SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

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

                 For the fiscal year ended December 31, 2003


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

             For the transition period from _________to _________

                         Commission file number 0-13530

                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.
                 (Name of small business issuer in its charter)

         Delaware                                                62-1181565
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

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

                    Issuer's telephone number (864) 239-1000

        Securities registered under Section 12(b) of the Exchange Act:

                                      None

        Securities registered under Section 12(g) of the Exchange Act:

                      Units of Limited Partnership Interest
                                (Title of class)

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

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

State issuer's revenues for its most recent fiscal year.  $967,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 2003. No market exists for the Limited  Partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>



14



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

                                     PART I

Item 1.     Description of Business

Davidson  Diversified Real Estate I, L.P. (the "Registrant" or "Partnership") is
a Delaware limited  partnership  organized in January 1983. The general partners
of the  Partnership  are  Davidson  Diversified  Properties,  Inc.,  a Tennessee
corporation  ("Managing  General  Partner");  Diversified  Equities,  Limited, a
Tennessee limited partnership ("Associate General Partner"); and David W. Talley
("Individual  General  Partner")  (collectively,  the "General  Partners").  The
Managing  General  Partner was wholly owned by MAE GP Corporation  ("MAE") until
February  25,  1998,  at which time MAE GP was merged into  Insignia  Properties
Trust  ("IPT"),  a subsidiary of Apartment  Investment  and  Management  Company
("AIMCO"),  a publicly traded real estate investment  trust.  Thus, the Managing
General Partner is now wholly-owned by AIMCO. The Partnership Agreement provides
that the  Partnership  is to terminate on December 31, 2007,  unless  terminated
prior to such date.

The offering of the Partnership's  limited partnership units ("Units") commenced
on November 16, 1983,  and  terminated  on September 14, 1984.  The  Partnership
received  gross  proceeds from the offering of  $15,008,000  and net proceeds of
$13,507,200.  Since its initial offering,  the Partnership has not received, nor
are limited partners required to make, additional capital contributions.

The Partnership's business is to own and operate existing real estate properties
for investment.  The Partnership  does not engage in any foreign  operations nor
derive any income from foreign sources.  All of the net proceeds of the offering
were invested in six properties,  five of which had been sold or foreclosed upon
prior to the calendar year 2002.  The  Partnership  continues to own and operate
one  investment  property as of December 31, 2003.  See "Item 2.  Description of
Property".

The  Partnership  receives  income  from its  property  and is  responsible  for
operating  expenses,  capital  improvements  and debt service  payments  under a
mortgage  obligation  secured by the  property.  The  Partnership  financed  its
property primarily through non-recourse debt. Therefore, if the Partnership were
to default on its loan, the lender, with certain exceptions,  can generally only
look to the subject property for recovery of amounts due.


<PAGE>



The Partnership  has no employees.  Management and  administrative  services are
provided by the  Managing  General  Partner and agents  retained by the Managing
General  Partner.  An affiliate of the Managing  General  Partner  provided such
management services for the years ended December 31, 2003 and 2002.

Risk Factors

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

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

Both the income and expenses of operating the property owned by the  Partnership
are subject to factors outside of the Partnership's  control, such as changes in
the supply  and  demand of similar  properties  resulting  from  various  market
conditions, increases/decreases in unemployment or population shifts, changes in
the availability of permanent mortgage funds, changes in zoning laws, or changes
in patterns or needs of users.  In addition,  there are risks inherent in owning
and operating residential  properties because such properties are susceptible to
the  impact of  economic  and other  conditions  outside  of the  control of the
Partnership.

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

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


<PAGE>




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

Item 2.     Description of Property

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

<TABLE>
<CAPTION>

                                Date of
Property                        Purchase          Type of Ownership           Use

Versailles on the Lake
<S>                             <C>   <C>
 Apartments                     04/05/84    Fee ownership subject to a    Apartment
  Ft. Wayne, Indiana                        first mortgage                156 units
</TABLE>

Schedule of Property

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

<TABLE>
<CAPTION>

                          Gross
                        Carrying   Accumulated   Depreciable    Method of       Federal
Property                  Value    Depreciation      Life      Depreciation    Tax Basis
                             (in thousands)                                  (in thousands)

Versailles on the
<S>                      <C>         <C>           <C>                           <C>
 Lake Apartments         $ 5,402     $ 3,828       5-30 yrs        S/L           $ 927
</TABLE>

See "Note A - Organization  and Summary of Significant  Accounting  Policies" to
the  financial  statements  included  in "Item 7.  Financial  Statements"  for a
description of the Partnership's capitalization and depreciation policies.

Schedule of Property Indebtedness

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

<TABLE>
<CAPTION>

                           Principal                                      Principal
                           Balance At    Stated                            Balance
                          December 31,  Interest   Period     Maturity      Due At
        Property              2003        Rate    Amortized     Date     Maturity (2)
                         (in thousands)                                 (in thousands)
Versailles on the Lake
 Apartments
<S>                         <C>           <C>      <C>        <C>  <C>     <C>
  1st mortgage              $ 2,367       (1)      30 yrs     9/15/07      $ 2,149
</TABLE>

(1)   Adjustable  rate  based  on  the  Fannie  Mae  discounted  mortgage-backed
      security  index plus 85 basis  points.  The rate at December  31, 2003 was
      1.92%.

(2)   See "Note B - Mortgage Note Payable" to the financial  statements included
      in "Item 7.  Financial  Statements"  for  information  with respect to the
      Registrant's  ability to prepay the loan and other specific  details about
      the loan.

On September 16, 2002,  the  Partnership  refinanced  the mortgages  encumbering
Versailles on the Lake  Apartments.  Gross  proceeds from the  refinancing  were
approximately  $2,421,000 of which approximately  $2,178,000 was used to pay off
the existing first and second mortgage notes. The Partnership  recognized a loss
on the early extinguishment of debt of approximately $7,000 due to the write off
of unamortized  loan costs and discounts.  Total  capitalized loan costs for the
new mortgage were approximately $68,000 for the year ended December 31, 2002.

These loans were initially refinanced under an interim credit facility ("Interim
Credit Facility"),  which had a term of three and six months. The Interim Credit
Facility  refinanced  properties in other  partnerships that are affiliated with
the Partnership. However, the Interim Credit Facility created separate loans for
each  property that are not  cross-collateralized  or  cross-defaulted  with the
other  property  loans.  During  the  three-month  term  of the  Interim  Credit
Facility,  the properties were required to make monthly interest-only  payments.
The first month's interest,  which was paid at the date of the refinancing,  was
calculated at LIBOR plus 70 basis points. Interest for each of the following two
months was calculated at LIBOR plus 150 basis points.

During December 2002, the loan encumbering Versailles on the Lake Apartments was
sold to  Fannie  Mae  under  a  permanent  credit  facility  ("Permanent  Credit
Facility"). The Permanent Credit Facility has a maturity of five years, with the
option for one five-year  extension.  This  Permanent  Credit  Facility  creates
separate loans for each property,  which loans are not  cross-collateralized  or
cross-defaulted  with the  other  property  loans  under  the  Permanent  Credit
Facility.  Each note under this Permanent  Credit  Facility begins as a variable
rate loan and provides the option,  after three years,  of converting to a fixed
rate  loan.  The  interest  rate on the  variable  rate  loans is the Fannie Mae
discounted  mortgage-backed  security  index  plus 85  basis  points  (1.92%  at
December 31, 2003), and resets monthly.  Each loan  automatically  renews at the
end of each month. In addition, monthly principal payments are required based on
a 30-year  amortization  schedule,  using the interest rate in effect during the
first month that the property is financed by the Permanent Credit Facility.  The
loans are prepayable without penalty.

Rental Rates and Occupancy

Average  annual rental rate and occupancy for 2003 and 2002 for the property are
as follows:

                                           Average Annual             Average
                                            Rental Rates             Occupancy
                                             (per unit)
 Property                                 2003        2002        2003      2002

 Versailles on the Lake Apartments       $6,085      $6,294       95%        95%

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly   competitive.   The  property  is  subject  to  competition  from  other
residential  apartment  complexes  in the area.  The  Managing  General  Partner
believes that the property is adequately  insured.  The property is an apartment
complex which leases units for terms of one year or less. No residential  tenant
leases 10% or more of the  available  space.  The  property is in good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.


<PAGE>



Real Estate Taxes and Rate

Real estate taxes and rate in 2003 for the property were as follows:

                                                 2003            2003
                                                 Taxes           Rate
                                            (in thousands)

Versailles on the Lake Apartments                $ 68*           1.80%

*Amount per 2002 billings.  Taxes are paid a year in arrears.

