increased  due  to  additional rent received  from  two  property
acquisitions  in  2003  and  2004 and  a  rent  increase  on  one
property.  These increases were partially offset by a decrease in
rental  income due to the sale of the Johnny Carino's  restaurant
in Victoria, Texas.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       For the nine months ended September 30, 2004 and 2003, the
Company  incurred  LLC  administration expenses  from  affiliated
parties   of   $95,106   and   $98,055,   respectively.     These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements  and correspondence to the Limited Members.   During
the  same  periods,  the Company incurred LLC administration  and
property  management expenses from unrelated parties  of  $48,519
and  $14,195,  respectively.   These  expenses  represent  direct
payments  to  third  parties for legal and  filing  fees,  direct
administrative costs, outside audit and accounting costs,  taxes,
insurance  and  other  property costs.   The  increase  in  these
expenses  in  2004, when compared to 2003, is the result  of  the
Company paying higher state taxes in 2004 related to the sale  of
the Johnny Carino's restaurant in Victoria, Texas.

       For the nine months ended September 30, 2004 and 2003, the
Company  recognized  interest  income  of  $10,411  and  $57,515,
respectively.   In  2004, interest income decreased  due  to  the
Company receiving interest from construction advances in 2003 and
having  less  money  invested in a money market  account  due  to
property acquisitions.

        For the nine months ended September 30, 2003, the Company
recognized gain on sale of real estate from continuing operations
of  $614,507  from the sale of the Johnny Carino's restaurant  in
Victoria, Texas.  Since the Company retains an ownership interest
in  the  property, the operating results and gain on sale of  the
property were not classified as discontinued operations.

        During  the  first  quarter of  2003,  the  Company  sold
99.6316% of the Johnny Carino's restaurant in Victoria, Texas, in
eight  separate  transactions, to unrelated third  parties.   The
Company  received  total net sale proceeds of  $2,161,939,  which
resulted  in a net gain of $614,507.  The total cost and  related
accumulated depreciation of the interests sold was $1,656,473 and
$109,041, respectively.

        In  accordance  with  Statement of  Financial  Accounting
Standards  No. 144, Accounting for the Impairment or Disposal  of
Long-Lived  Assets,  upon  complete disposal  of  a  property  or
classification of a property as Real Estate Held  for  Sale,  the
Company  includes the operating results and sale of the  property
in   discontinued   operations.    In   addition,   the   Company
reclassifies the prior periods operating results and any  partial
sales  of the property to discontinued operations.  For the  nine
months  ended September 30, 2004, the Company recognized  a  loss
from  discontinued  operations of $152,970,  representing  rental
income  less  property management expenses.  For the nine  months
ended  September  30,  2003, the Company recognized  income  from
discontinued  operations of $787,212, representing rental  income
less  property management expenses and depreciation  of  $322,602
and gain on disposal of real estate of $464,610.

       During the third quarter of 2003, the Company sold its 48%
interest in the Johnny Carino's restaurant in San Antonio, Texas,
in  five separate transactions, to unrelated third parties.   The
Company  received  total net sale proceeds of  $1,517,706,  which
resulted  in a net gain of $464,610.  The total cost and  related
accumulated depreciation of the interests sold was $1,105,231 and
$52,135, respectively.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        In  July 2003, the lessee of the Razzoo's restaurants  in
San  Antonio, Texas and Alpharetta, Georgia notified the  Company
that  they  were experiencing financial difficulty stemming  from
lower  than  expected sales and might not be able to  pay  future
rents.   During  the  summer  of  2003,  the  lessee  closed  the
restaurant  in San Antonio.  In late 2003, the lessee closed  the
restaurant in Alpharetta and said that they no longer intended to
operate  restaurants  at the sites.  On  December  5,  2003,  the
Company  terminated the lease for the property  in  San  Antonio,
effective December 31, 2003, and was prepared to commence a legal
action  against  the lessee and the majority shareholder  of  the
lessee, who guaranteed the lease until December 19, 2003.  Before
the Company filed its legal action, the lessee filed suit against
the Company with respect to the Company's lease termination.  The
lessee  paid the rent due for the property in San Antonio through
December  31, 2003.  Due to the lease termination, they  did  not
pay any rent for 2004.