During 2003,  the state of Indiana  implemented a  reassessment  of property tax
values. The Partnership is currently appealing the reassessed property tax value
of Versailles on The Lake Apartments. In the state of Indiana property tax bills
are paid one year in arrears. Thus, the 2002 property tax bills are received and
paid in 2003. Due to the Partnership's  appeal of the reassessed property value,
the  property  tax accrual for 2003 and, in certain  situations,  the  remaining
liability  for the 2002 property tax bills is based on the property tax value as
estimated  by a third party  property  tax  specialist.  The 2003  property  tax
expense  based on this  estimate and  recorded in the  financial  statements  is
approximately  $68,000.  If the Partnership is  unsuccessful  in its appeal,  it
could potentially be liable for up to $35,000 of additional  property taxes. The
Partnership  believes  that the recorded  liability is the best  estimate of the
amounts to be paid for  Indiana  property  taxes.  During the fourth  quarter of
2003,  the  Partnership  recorded an  adjustment  to reflect the property  value
estimated by the  specialist  and adjusted  the accrued  property  taxes and tax
expense by approximately ($56,000).

Capital Improvements

Versailles on the Lake Apartments

During the year ended December 31, 2003, the Partnership completed approximately
$214,000  of capital  improvements  at the  property,  consisting  primarily  of
basement  storage units,  waterproofing,  water heater and structural  upgrades,
parking area  resurfacing,  office  computers,  and floor covering  replacement.
These  improvements  were funded from operations and replacement  reserves.  The
Partnership  is  currently  evaluating  the  capital  improvement  needs  of the
property for the upcoming  year and  currently  expects to budget  approximately
$86,000.  Additional  improvements  may be  considered  and will  depend  on the
physical condition of the property as well as anticipated cash flow generated by
the property.

The capital improvements planned for the year 2004 at the Partnership's property
will be  incurred  only to the  extent of cash  available  from  operations  and
Partnership  reserves. To the extent that such budgeted capital improvements are
completed,  the Partnership's  distributable cash flow, if any, may be adversely
affected at least in the short term.

Item 3.     Legal Proceedings

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

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Managing   General   Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending appeal.  The Managing  General Partner is currently
scheduled  to file a brief in  support  of the order  approving  settlement  and
entering judgment thereto by April 23, 2004.

On August 8, 2003 AIMCO  Properties  L.P., an affiliate of the Managing  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours worked in excess of forty per week.  The  Complaint is styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The  Complaint  also  attempts  to certify a subclass  for  salaried
service  directors who are challenging  their  classification as exempt from the
overtime  provisions of the FLSA.  AIMCO  Properties L.P. has filed an answer to
the  Complaint  denying the  substantive  allegations.  Discovery  is  currently
underway.

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

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

During the quarter ended  December 31, 2003, no matters were submitted to a vote
of unit holders through the solicitation of proxies or otherwise.


<PAGE>


                                     PART II

Item 5.     Market for the Partnership's Equity and Related Partner Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 751.84
Limited Partnership Units (the "Units") aggregating $15,008,000.  As of December
31, 2003,  there were 546 holders of record owning an aggregate of 751.59 Units.
Affiliates  of the  Managing  General  Partner  owned  325.95 units or 43.37% at
December 31, 2003.

The  Partnership  distributed  the  following  amounts  during  the years  ended
December 31, 2003 and 2002 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                                          Per                               Per
                      Year Ended        Limited         Year Ended        Limited
                     December 31,     Partnership      December 31,     Partnership
                         2003             Unit             2002             Unit

<S>  <C>               <C>              <C>              <C>               <C>
Sale (1)               $   --           $    --          $  385            $ 512.25
</TABLE>

(1) From the sale of Ashley Woods Apartments in 2001.

Future cash  distributions  will depend on the levels of net cash generated from
operations,  the  availability  of cash  reserves  and the  timing  of the  debt
maturity,  refinancing,  and/or property sale. The Partnership's  cash available
for  distribution  is reviewed on a monthly  basis.  There can be no  assurance,
however,  that the Partnership  will generate  sufficient  funds from operations
after required capital  improvements to permit any distributions to its partners
in 2004 or subsequent  periods.  See "Item 2.  Description of Property - Capital
Improvements" for information  relating to anticipated  capital  expenditures at
the property.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its  affiliates  owned 325.95  Units in the  Partnership
representing  43.37% of the outstanding  Units at December 31, 2003. A number of
these  Units  were  acquired  pursuant  to  tender  offers  made by AIMCO or its
affiliates.  It is possible that AIMCO or its affiliates will acquire additional
Units  in  exchange  for  cash or a  combination  of cash  and  units  in  AIMCO
Properties,  L.P., the operating  partnership of AIMCO,  either through  private
purchases or tender offers.  Pursuant to the Partnership Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  that  include,  but are not  limited  to,  voting on certain
amendments  to the  Partnership  Agreement  and  voting to remove  the  Managing
General  Partner.  As a result of its  ownership  of  43.37% of the  outstanding
Units,  AIMCO and its  affiliates are in a position to influence all such voting
decisions with respect to the Partnership. Although the Managing General Partner
owes fiduciary duties to the limited  partners of the Partnership,  the Managing
General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the  Managing  General  Partner,  as  managing  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Managing General Partner to AIMCO, as its sole stockholder.


<PAGE>



Item 6.     Management's Discussion and Analysis or Plan of Operation

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

Results of Operations

The   Partnership's   net  loss  for  the  year  ended  December  31,  2003  was
approximately  $3,000 as compared to net loss of approximately  $171,000 for the
year ended  December 31, 2002.  The decrease in net loss is due to a decrease in
total expenses,  partially  offset by a slight  decrease in total revenues.  The
decrease  in  total  expenses  is due to  decreases  in  interest,  general  and
administrative,  and property tax expenses,  partially  offset by an increase in
operating  expenses.  Depreciation  expense remained relatively constant for the
comparable  periods.  The decrease in interest  expense is due to the  September
2002  refinancing  of the mortgages  encumbering  the  Partnership's  investment
property at a lower interest rate, a decrease in mortgage discount  amortization
expense, and the loss recognized during 2002 on the early extinguishment of debt
(as  discussed  in  "Liquidity  and Capital  Resources").  Property  tax expense
decreased  as a  result  of the  Partnership  appealing  the  assessed  value of
Versailles on The Lake Apartments. During 2003, the state of Indiana implemented
a reassessment of property tax values.  The  Partnership is currently  appealing
the reassessed  property tax value of Versailles on The Lake Apartments.  In the
state of Indiana property tax bills are paid one year in arrears. Thus, the 2002
property  tax  bills are  received  and paid in 2003.  Due to the  Partnership's
appeal of the reassessed  property value, the property tax accrual for 2003 and,
in certain  situations,  the remaining liability for the 2002 property tax bills
is based on the property  tax value as  estimated by a third party  property tax
specialist. The 2003 property tax expense based on this estimate and recorded in
the  financial  statements  is  approximately  $68,000.  If the  Partnership  is
unsuccessful in its appeal,  it could potentially be liable for up to $35,000 of
additional property taxes. The Partnership  believes that the recorded liability
is the best  estimate  of the  amounts to be paid for  Indiana  property  taxes.
During the fourth  quarter of 2003,  the  Partnership  recorded an adjustment to
reflect the property value  estimated by the specialist and adjusted the accrued
property taxes and tax expense by approximately  ($56,000).  Operating  expenses
increased  due to  increases  in snow  removal  costs and  contract  maintenance
expense,  partially offset by a decrease in newspaper advertising expense at the
property.  General and  administrative  expenses  decreased  primarily  due to a
decrease in management reimbursements to the Managing General Partner as allowed
in the  Partnership  Agreement.  Also  included  in general  and  administrative
expenses  for the years ended  December  31, 2003 and 2002 are costs  associated
with the  quarterly and annual  communications  with  investors  and  regulatory
agencies and the annual audit required by the Partnership Agreement.

The  decrease in total  revenues is due to a decrease  in rental  income.  Other
income remained relatively constant for the comparable periods.  The decrease in
rental  income is  primarily  due to a  decrease  in the  average  rental  rate,
partially offset by a decrease in bad debt expense at the property.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner  monitors the rental market  environment of its  investment  property to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting  the  Partnership  from increases in expenses.  As part of
this plan, the Managing General Partner attempts to protect the Partnership from
the burden of  inflation-related  increases in expenses by increasing  rents and
maintaining  a high overall  occupancy  level.  However,  the  Managing  General
Partner  may use  rental  concessions  and  rental  rate  reductions  to  offset
softening  market  conditions,  accordingly,  there  is no  guarantee  that  the
Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  December  31,  2003,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $60,000,  compared to approximately $72,000 at December 31, 2002.
The decrease in cash and cash  equivalents  of  approximately  $12,000 is due to
approximately  $245,000 of cash used in financing  activities and  approximately
$7,000 of cash used in investing  activities,  partially offset by approximately
$240,000  of cash  provided  by  operating  activities.  Cash used in  financing
activities  consisted of payments on advances  received from an affiliate of the
Managing  General  Partner  and  payments  of  principal  made  on the  mortgage
encumbering the Partnership's  property,  partially offset by an advance from an
affiliate of the Managing  General  Partner.  Cash used in investing  activities
consisted of property  improvements  and  replacements,  partially offset by net
receipts  from  an  escrow  account  maintained  by  the  mortgage  lender.  The
Partnership invests its working capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership and to comply with Federal,  state,
and local  legal and  regulatory  requirements.  The  Managing  General  Partner
monitors  developments  in the area of legal and  regulatory  compliance  and is
studying  new  federal  laws,  including  the  Sarbanes-Oxley  Act of 2002.  The
Sarbanes-Oxley Act of 2002 mandates or suggests  additional  compliance measures
with regard to governance,  disclosure, audit and other areas. In light of these
changes,  the Partnership  expects that it will incur higher expenses related to
compliance,  including  increased  legal  and audit  fees.  The  Partnership  is
currently  evaluating  the capital  improvement  needs of its  property  for the
upcoming year and currently expects to budget approximately $86,000.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as anticipated cash flow generated by the property. The capital
expenditures  will be incurred only if cash is available from operations or from
Partnership  reserves. To the extent that such budgeted capital improvements are
completed,  the Partnership's  distributable cash flow, if any, may be adversely
affected at least in the short term.

The  Partnership's  assets are thought to be sufficient for any near-term  needs
(exclusive of capital  improvements) of the Partnership.  On September 16, 2002,
the  Partnership  refinanced  the mortgages  encumbering  Versailles on the Lake
Apartments. Gross proceeds from the refinancing were approximately $2,421,000 of
which approximately $2,178,000 was used to pay off the existing first and second
mortgage notes. The Partnership recognized a loss on the early extinguishment of
debt of approximately  $7,000 due to the write off of unamortized loan costs and
discounts,  which is included in interest expense.  Total capitalized loan costs
for the new mortgage were approximately  $68,000 for the year ended December 31,
2002.

These loans were initially refinanced under an interim credit facility ("Interim
Credit Facility"),  which had a term of three and six months. The Interim Credit
Facility  refinanced  properties in other  partnerships that are affiliated with
the Partnership. However, the Interim Credit Facility created separate loans for
each  property that are not  cross-collateralized  or  cross-defaulted  with the
other  property  loans.  During  the  three-month  term  of the  Interim  Credit
Facility,  the properties were required to make monthly interest-only  payments.
The first month's interest,  which was paid at the date of the refinancing,  was
calculated at LIBOR plus 70 basis points. Interest for each of the following two
months was calculated at LIBOR plus 150 basis points.

During December 2002, the loan encumbering Versailles on the Lake Apartments was
sold to  Fannie  Mae  under  a  permanent  credit  facility  ("Permanent  Credit
Facility"). The Permanent Credit Facility has a maturity of five years, with the
option for one five-year  extension.  This  Permanent  Credit  Facility  creates
separate loans for each property,  which loans are not  cross-collateralized  or
cross-defaulted  with the  other  property  loans  under  the  Permanent  Credit
Facility.  Each note under this Permanent  Credit  Facility begins as a variable
rate loan and provides the option,  after three years,  of converting to a fixed
rate  loan.  The  interest  rate on the  variable  rate  loans is the Fannie Mae
discounted  mortgage-backed  security  index  plus 85  basis  points  (1.92%  at
December 31, 2003), and resets monthly.  Each loan  automatically  renews at the
end of each month. In addition, monthly principal payments are required based on
a 30-year  amortization  schedule,  using the interest rate in effect during the
first month that the property is financed by the Permanent Credit Facility.  The
loans are prepayable without penalty.

The mortgage  indebtedness  encumbering  Versailles  on the Lake  Apartments  of
approximately $2,367,000 has a maturity date of September 15, 2007 at which time
a balloon payment  totaling  approximately  $2,149,000 is due. At that time, the
Managing  General Partner has the option to extend the maturity of this loan for
another five years. After that period, the Managing General Partner will attempt
to refinance  such  indebtedness  and/or sell the property prior to the maturity
date. If the property  cannot be refinanced or sold, the  Partnership  will risk
losing such property through foreclosure.

The  Partnership  distributed  the  following  amounts  during  the years  ended
December 31, 2003 and 2002 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                                          Per                               Per
                      Year Ended        Limited         Year Ended        Limited
                     December 31,     Partnership      December 31,     Partnership
                         2003             Unit             2002             Unit

<S>  <C>               <C>              <C>              <C>               <C>
Sale (1)               $   --           $    --          $  385            $ 512.25
</TABLE>

(1) From the sale of Ashley Woods Apartments in 2001.

Future cash  distributions  will depend on the levels of net cash generated from
operations,  the  availability  of cash  reserves  and the  timing  of the  debt
maturity,  refinancing,  and/or property sale. The Partnership's  cash available
for  distribution  is reviewed on a monthly  basis.  There can be no  assurance,
however,  that the Partnership  will generate  sufficient  funds from operations
after required capital  improvements to permit any distributions to its partners
in 2004 or subsequent periods.

Other

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its  affiliates  owned 325.95  Units in the  Partnership
representing  43.37% of the outstanding  Units at December 31, 2003. A number of
these  Units  were  acquired  pursuant  to  tender  offers  made by AIMCO or its
affiliates.  It is possible that AIMCO or its affiliates will acquire additional
Units  in  exchange  for  cash or a  combination  of cash  and  units  in  AIMCO
Properties,  L.P., the operating  partnership of AIMCO,  either through  private
purchases or tender offers.  Pursuant to the Partnership Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  that  include,  but are not  limited  to,  voting on certain
amendments  to the  Partnership  Agreement  and  voting to remove  the  Managing
General  Partner.  As a result of its  ownership  of  43.37% of the  outstanding
Units,  AIMCO and its  affiliates are in a position to influence all such voting
decisions with respect to the Partnership. Although the Managing General Partner
owes fiduciary duties to the limited  partners of the Partnership,  the Managing
General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the  Managing  General  Partner,  as  managing  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Managing General Partner to AIMCO, as its sole stockholder.

Critical Accounting Policies and Estimates

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

Impairment of Long-Lived Assets

The  Partnership's  investment  property is recorded at cost,  less  accumulated
depreciation,  unless considered impaired.  If events or circumstances  indicate
that the carrying  amount of a property may be impaired,  the  Partnership  will
make an assessment of its  recoverability by estimating the undiscounted  future
cash flows,  excluding interest charges, of the property. If the carrying amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's  investment  property.  These factors include, but are not limited
to,  changes  in the  national,  regional  and  local  economic  climate;  local
conditions,  such as an oversupply of multifamily  properties;  competition from
other available  multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
asset.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized monthly as it is earned. The
Partnership  evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy  competition from other similar  complexes in the area. Any
concessions  given at the inception of the lease are amortized  over the life of
the lease.


<PAGE>


Item 7.     Financial Statements

DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Balance Sheet - December 31, 2003

      Statements of Operations - Years ended December 31, 2003 and 2002

      Statement  of Changes in  Partners'  Deficit - Years ended  December 31,
      2003 and 2002

      Statements of Cash Flows - Years ended December 31, 2003 and 2002

      Notes to Financial Statements


<PAGE>


              Report of Ernst & Young LLP, Independent Auditors



The Partners
Davidson Diversified Real Estate I, L.P.


We have audited the  accompanying  balance  sheet of Davidson  Diversified  Real
Estate  I,  L.P.  as of  December  31,  2003,  and  the  related  statements  of
operations,  changes in  partners'  deficit,  and cash flows for each of the two
years in the period ended December 31, 2003. These financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Davidson  Diversified  Real
Estate I, L.P. at December 31, 2003,  and the results of its  operations and its
cash flows for each of the two years in the period ended  December 31, 2003,  in
conformity with accounting principles generally accepted in the United States.