        Subsequent to September 30, 2004, the parties reached  an
agreement  to terminate their legal actions, terminate the  lease
for  the  property  in Alpharetta and return  possession  of  the
property to the Company.  Rents were current through the date  of
termination  for  the property in Alpharetta.   As  part  of  the
agreement  the Company received a settlement payment of $610,142,
of  which  $288,040 were allocated to rental income, representing
rent  for the property in San Antonio for the period from January
1,  2004  through the settlement date and $322,102 were allocated
as   reimbursement  of  certain  property  management  and  legal
expenses  related to the two properties.  These amounts  will  be
recognized in the fourth quarter of 2004.  Following an  analysis
of  the  lessee's business at these locations and  its  financial
condition,  and its intent to no longer operate at  these  sites,
the Company determined the best course of action was to negotiate
a  settlement with the lessee and take possession of the property
in  Alpharetta.  With possession of the property, the Company can
now  move  forward with selling the property and reinvesting  the
proceeds  from the sale in replacement income-producing property.
The  Company has listed the property for sale with a real  estate
broker in the Alpharetta area.  The Company previously listed the
property  in  San Antonio for sale or lease with  a  real  estate
broker in the San Antonio area.  While the properties are vacant,
the  Company is responsible for real estate taxes and other costs
required to maintain the properties

        As  of  December 31, 2003, based on an analysis of market
conditions  in  the area, the Company determined  the  properties
were impaired in accordance with the requirements of Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for  the
Impairment or Disposal of Long-Lived Assets.  As a result, in the
fourth  quarter of 2003, a charge to discontinued operations  for
real  estate  impairment  of $1,148,880 was  recognized  for  the
property  in  San Antonio, which was the difference  between  the
book  value at December 31, 2003 of $3,198,880 and the  estimated
fair  value  of $2,050,000.  A charge to discontinued  operations
for  real  estate impairment of $451,513 was recognized  for  the
property in Alpharetta, which was the difference between the book
value  at December 31, 2003 of $1,551,513 and the estimated  fair
value of $1,100,000.  The charges were recorded against the  cost
of  the land, buildings and equipment.  At September 30, 2004 and
December 31, 2003, the properties were classified as Real  Estate
Held for Sale.



ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       Subsequent to September 30, 2004, the Company entered into
an  agreement with a subsidiary of Darden Restaurants, Inc. (DRI)
to lease the property in San Antonio.  DRI intends to remodel the
building  to  operate it as a Smokey Bones BBQ  restaurant.   The
lease  agreement has a primary term of ten years,  which  may  be
renewed  for  up  to four consecutive terms of five  years.   The
annual  rent for the primary term is $165,000.  Under the  Lease,
DRI  has  a  feasibility period of a maximum of 150  days  during
which   DRI   will  pursue  licenses,  permits  and  governmental
approvals  for the contemplated use of the property  and  perform
other  due  diligence on the site.  If DRI is  unable  to  obtain
these  items or finds other issues with the property, it has  the
right to cancel the lease.  Assuming successful completion of the
feasibility  work,  DRI will commence paying  rent  and  property
expenses on the earlier of the date the restaurant opens  to  the
public  for business or 120 days after the end of the feasibility
period.   DRI indicated it will attempt to complete work  on  the
property  in  a timely manner and may not need the entire  period
allowed  under  the  Lease.  Once DRI  begins  paying  rent,  the
Company  intends to explore selling the property and  reinvesting
the  proceeds  from  the  sale  in  replacement  income-producing
property.

        In  2003, the Company received $342,225 of rental  income
from  the  Razzoo's  restaurant  in  San  Antonio,  Texas,  which
represented  a  significant percentage  of  the  Company's  total
rental  income for the year.  For the nine months ended September
30,  2004, the loss of rent from the property and the real estate
taxes  and other costs required to maintain the property resulted
in  a  significant  reduction  in the  Company's  Net  Cash  Flow
available  for  distribution.  As a result,  effective  April  1,
2004, the Company reduced its distribution rate from 7% to 6%  of
the  Limited Members' Adjusted Capital Contributions.   Effective
July  1, 2004, the distribution rate was reduced further  to  5%.
Until  the  Razzoo's transactions discussed above are  completed,
the  loss  of  rent  and  property  expenses  will  result  in  a
significant  reduction in the Company's Net Cash  Flow  available
for  distribution.   The Company will likely use  the  settlement
proceeds  and  a portion of its cash reserve, which  consists  of
profits  generated from the sale of property in 2003, to maintain
the current level of distributions.