                                                          /s/ERNST & YOUNG LLP



Greenville, South Carolina
March 16, 2004


<PAGE>





                   DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                                  BALANCE SHEET
                        (in thousands, except unit data)

                                December 31, 2003

<TABLE>
<CAPTION>


Assets
<S>                                                                           <C>
   Cash and cash equivalents                                                  $ 60
   Receivables and deposits                                                     338
   Other assets                                                                  72
   Investment property (Notes B & E):
      Land                                                     $ 191
      Buildings and related personal property                   5,211
                                                                5,402
      Less accumulated depreciation                            (3,828)        1,574

                                                                            $ 2,044
Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                          $ 140
   Tenant security deposit liabilities                                           17
   Accrued property taxes (Note F)                                               76
   Other liabilities                                                             78
   Due to affiliate (Note D)                                                    321
   Mortgage note payable (Note B)                                             2,367

Partners' Deficit
   General partners                                             $ (9)
   Limited partners (751.59 units issued and
      outstanding)                                               (946)         (955)

                                                                            $ 2,044


              See Accompanying Notes to Financial Statements
</TABLE>



<PAGE>


                   DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                            STATEMENTS OF OPERATIONS
                      (in thousands, except per unit data)


<TABLE>
<CAPTION>

                                                             Years Ended
                                                             December 31,
                                                         2003               2002


Revenues:
<S>                                                   <C>               <C>
  Rental income                                       $    862          $    875
  Other income                                             105               110
         Total revenues                                    967               985

Expenses:
  Operating                                                487               452
  General and administrative                                86               156
  Depreciation                                             278               274
  Interest                                                  70               186
  Property taxes                                            49                88
         Total expenses                                    970             1,156

Net loss (Note C)                                     $     (3)         $   (171)

Net loss allocated to general partners (5%)           $     --          $     (9)

Net loss allocated to limited partners (95%)                (3)             (162)
                                                      $     (3)         $   (171)

Net loss per limited partnership unit                 $  (3.99)         $(215.54)

Distributions per limited partnership unit            $     --          $ 512.25

              See Accompanying Notes to Financial Statements
</TABLE>




<PAGE>


                   DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                  STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
                        (in thousands, except unit data)

<TABLE>
<CAPTION>


                                         Limited
                                       Partnership    General     Limited
                                          Units       Partners   Partners     Total

<S>                                       <C>           <C>       <C>        <C>
Original capital contributions            751.84        $ 1       $15,008    $15,009

Partners' deficit at
  December 31, 2001                       751.59        $ --      $ (396)     $ (396)

Distributions to partners                     --           --        (385)      (385)

Net loss for the year ended
  December 31, 2002                           --           (9)       (162)      (171)

Partners' deficit at
  December 31, 2002                       751.59           (9)       (943)      (952)

Net loss for the year ended
  December 31, 2003                           --           --          (3)        (3)

Partners' deficit at
  December 31, 2003                       751.59        $ (9)     $ (946)     $ (955)


              See Accompanying Notes to Financial Statements
</TABLE>



<PAGE>



                   DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                      Years Ended
                                                                      December 31,
                                                                        2003    2002
Cash flows from operating activities:
<S>                                                                 <C>        <C>
  Net loss                                                          $ (3)      $ (171)
  Adjustments to reconcile net loss to net cash provided by
   (used in) operating activities:
     Depreciation                                                     278          274
     Amortization of discounts and loan costs                          14           28
     Loss on early extinguishment of debt                              --            7
     Change in accounts:
      Receivables and deposits                                         (8)        (320)
      Other assets                                                     (6)          (7)
      Accounts payable                                                (14)          (7)
      Tenant security deposit liabilities                               2            2
      Due to affiliates                                                (2)           2
      Accrued property taxes                                          (10)           3
      Other liabilities                                               (11)          30
        Net cash provided by (used in) operating activities           240         (159)
Cash flows from investing activities:
  Property improvements and replacements                              (71)        (150)
  Net withdrawals from (deposits to) restricted escrows                64           (1)
        Net cash used in investing activities                          (7)        (151)
Cash flows from financing activities:
  Payments on mortgage notes payable                                  (54)         (73)
  Proceeds from mortgage note payable                                  --        2,421
  Repayment of mortgage notes payable                                  --       (2,178)
  Advances from affiliate                                               3          260
  Payments on advances from affiliate                                (194)         (69)
  Loan costs paid                                                      --          (68)
  Distributions to partners                                            --         (385)
        Net cash used in financing activities                        (245)         (92)

Net decrease in cash and cash equivalents                             (12)        (402)
Cash and cash equivalents at beginning of year                         72          474
Cash and cash equivalents at end of year                            $ 60        $ 72
Supplemental disclosure of cash flow information:
  Cash paid for interest                                            $ 57        $ 155
Supplemental disclosure of non-cash activity:
  Property improvements and replacements in                        $ 143        $ --
  accounts payable

              See Accompanying Notes to Financial Statements
</TABLE>




<PAGE>



                   DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2003


Note A - Organization and Summary of Significant Accounting Policies

Organization:  Davidson  Diversified Real Estate I, L.P. (the "Partnership" or
"Registrant"),  is a Delaware  limited  partnership  organized  on January 14,
1983,  to acquire  and  operate  residential  real  estate  properties.  As of
December 31, 2003, the Partnership operates one residential property,  located
in Ft. Wayne, Indiana. The Partnership's  managing general partner is Davidson
Diversified  Properties,  Inc. (the "Managing General Partner").  The Managing
General  Partner  is a  subsidiary  of  Apartment  Investment  and  Management
Company  ("AIMCO"),  a publicly  traded  real  estate  investment  trust.  The
Partnership  Agreement  provides  that  the  Partnership  is to  terminate  on
December 31, 2007 unless terminated prior to such date.

Allocations to Partners: Net loss from operations of the Partnership and taxable
income (loss) are  allocated  95% to the limited  partners and 5% to the general
partners.  Distributions  of available cash (cash flow) are allocated  among the
limited  partners and the general  partners in accordance  with the agreement of
limited partnership.

Allocation of net income for tax purposes, arising from the occurrence of a sale
or refinancing shall be allocated as follows:

      First, an amount equal to the aggregate deficit in the capital accounts of
      the general and limited partners having deficits in their capital accounts
      shall be  allocated  to each such partner in the same ratio as the deficit
      such  partner's  capital  account  bears  to the  aggregate  of  all  such
      partner's deficits.

      Second, to the limited partners in an amount equal to the cash distributed
      to them from a sale or refinancing.

      Third,  the remainder,  if any, 5% to the general  partners and 95% to the
      limited partners.

Distributions  of cash from sales or  refinancings  shall be  distributed in the
following order of priority.

      First,  to the limited  partners,  an amount which when added to all prior
      distributions  of cash  from  sales  or  refinancings  shall  equal  their
      original invested  capital,  plus an amount which, when added to all prior
      distributions to the limited partners  (excluding  distributions which are
      deducted in the calculation of adjusted invested  capital),  will equal 8%
      per annum  cumulative  noncompounded on their adjusted  invested  capital,
      commencing  the last day of the  calendar  quarter in which  each  limited
      partner is admitted to the Partnership through the date of payment.

      Second,  to an affiliate of the general  partners,  an amount equal to its
      subordinated real estate  commission,  which fee is equal to the lesser of
      (i) 3% of the gross  sales  price of a property  or (ii)  one-half  of the
      competitive commission, as defined, but may only be paid after the limited
      partners have received  their priority  distributions  as discussed in the
      previous paragraph.

      Third, 85% of the remaining cash from sales or refinancings to the limited
      partners and 15% of the remaining cash from sales or  refinancings  to the
      general partners.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the investment  property and related personal  property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used for
real property over 18 years for additions  after March 15, 1984,  and before May
9, 1985,  and 19 years for additions  after May 8, 1985,  and before  January 1,
1987. As a result of the Tax Reform Act of 1986,  for additions  after  December
31, 1986, the modified accelerated cost recovery method is used for depreciation
of (1) real  property  additions  over 27 1/2 years,  and (2) personal  property
additions over 5 years.

Investment  Property:  Investment property consists of one apartment complex and
is stated at cost.  Acquisition  fees are  capitalized as a cost of real estate.
Expenditures  in excess of $250 that  maintain  an  existing  asset  which has a
useful  life of more  than one  year  are  capitalized  as  capital  replacement
expenditures  and  depreciated  over the  estimated  useful  life of the  asset.
Expenditures for ordinary repairs,  maintenance and apartment turnover costs are
expensed as incurred.  In  accordance  with  Statement  of Financial  Accounting
Standards  ("SFAS")  No.  144,  "Accounting  for the  Impairment  or Disposal of
Long-Lived  Assets",  the Partnership  records  impairment  losses on long-lived
assets used in operations when events and circumstances indicate that the assets
might be impaired and the  undiscounted  cash flows estimated to be generated by
those assets are less than the carrying  amounts of those assets.  For the years
ended  December 31, 2003 and 2002, no  adjustments  for impairment of value were
necessary.

Cash and Cash Equivalents:  Cash and cash equivalents  includes cash on hand and
in banks.  At certain  times,  the amount of cash deposited at a bank may exceed
the limit on insured deposits.  Cash balances included  approximately $55,000 at
December 31, 2003 that are  maintained  by an affiliated  management  company on
behalf of affiliated entities in cash concentration accounts.

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

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

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising  expense,  included in operating expenses was approximately  $14,000
and $19,000 for the years ended December 31, 2003 and 2002, respectively.

Loan Costs: At December 31, 2003, loan costs of  approximately  $68,000,  net of
accumulated  amortization of approximately $17,000, are included in other assets
and are being amortized on a  straight-line  method over the life of the related
loan.  Amortization  expense for the years ended  December 31, 2003 and 2002 was
approximately  $14,000 and  $12,000,  respectively,  and is included in interest
expense.  Amortization expense is expected to be approximately  $14,000 for each
of the years 2004 through 2006 and $9,000 for 2007.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income applicable to leases monthly as it is
earned.  The  Partnership  evaluates all accounts  receivable from residents and
establishes  an  allowance,  after the  application  of security  deposits,  for
accounts  greater than 30 days past due on current  tenants and all  receivables
due from former tenants.  In addition,  it is the Partnership's  policy to offer
rental concessions during periods of declining occupancy or in response to heavy
competition from other similar  complexes in the area. Any concessions  given at
the inception of the lease are amortized over the life of the lease.

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Derivative
Financial  Instruments",   as  amended  by  SFAS  No.  119,  "Disclosures  about
Derivative  Financial  Instruments  and  Fair  Value of  Financial  Instruments"
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate  fair  value.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the  carrying  amount of its  financial  instruments  (except for long term
debt)  approximates  their fair value due to the short  term  maturity  of these
instruments.  The fair value of the Partnership's long term debt at December 31,
2003,  after  discounting the scheduled loan payments to maturity,  approximates
its carrying balance.

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

Note B - Mortgage Note Payable

<TABLE>
<CAPTION>

                          Principal     Monthly                           Principal
                         Balance At     Payment     Stated                 Balance
                        December 31,   Including   Interest   Maturity      Due At
       Property             2003        Interest     Rate       Date       Maturity
                             (in thousands)                             (in thousands)
Versailles on the Lake
 Apartments
<S>                        <C>           <C>          <C>     <C>  <C>     <C>
  1st mortgage             $ 2,367       $   9        (1)     9/15/07      $ 2,149
</TABLE>

(1)   Adjustable  rate based on Fannie Mae discounted  mortgage-backed  security
      index plus 85 basis points. The rate at December 31, 2003 was 1.92%.

On September 16, 2002,  the  Partnership  refinanced  the mortgages  encumbering
Versailles on the Lake  Apartments.  Gross  proceeds from the  refinancing  were
approximately  $2,421,000 of which approximately  $2,178,000 was used to pay off
the existing first and second mortgage notes. The Partnership  recognized a loss
on the early extinguishment of debt of approximately $7,000 due to the write off
of unamortized loan costs and discounts,  which is included in interest expense.
Total capitalized loan costs for the new mortgage were approximately $68,000 for
the year ended December 31, 2002.

These loans were initially refinanced under an interim credit facility ("Interim
Credit Facility"),  which had a term of three and six months. The Interim Credit
Facility  refinanced  properties in other  partnerships that are affiliated with
the Partnership. However, the Interim Credit Facility created separate loans for
each  property that are not  cross-collateralized  or  cross-defaulted  with the
other  property  loans.  During  the  three-month  term  of the  Interim  Credit
Facility,  the properties were required to make monthly interest-only  payments.
The first month's interest,  which was paid at the date of the refinancing,  was
calculated at LIBOR plus 70 basis points. Interest for each of the following two
months was calculated at LIBOR plus 150 basis points.

During December 2002, the loan encumbering Versailles on the Lake Apartments was
sold to  Fannie  Mae  under  a  permanent  credit  facility  ("Permanent  Credit
Facility"). The Permanent Credit Facility has a maturity of five years, with the
option for one five-year  extension.  This  Permanent  Credit  Facility  creates
separate loans for each property,  which loans are not  cross-collateralized  or
cross-defaulted  with the  other  property  loans  under  the  Permanent  Credit
Facility.  Each note under this Permanent  Credit  Facility begins as a variable
rate loan and provides the option,  after three years,  of converting to a fixed
rate  loan.  The  interest  rate on the  variable  rate  loans is the Fannie Mae
discounted  mortgage-backed  security  index  plus 85  basis  points  (1.92%  at
December 31, 2003), and resets monthly.  Each loan  automatically  renews at the
end of each month. In addition, monthly principal payments are required based on
a 30-year  amortization  schedule,  using the interest rate in effect during the
first month that the property is financed by the Permanent Credit Facility.  The
loans are prepayable without penalty.

The  mortgage  note  payable  is  non-recourse  and is  secured by pledge of the
respective  apartment  property  and by pledge of revenues  from the  respective
apartment   property.   The  property  may  not  be  sold  subject  to  existing
indebtedness.

Scheduled principal payments of the mortgage note payable subsequent to December
31, 2003, are as follows (in thousands):

                               2004         $    60
                               2005              61
                               2006              62
                               2007           2,184
                               Total        $ 2,367


<PAGE>



Note C - Income Taxes

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

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

                                                2003           2002
Net loss as reported                        $       (3)    $     (171)
Add (deduct):
  Depreciation differences                         145            114
  Unearned income                                  (24)            25
  Other                                            (97)           (12)
Federal taxable income (loss)               $       21     $      (44)
Federal taxable income (loss) per
  limited partnership unit                  $   111.87     $   (36.37)

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 2003 (in thousands):

                                                         2003

Net  liabilities  as  reported                          $ (955)
Differences  in  basis  of  assets  and
liabilities:
  Buildings and land                                        99
  Accumulated depreciation                                (746)
  Other                                                     (3)
Net liabilities - Federal tax basis                   $ (1,605)

Note D - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  Affiliates  of the Managing  General  Partner  provide
property  management  services to the  Partnership.  The  Partnership  Agreement
provides for (i) payments to affiliates for services and (ii)  reimbursement  of
certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the Managing  General  Partner are entitled to receive 5% of gross
receipts from the Partnership's  property as compensation for providing property
management  services.  The  Partnership  paid to such  affiliates  approximately
$47,000  and  $51,000  for  the  years  ended   December   31,  2003  and  2002,
respectively, which is included in operating expenses.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative  expenses amounting to approximately $42,000 and $122,000 for the
years ended  December  31, 2003 and 2002,  respectively,  which are  included in
general and administrative  expenses and investment property. For the year ended
December 31, 2003 the first three  quarters were based on estimated  amounts and
in the fourth quarter of 2003, the reimbursements of accountable  administrative
expenses were adjusted  based on actual costs (see "Note F").  Included in these
amounts are fees  related to  construction  management  services  provided by an
affiliate of the Managing General Partner of approximately $1,000 and $5,000 for
the years ended  December  31,  2003 and 2002,  respectively.  The  construction
management  service fees are  calculated  based on a percentage  of current year
additions to investment property.

In accordance with the Partnership  Agreement,  during 2002 the Managing General
Partner  loaned the  Partnership  approximately  $260,000 to cover  non-resident
withholding  taxes.  Interest was charged at the prime rate plus 1%. As a result
of this  loan,  interest  expense  for the  year  ended  December  31,  2003 was
approximately  $5,000 as  compared to  approximately  $11,000 for the year ended
December  31,  2002.  During  the years  ended  December  31,  2003 and 2002 the
Partnership  made  principal   payments  to  the  Managing  General  Partner  of
approximately  $194,000  and  $69,000,  respectively  and  interest  payments of
approximately $7,000 and $9,000,  respectively with cash provided by operations.
At December 31, 2003,  there were no  outstanding  loans or  associated  accrued
interest owed to the Managing General Partner.  Subsequent to December 31, 2003,
the Managing  General  Partner loaned the Partnership  approximately  $93,000 to
fund operating  expenses at Versailles on The Lake  Apartments.  This loan bears
interest at the prime rate plus 1% (5.00% at December 31, 2003).

The  Partnership is liable to an affiliate of the Managing  General  Partner for
real estate  commissions  in the amounts of  approximately  $125,000  for Revere
Village  Apartments and  approximately  $196,000 for Essex  Apartments,  both of
which were sold in previous years. The total amount of approximately $321,000 is
included on the balance sheet in due to affiliates.  Payment of the  commissions
will not be made to the  affiliate  until the  limited  partners  have  received
distributions  equal to  their  original  invested  capital,  plus 8% per  annum
cumulative  non-compounded on their adjusted invested capital  commencing on the
last day of the calendar  quarter in which each limited  partner was admitted to
the Partnership through the date of payment.

The  Partnership  insures its  property up to certain  limits  through  coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability.  The Partnership  insures its property above the AIMCO limits through
insurance  policies  obtained  by  AIMCO  from  insurers  unaffiliated  with the
Managing General Partner. During the years ended December 31, 2003 and 2002, the
Partnership  was charged by AIMCO and its affiliates  approximately  $13,000 and
$16,000,  respectively,  for insurance  coverage and fees associated with policy
claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its  affiliates  owned 325.95  Units in the  Partnership
representing  43.37% of the outstanding  Units at December 31, 2003. A number of
these  Units  were  acquired  pursuant  to  tender  offers  made by AIMCO or its
affiliates.  It is possible that AIMCO or its affiliates will acquire additional
Units  in  exchange  for  cash or a  combination  of cash  and  units  in  AIMCO
Properties,  L.P., the operating  partnership of AIMCO,  either through  private
purchases or tender offers.  Pursuant to the Partnership Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  that  include,  but are not  limited  to,  voting on certain
amendments  to the  Partnership  Agreement  and  voting to remove  the  Managing
General  Partner.  As a result of its  ownership  of  43.37% of the  outstanding
Units,  AIMCO and its  affiliates are in a position to influence all such voting
decisions with respect to the Partnership. Although the Managing General Partner
owes fiduciary duties to the limited  partners of the Partnership,  the Managing
General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the  Managing  General  Partner,  as  managing  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Managing General Partner to AIMCO, as its sole stockholder.