        In  2003, the Company realized significant gains from the
sale  of  property.  While the real estate market is expected  to
remain  attractive  for  sellers of property,  there  can  be  no
assurance the Company will be able to achieve a similar level  of
sales  activity or sales profitability in 2004 due to  unforeseen
changes  in the real estate market.   In addition, it  is  likely
the  Company will curtail its selling activity as it is  becoming
more  difficult to find attractive property in which to  reinvest
the proceeds from property sales.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   Leases  may contain rent increases,  based  on  the
increase  in  the  Consumer Price Index over a specified  period,
which  will result in an increase in rental income over the  term
of  the  leases.   In addition, leases may contain  rent  clauses
which  entitle the Company to receive additional rent  in  future
years if gross receipts for the property exceed certain specified
amounts.   Increases  in sales volumes of  the  tenants,  due  to
inflation  and  real sales growth, may result in an  increase  in
rental  income over the term of the leases.  Inflation  also  may
cause the real estate to appreciate in value.  However, inflation
and  changing prices may have an adverse impact on the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

Liquidity and Capital Resources

        During  the  nine months ended September  30,  2004,  the
Company's cash balances decreased $2,134,624 as a result of  cash
used  to  purchase property and distributions paid to the Members
in  excess  of cash generated from operating activities.   During
the  nine  months  ended September 30, 2003, the  Company's  cash
balances increased $1,200,957 as a result of cash generated  from
the sale of property, which was partially offset by cash used  to
purchase property and distributions paid to the Members in excess
of cash generated from operating activities.

        Net  cash provided by operating activities increased from
$429,967 in 2003 to $474,248 provided by operating activities  in
2004  as a result of net timing differences in the collection  of
payments from the lessees and the payment of expenses, which were
partially  offset  by  a decrease in total  rental  and  interest
income in 2004 and an increase in LLC administration and property
management expenses in 2004.

        The  major  components of the Company's  cash  flow  from
investing activities are investments in real estate and  proceeds
from  the  sale of real estate.    During the nine  months  ended
September 30, 2003, the Company generated cash flow from the sale
of  real  estate  of  $3,679,645.  During the nine  months  ended
September 30, 2004 and 2003, the Company expended $1,944,944  and
$2,107,926, respectively, to invest in real properties (inclusive
of   acquisition  expenses),  as  the  Company  reinvested   cash
generated from property sales.

        On  April 4, 2003, the Company purchased a parcel of land
in  Parker, Colorado for $794,250. The Company obtained title  to
the  land  in  the form of an undivided fee simple interest.  The
land  is  leased  to Kona Restaurant Group (KRG)  under  a  Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $79,425.  Simultaneously with the purchase  of  the
land,  the Company entered into a Development Financing Agreement
under   which  the  Company  advanced  funds  to  KRG   for   the
construction  of  a  Johnny  Carino's  restaurant  on  the  site.
Pursuant  to the Lease, any improvements to the land  during  the
term  of  the  Lease  become the property of  the  lessor.    The
Company  charged interest on the advances at a rate of  10%.   On
December 18, 2003, after the development was completed, the Lease
Agreement  was  amended  to  require annual  rental  payments  of
$236,000.   Total acquisition costs, including the  cost  of  the
land, were $2,346,107.

        On February 6, 2004, the Company purchased a 48% interest
in  a  Jared  Jewelry  store  in Madison  Heights,  Michigan  for
$1,944,944.   The  property is leased to  Sterling  Jewelers  LLC
under  a  Lease  Agreement with a primary term of  20  years  and
annual  rental  payments  of $149,808.  The  purchase  price  and
annual  rental  payments shown are approximately  10%  less  than
amounts reported prior to June 30, 2004.  As part of an agreement
between  the lessee and the property developer, the monthly  rent
was  reduced by approximately 10% based on a final accounting  of
the development costs.  As part of the purchase agreement between
the  property developer and the Company, the purchase price  paid
by  the Company was reduced by the same percentage so the rate of
return  realized by the Company remains the same.  The  remaining
interests in the property were purchased by AEI Income  &  Growth
Fund  25  LLC  and  AEI  Accredited Investor  Fund  2002  Limited
Partnership, affiliates of the Company.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        The  Company's  primary  use of  cash  flow,  other  than
investment   in  real  estate,  is  distribution  and  redemption
payments  to Members.  The Company declares its regular quarterly
distributions  before  the  end of  each  quarter  and  pays  the
distribution in the first ten days after the end of each quarter.
The  Company attempts to maintain a stable distribution rate from
quarter  to  quarter.  Redemption payments are paid to  redeeming
Members on a semi-annual basis.

       For the nine months ended September 30, 2004 and 2003, the
Company   declared  distributions  of  $584,648   and   $717,726,
respectively.  Pursuant to the Operating Agreement, distributions
of Net Cash Flow were allocated 97% to the Limited Members and 3%
to  the Managing Members.  Distributions of Net Proceeds of  Sale
were  allocated 99% to the Limited Members and 1% to the Managing
Members.   The Limited Members received distributions of $576,765
and  $700,840 and the Managing Members received distributions  of
$7,883 and $16,886 for the periods, respectively.