Note E - Investment Property and Accumulated Depreciation

<TABLE>
<CAPTION>

                                                 Initial Cost
                                                To Partnership
                                                (in thousands)

                                                        Buildings         Net Cost
                                                       and Related      Capitalized
                                                         Personal      Subsequent to
Description                Encumbrances      Land        Property       Acquisition
                          (in thousands)                               (in thousands)
Versailles on the Lake
<S>                           <C>           <C>          <C>              <C>
 Apartments                   $ 2,367       $ 191        $ 3,847          $ 1,364
</TABLE>

<TABLE>
<CAPTION>

                        Gross Amount At Which
                            Carried
                       At December 31, 2003
                          (in thousands)

                              Buildings
                                 And                           Date of
                               Personal          Accumulated  Construc-   Date    Depreciable
     Description       Land    Property   Total  Depreciation   tion    Acquired     Life
                                                (in thousands)
Versailles   on   the
Lake
<S>                    <C>     <C>       <C>       <C>          <C>       <C>      <C>
 Apartments            $ 191   $ 5,211   $ 5,402   $ 3,828      1970      04/84    5-30 yrs
</TABLE>

Reconciliation  of  "investment  property  and  accumulated   depreciation"  (in
thousands):

                                              Years Ended December 31,
                                                 2003          2002
Investment Property

Balance at beginning of year                    $ 5,188       $ 5,038
    Property improvements                           214           150
Balance at end of year                          $ 5,402       $ 5,188

Accumulated Depreciation

Balance at beginning of year                    $ 3,550       $ 3,276
    Depreciation expense                            278           274
Balance at end of year                          $ 3,828       $ 3,550

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2003  and  2002  is  approximately   $5,501,000  and  $5,287,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at  December  31,  2003 and 2002 is  approximately  $4,574,000  and  $4,441,000,
respectively.

Note F - Fourth-Quarter Adjustments

The Partnership's policy is to record management  reimbursements to the Managing
General Partner as allowed under the Partnership Agreement on a quarterly basis,
using estimated financial  information furnished by an affiliate of the Managing
General Partner.  For the first three quarters of 2003, these  reimbursements of
accountable  administrative expenses were based on estimated amounts. During the
fourth  quarter of 2003 the  Partnership  recorded an  adjustment  to management
reimbursements to the Managing General Partner of approximately ($39,000) due to
a difference in the estimated  costs and the actual costs  incurred.  The actual
management  reimbursements  to the Managing  General  Partner for the year ended
December  31,  2003 were  approximately  $41,000 as  compared  to the  estimated
management  reimbursements  to the Managing  General Partner for the nine months
ended September 30, 2003 of approximately $57,000.

During 2003,  the state of Indiana  implemented a  reassessment  of property tax
values. The Partnership is currently appealing the reassessed property tax value
of Versailles on The Lake Apartments. In the state of Indiana property tax bills
are paid one year in arrears. Thus, the 2002 property tax bills are received and
paid in 2003. Due to the Partnership's  appeal of the reassessed property value,
the  property  tax accrual for 2003 and, in certain  situations,  the  remaining
liability  for the 2002 property tax bills is based on the property tax value as
estimated  by a third party  property  tax  specialist.  The 2003  property  tax
expense  based on this  estimate and  recorded in the  financial  statements  is
approximately  $68,000.  If the Partnership is  unsuccessful  in its appeal,  it
could potentially be liable for up to $35,000 of additional  property taxes. The
Partnership  believes  that the recorded  liability is the best  estimate of the
amounts to be paid for  Indiana  property  taxes.  During the fourth  quarter of
2003,  the  Partnership  recorded an  adjustment  to reflect the property  value
estimated by the  specialist  and adjusted  the accrued  property  taxes and tax
expense by approximately ($56,000).


<PAGE>



Note G - Legal Proceedings

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

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action.

In general  terms,  the  proposed  settlement  provides  for  certification  for
settlement  purposes of a settlement class consisting of all limited partners in
this  Partnership and others (the  "Partnerships")  as of December 20, 2002, the
dismissal  with  prejudice  and  release  of claims  in the  Nuanes  and  Heller
litigation,  payment by AIMCO of $9.9  million  (which shall be  distributed  to
settlement  class  members  after  deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent  appraisals of the  Partnerships'  properties  by a Court  appointed
appraiser.  An affiliate of the Managing General Partner has also agreed to make
at least one round of tender offers to purchase all of the partnership interests
in the Partnerships within one year of final approval,  if it is granted, and to
provide  partners with the independent  appraisals at the time of these tenders.
The proposed  settlement also provided for the limitation of the allowable costs
which  the  Managing   General   Partner  or  its  affiliates  will  charge  the
Partnerships  in connection with this litigation and imposes limits on the class
counsel  fees and  costs in this  litigation.  On April  11,  2003,  notice  was
distributed  to  limited   partners   providing  the  details  of  the  proposed
settlement.

On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions.  On August 12, 2003, an objector
("Objector")  filed an  appeal  seeking  to  vacate  and/or  reverse  the  order
approving the settlement and entering  judgment  thereto.  On November 24, 2003,
the Objector filed an  application  requesting the Court order AIMCO to withdraw
settlement  tender offers it had  commenced,  refrain from making further offers
pending the appeal and auction any units tendered to third  parties,  contending
that the offers did not conform  with the terms of the  Settlement.  Counsel for
the Objector (on behalf of another  investor)  had  alternatively  requested the
Court take certain  action  purportedly  to enforce the terms of the  settlement
agreement.  On December 18, 2003,  the Court heard oral  argument on the motions
and denied them both in their entirety.  On January 28, 2004, Objector filed his
opening brief in his pending appeal.  The Managing  General Partner is currently
scheduled  to file a brief in  support  of the order  approving  settlement  and
entering judgment thereto by April 23, 2004.

On August 8, 2003 AIMCO  Properties  L.P., an affiliate of the Managing  General
Partner,  was served  with a  Complaint  in the United  States  District  Court,
District of Columbia alleging that AIMCO Properties L.P.  willfully violated the
Fair Labor Standards Act (FLSA) by failing to pay maintenance  workers  overtime
for all hours worked in excess of forty per week.  The  Complaint is styled as a
Collective  Action  under  the FLSA and seeks to  certify  state  subclasses  in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate  maintenance workers for
time  that they were  required  to be  "on-call".  Additionally,  the  Complaint
alleges AIMCO  Properties  L.P.  failed to comply with the FLSA in  compensating
maintenance  workers  for time that they  worked in  responding  to a call while
"on-call".  The  Complaint  also  attempts  to certify a subclass  for  salaried
service  directors who are challenging  their  classification as exempt from the
overtime  provisions of the FLSA.  AIMCO  Properties L.P. has filed an answer to
the  Complaint  denying the  substantive  allegations.  Discovery  is  currently
underway.

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

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


<PAGE>



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

            None.

Item 8A.    Controls and Procedures

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

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fourth quarter of 2003 that have materially  affected,  or are reasonably likely
to  materially  affect,  the  Partnership's   internal  control  over  financial
reporting.


<PAGE>


                                    PART III

Item 9.     Directors,  Executive  Officers,  Promoters  and Control  Persons,
            Compliance with Section 16(a) of the Exchange Act

Davidson  Diversified Real Estate I, L.P. (the  "Partnership" or "Registrant")
has no officers or  directors.  Davidson  Diversified  Properties,  Inc.  (the
"Managing  General  Partner")  manages and  controls the  Partnership  and has
general responsibility and authority in all matters affecting its business.

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

Peter K. Kompaniez               59   Director
Martha L. Long                   44   Director and Senior Vice President
Harry G. Alcock                  41   Executive Vice President
Miles Cortez                     60   Executive Vice President, General Counsel
                                      and Secretary
Patti K. Fielding                40   Executive Vice President
Paul J. McAuliffe                47   Executive Vice President and Chief
                                      Financial Officer
Thomas M. Herzog                 41   Senior Vice President and Chief Accounting
                                     Officer

Peter K.  Kompaniez  has been Director of the Managing  General  Partner since
February  2004.  Mr.  Kompaniez  has  been  Vice  Chairman  of  the  Board  of
Directors of AIMCO since July 1994 and was  appointed  President in July 1997.
Mr.  Kompaniez has also served as Chief Operating  Officer of NHP Incorporated
after it was  acquired by AIMCO in  December  1997.  Effective  April 1, 2004,
Mr.  Kompaniez  resigned as President of AIMCO. Mr. Kompaniez will continue in
his role as  Director of the  Managing  General  Partner and Vice  Chairman of
AIMCO's  Board  and will  serve  AIMCO on a variety  of  special  and  ongoing
projects in an operating role.

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

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

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


<PAGE>



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

Paul J. McAuliffe has been Executive Vice President and Chief Financial  Officer
of the Managing  General  Partner since April 2002. Mr.  McAuliffe has served as
Executive Vice  President of AIMCO since  February 1999 and was appointed  Chief
Financial Officer of AIMCO in October 1999. From May 1996 until he joined AIMCO,
Mr. McAuliffe was Senior Managing Director of Secured Capital Corp.

Thomas M.  Herzog was  appointed  Senior  Vice  President  and Chief  Accounting
Officer of the Managing General Partner in February 2004 and of AIMCO in January
2004.  Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate,
serving  as Chief  Accounting  Officer & Global  Controller  from  April 2002 to
January 2004 and as Chief Technical Advisor from March 2000 to April 2002. Prior
to joining GE Real  Estate,  Mr.  Herzog was at  Deloitte & Touche LLP from 1990
until 2000, including a two-year assignment in the real estate national office.

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

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

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

Item 10.    Executive Compensation

Neither the directors nor officers of the Managing  General Partner received any
remuneration from the Registrant.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial owners of more than 5% of the Limited Partnership Units (the "Units")
of the Registrant as of December 31, 2003.


<PAGE>



                        Entity                     Number of Units    Percentage

      AIMCO Properties, L.P.                            221.55           29.48%
        (an affiliate of AIMCO)
      Cooper River Properties, L.L.C.                    85.65           11.40%
        (an affiliate of AIMCO)
      AIMCO IPLP, L.P. (formerly Insignia
         Properties, L.P.)                               18.50            2.46%
        (an affiliate of AIMCO)
      Davidson Diversified Properties, Inc.                .25            0.03%
        (an affiliate of AIMCO)

Cooper River  Properties,  L.L.C.,  AIMCO IPLP, L.P. and Davidson  Diversified
Properties,  Inc. are  indirectly  ultimately  owned by AIMCO.  Their business
address is 55 Beattie Place, Greenville, SC 29602.

AIMCO  Properties,  L.P. is indirectly  ultimately  controlled  by AIMCO.  Its
business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, CO 80237.

As of December 31, 2003, no director or officer of the Managing  General Partner
owns,  nor do the directors or officers as a group own any of the  Partnership's
Units. No such director or officer had any right to acquire beneficial ownership
of additional Units of the Partnership.

Item 12.    Certain Relationships and Related Transactions

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  Affiliates  of the Managing  General  Partner  provide
property  management  services to the  Partnership.  The  Partnership  Agreement
provides for (i) payments to affiliates for services and (ii)  reimbursement  of
certain expenses incurred by affiliates on behalf of the Partnership.

Affiliates of the Managing  General  Partner are entitled to receive 5% of gross
receipts from the Partnership's  property as compensation for providing property
management  services.  The  Partnership  paid to such  affiliates  approximately
$47,000  and  $51,000  for  the  years  ended   December   31,  2003  and  2002,
respectively, which is included in operating expenses.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative  expenses amounting to approximately $42,000 and $122,000 for the
years ended  December  31, 2003 and 2002,  respectively,  which are  included in
general and administrative  expenses and investment property. For the year ended
December 31, 2003 the first three  quarters were based on estimated  amounts and
in the fourth quarter of 2003, the reimbursements of accountable  administrative
expenses were adjusted based on actual costs (see Item 7. Financial Statements -
Note F). Included in these amounts are fees related to  construction  management
services   provided  by  an  affiliate  of  the  Managing   General  Partner  of
approximately  $1,000 and $5,000 for the years ended December 31, 2003 and 2002,
respectively. The construction management service fees are calculated based on a
percentage of current year additions to investment property.

In accordance with the Partnership  Agreement,  during 2002 the Managing General
Partner  loaned the  Partnership  approximately  $260,000 to cover  non-resident
withholding  taxes.  Interest was charged at the prime rate plus 1%. As a result
of this  loan,  interest  expense  for the  year  ended  December  31,  2003 was
approximately  $5,000 as  compared to  approximately  $11,000 for the year ended
December  31,  2002.  During  the years  ended  December  31,  2003 and 2002 the
Partnership  made  principal   payments  to  the  Managing  General  Partner  of
approximately  $194,000  and  $69,000,  respectively  and  interest  payments of
approximately $7,000 and $9,000,  respectively with cash provided by operations.
At December 31, 2003,  there were no  outstanding  loans or  associated  accrued
interest owed to the Managing General Partner.  Subsequent to December 31, 2003,
the Managing  General  Partner loaned the Partnership  approximately  $93,000 to
fund operating  expenses at Versailles on The Lake  Apartments.  This loan bears
interest at the prime rate plus 1% (5.00% at December 31, 2003).

The  Partnership is liable to an affiliate of the Managing  General  Partner for
real estate  commissions  in the amounts of  approximately  $125,000  for Revere
Village  Apartments and  approximately  $196,000 for Essex  Apartments,  both of
which were sold in previous years. The total amount of approximately $321,000 is
included on the balance sheet in due to affiliates.  Payment of the  commissions
will not be made to the  affiliate  until the  limited  partners  have  received
distributions  equal to  their  original  invested  capital,  plus 8% per  annum
cumulative  non-compounded on their adjusted invested capital  commencing on the
last day of the calendar  quarter in which each limited  partner was admitted to
the Partnership through the date of payment.

The  Partnership  insures its  property up to certain  limits  through  coverage
provided by AIMCO which is  generally  self-insured  for a portion of losses and
liabilities  related to workers  compensation,  property  casualty  and  vehicle
liability.  The Partnership  insures its property above the AIMCO limits through
insurance  policies  obtained  by  AIMCO  from  insurers  unaffiliated  with the
Managing General Partner. During the years ended December 31, 2003 and 2002, the
Partnership  was charged by AIMCO and its affiliates  approximately  $13,000 and
$16,000,  respectively,  for insurance  coverage and fees associated with policy
claims administration.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its  affiliates  owned 325.95  Units in the  Partnership
representing  43.37% of the outstanding  Units at December 31, 2003. A number of
these  Units  were  acquired  pursuant  to  tender  offers  made by AIMCO or its
affiliates.  It is possible that AIMCO or its affiliates will acquire additional
Units  in  exchange  for  cash or a  combination  of cash  and  units  in  AIMCO
Properties,  L.P., the operating  partnership of AIMCO,  either through  private
purchases or tender offers.  Pursuant to the Partnership Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters  that  include,  but are not  limited  to,  voting on certain
amendments  to the  Partnership  Agreement  and  voting to remove  the  Managing
General  Partner.  As a result of its  ownership  of  43.37% of the  outstanding
Units,  AIMCO and its  affiliates are in a position to influence all such voting
decisions with respect to the Partnership. Although the Managing General Partner
owes fiduciary duties to the limited  partners of the Partnership,  the Managing
General Partner also owes fiduciary duties to AIMCO as its sole stockholder.  As
a result,  the duties of the  Managing  General  Partner,  as  managing  general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Managing General Partner to AIMCO, as its sole stockholder.


<PAGE>


Item 13.    Exhibits and Reports on Form 8-K

            (a)   Exhibits:

                  See Exhibit Index attached.

(b) Reports on Form 8-K filed during the quarter ended December 31, 2003:

                  None.

Item 14.    Principal Accounting Fees and Services

The Managing  General Partner has  reappointed  Ernst & Young LLP as independent
auditors to audit the financial statements of the Partnership for 2004.

Audit  Fees.  The  Partnership   paid  to  Ernst  &  Young  LLP  audit  fees  of
approximately $32,000 and $31,000 for 2003 and 2002, respectively.

Tax Fees.  The  Partnership  paid to Ernst & Young LLP fees for tax services for
2003 and 2002 of approximately $7,000 and $8,000, respectively.


<PAGE>


                                   SIGNATURES



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



                                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.


                                    By:   Davidson Diversified Properties,
                                          Inc.,
                                          Managing General Partner


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President


                                    By:   /s/Thomas M. Herzog
                                          Thomas M. Herzog
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: March 30, 2004


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.