       During the first nine months of 2004 and 2003, the Company
distributed  $482,860 and $232,323 of net sale  proceeds  to  the
Limited  and Managing Members as part of their regular  quarterly
distributions,  which represented a return of capital  of  $35.94
and  $17.28  per LLC Unit, respectively.  The Company anticipates
the  remaining  net sale proceeds will either  be  reinvested  in
additional property or distributed to the Members in the future.

        The  Company may acquire Units from Limited  Members  who
have  tendered  their Units to the Company.  Such  Units  may  be
acquired  at  a discount.  The Company will not be  obligated  to
purchase  in  any year any number of Units that, when  aggregated
with  all  other transfers of Units that have occurred since  the
beginning   of  the  same  calendar  year  (excluding   Permitted
Transfers as defined in the Operating Agreement), would exceed 2%
of  the  total number of Units outstanding on January 1  of  such
year.   In  no  event shall the Company be obligated to  purchase
Units  if,  in  the sole discretion of the Managing Member,  such
purchase would impair the capital or operation of the Company.

        For the nine months ended September 30, 2004, the Company
did  not redeem any Units from the Limited Members.  On April  1,
2003,  two  Limited Members redeemed a total of 20.71  Units  for
$14,503  in accordance with the Operating Agreement.  The Company
acquired  these  Units using Net Cash Flow from  operations.   In
prior  years, a total of two Limited Members redeemed 11.73 Units
for  $8,085.   The  redemptions increase  the  remaining  Limited
Member's ownership interest in the Company.  As a result of these
redemption payments and pursuant to the Operating Agreement,  the
Managing Members received distributions of $448 in 2003.

       The continuing rent payments from the properties, together
with  cash  generated from property sales, should be adequate  to
fund  continuing distributions and meet other Company obligations
on both a short-term and long-term basis.

ITEM 3.   CONTROLS AND PROCEDURES

       (a) Evaluation of disclosure controls and procedures

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the Managing Member of the Company evaluated the effectiveness of
the   design  and  operation  of  its  disclosure  controls   and
procedures (as defined in Rule 13a-14(c) under the Exchange Act).
Based  upon  that  evaluation, the President and Chief  Financial
Officer of the Managing Member concluded that, as of the  end  of
the  period  covered by this report, the disclosure controls  and
procedures of the Company are adequately designed to ensure  that
information required to be disclosed by us in the reports we file
or   submit  under  the  Exchange  Act  is  recorded,  processed,
summarized  and  reported, within the time periods  specified  in
applicable rules and forms.

       (b)  Changes in internal controls

        There  were no significant changes made in the  Company's
internal controls during the most recent period covered  by  this
report that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over  financial
reporting.


                   PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

       There  are no material pending legal proceedings to  which
the  Company  is  a party or of which the Company's  property  is
subject.

ITEM  2.UNREGISTERED  SALES  OF  EQUITY  SECURITIES  AND  USE  OF
  PROCEEDS

        (a) During the period covered by this report, the Company
did  not sell any equity securities that are not registered under
the Securities Act of 1933.

       (b) Not applicable.

        (c)  Pursuant to Section 7.7 of the Operating  Agreement,
each Limited Member has the right to present Units to the Company
for  purchase by submitting notice to the Managing Member  during
January or July of each year.  The purchase price of the Units is
equal to 80% of the net asset value of the Units, as of the first
business  day  of January or July of each year, as determined  by
the  Managing  Member in accordance with the  provisions  of  the
Operating  Agreement.   Units  tendered  to  the  Company  during
January  and  July  are redeemed on April 1st  and  October  1st,
respectively, of each year subject to the following  limitations.
The  Company  will not be obligated to purchase in any  year  any
number of Units that, when aggregated with all other transfers of
Units that have occurred since the beginning of the same calendar
year  (excluding Permitted Transfers as defined in the  Operating
Agreement),  would  exceed  2%  of  the  total  number  of  Units
outstanding  on  January 1 of such year.  In no event  shall  the
Company be obligated to purchase Units if, in the sole discretion
of the Managing Member, such purchase would impair the capital or
operation  of  the Company.  During the period  covered  by  this
report, the Company did not purchase any Units.

                   PART II - OTHER INFORMATION
                           (Continued)

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None

ITEM 5.OTHER INFORMATION

      None.

ITEM 6.EXHIBITS

    31.1  Certification  of Chief Executive Officer  of  Managing
    Member  pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2  Certification  of Chief Financial Officer  of  Managing
    Member  pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    32    Certification  of  Chief Executive  Officer  and  Chief
    Financial Officer of Managing Member pursuant to Section  906
    of the Sarbanes-Oxley Act of 2002.


                           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.


Dated:  November 10, 2004     AEI Income & Growth Fund 23 LLC
                              By:  AEI Fund Management XXI, Inc.
                              Its: Managing Member



                              By: /s/ Robert P Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Patrick W Keene
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)