/s/Peter K. Kompaniez         Director                  Date: March 30, 2004
Peter K. Kompaniez

/s/Martha L. Long             Director and Senior Vice  Date: March 30, 2004
Martha L. Long                President

/s/Thomas M. Herzog           Senior Vice President     Date: March 30, 2004
Thomas M. Herzog              and Chief Accounting Officer


<PAGE>




                     DAVIDSON DIVERSIFIED REAL ESTATE I, LP

                                  EXHIBIT INDEX



Exhibit           Description

    3A            Partnership  Agreement  dated January 14, 1983 is incorporated
                  by reference to Exhibit A to the Prospectus of the Partnership
                  dated November 16, 1983 as filed with the Commission  pursuant
                  to Rule 424(b) under the Act.

    3B            Amendment  No.  1 dated  January  1,  1986 to the  Partnership
                  Agreement  is  incorporated  by reference to Exhibit 3B to the
                  Partnership's  Annual  Report on Form 10-K for the fiscal year
                  ended December 31, 1985.

    4             Certificate  of Limited  Partnership  dated December 2, 1982
                  is   incorporated   by   reference   to  Exhibit  4  to  the
                  Partnership's  Annual  Report  on Form  10-K for the  fiscal
                  year ended December 31, 1987.

    4A            Certificate of Amendment of Certificate of Limited Partnership
                  dated March 24, 1983 is  incorporated  by reference to Exhibit
                  4A to the  Partnership's  Annual  Report  on Form 10-K for the
                  fiscal year ended December 31, 1987.

    4B            Restated Certificate of Limited Partnership dated June 8, 1983
                  is   incorporated   by   reference   to   Exhibit  4B  to  the
                  Partnership's  Annual  Report on Form 10-K for the fiscal year
                  ended December 31, 1987.

    4C            Amended and Restated  Certificate of Limited Partnership dated
                  January 1, 1986 is  incorporated by reference to Exhibit 4C to
                  the  Partnership's  Annual  Report on Form 10-K for the fiscal
                  year ended December 31, 1987.

   10A            Agent's   Agreement   dated   November  1,  1983  between  the
                  Partnership and Harvey Freeman & Sons, Inc. is incorporated by
                  reference to Exhibit 10B to the Partnership's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1983.

   10B            Agreement  among Agents dated  November 1, 1983 by and among
                  Harvey Freeman & Sons, Inc.,  Harvey Freeman & Sons, Inc. of
                  Arkansas,  Harvey  Freeman & Sons,  Inc. of Florida,  Harvey
                  Freeman & Sons,  Inc.  of  Georgia,  Harvey  Freeman & Sons,
                  Inc. of Indiana,  Harvey  Freeman & Sons,  Inc. of Kentucky,
                  Harvey Freeman & Sons, Inc. of  Mississippi,  Harvey Freeman
                  & Sons, Inc. of North Carolina,  Harvey Freeman & Sons, Inc.
                  of Ohio, and Harvey Freeman & Sons,  Inc. of South Carolina,
                  is   incorporated   by  reference  to  Exhibit  10C  to  the
                  Partnership's  Annual  Report  on Form  10-K for the  fiscal
                  year ended December 31, 1983.

   10C            Acquisition and Disposition  Services  Agreement dated October
                  3, 1983 between the Partnership  and Criswell  Freeman Company
                  is   incorporated   by   reference   to  Exhibit  10D  to  the
                  Partnership's  Annual  Report on Form 10-K for the fiscal year
                  ended December 31, 1983.

   10D            Contract  for Sale of Real Estate for  Versailles  on the Lake
                  dated  March  16,  1984   between   Versailles   on  the  Lake
                  Associates,  an Illinois  limited  partnership  and  Tennessee
                  Trust  Company,  Trustee,  is  incorporated  by  reference  to
                  Exhibit 10(b) to the Partnership's  Current Report on Form 8-K
                  dated April 4, 1984.

   10E            Assignment  of Contract  for Sale dated April 2, 1984  between
                  Tennessee Trust Company, Trustee and the Partnership (relating
                  to  Versailles  on the Lake  Apartments)  is  incorporated  by
                  reference to Exhibit 10L to the Partnership's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1984.

   10F            Note dated  November  19,  1984  executed  by the  Partnership
                  payable to American  Fletcher  National Bank and Trust Company
                  relating to Versailles on the Lake  Apartments is incorporated
                  by reference to Exhibit 10W to the Partnership's Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1985.

   10G            Real  Estate  Mortgage,  Assignment  of Rents  and  Security
                  Agreement   dated   November   19,  1984   executed  by  the
                  Partnership  payable to American  Fletcher National Bank and
                  Trust  Company   relating  to  Versailles  on  the  Lake  is
                  incorporated   by   reference   to   Exhibit   10EE  to  the
                  Partnership's  Annual  Report  on Form  10-K for the  fiscal
                  year ended December 31, 1985.

   10H            Memorandum   of   Understanding   among  SEC  Realty  Corp.,
                  Tennessee  Properties,  L.P., Freeman Mortgage  Corporation,
                  J. Richard Freeman,  W. Criswell Freeman and  Jacques-Miller
                  Properties,  Inc. is  incorporated  by  reference to Exhibit
                  10BB to the  Partnership's  Annual  Report  on Form 10-K for
                  the fiscal year ended December 31, 1988.

   10I            Partnership  Administration and Consultation Agreement among
                  Freeman Properties,  Inc., Freeman  Diversified  Properties,
                  Inc.,   Residual   Equities   Limited   and   Jacques-Miller
                  Properties,  Inc. is  incorporated  by  reference to Exhibit
                  10CC to the  Partnership's  Annual  Report  on Form 10-K for
                  the fiscal year ended December 31, 1988.

   10M            Termination   Agreement   dated   December  31,  1991  among
                  Jacques-Miller,  Inc.,  Jacques-Miller  Property Management,
                  Davidson  Diversified  Properties,  Inc., and Supar, Inc. is
                  incorporated   by   reference   to   Exhibit   10HH  to  the
                  Partnership's  Annual  Report  on Form  10-K for the  fiscal
                  year ended December 31, 1991.

   10N            Assignment   of  Limited   Partnership   Interest  of  Freeman
                  Equities,  Limited,  dated December 31, 1991 between  Davidson
                  Diversified Properties, Inc. and Insignia Jacques-Miller, L.P.
                  is   incorporated   by   reference  to  Exhibit  10II  to  the
                  Partnership's  Annual  Report on Form 10-K for the fiscal year
                  ended December 31, 1991.

   10O            Assignment of General Partner  Interests of Freeman  Equities,
                  Limited,  dated December 31, 1991 between Davidson Diversified
                  Properties,  Inc. and MAE GP  Corporation is  incorporated  by
                  reference to Exhibit 10JJ to the  Partnership's  Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1991.

   10P            Stock  certificate,  dated December 31, 1991 showing ownership
                  of 1,000 shares of Davidson  Diversified  Properties,  Inc. by
                  MAE GP  Corporation  is  incorporated  by reference to Exhibit
                  10KK to the  Partnership's  Annual Report on Form 10-K for the
                  fiscal year ended December 31, 1991.

   10W            Multifamily  Note dated  September  16,  2002,  by and between
                  Davidson   Diversified  Real  Estate  I,  a  Delaware  limited
                  partnership   and  GMAC   Commercial   Mortgage   Corporation.
                  (Incorporated  by reference to Exhibit 10W to the  Partnership
                  Quarterly  Report on Form  10-QSB  for the nine  months  ended
                  September 30, 2002.)

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

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

   32.1           Certification   Pursuant  to  18  U.S.C.  Section  1350,  as
                  Adopted  Pursuant to Section 906 of the  Sarbanes-Oxley  Act
                  of 2002.


<PAGE>


Exhibit 31.1
                                  CERTIFICATION

I, Martha L. Long, certify that:


1.    I have reviewed this annual report on Form 10-KSB of Davidson  Diversified
      Real Estate I, L.P.;

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

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

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

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

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

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

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

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


      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date: March 30, 2004

                                    /s/Martha L. Long
                                    Martha L. Long
                                    Senior Vice President of Davidson
                                    Diversified Properties, Inc., equivalent
                                    of the chief executive officer of the
                                   Partnership


<PAGE>


Exhibit 31.2
                                  CERTIFICATION

I, Thomas M. Herzog, certify that:


1.    I have reviewed this annual report on Form 10-KSB of Davidson  Diversified
      Real Estate I, L.P.;

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

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

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

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

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

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

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

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


      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date: March 30, 2004

                               /s/Thomas M. Herzog
                                Thomas M. Herzog
                                Senior Vice President and
                                Chief Accounting Officer of
                                Davidson Diversified
                                Properties, Inc., equivalent
                                of the chief financial officer
                                of the Partnership


<PAGE>


Exhibit 32.1


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



In connection with the Annual Report on Form 10-KSB of Davidson Diversified Real
Estate I, L.P.  (the  "Partnership"),  for the year ended  December  31, 2003 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  Martha L. Long, as the equivalent of the chief executive  officer of
the Partnership,  and Thomas M. Herzog, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that, to the best of his knowledge:

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

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


                                           /s/Martha L. Long
                                    Name:  Martha L. Long
                                    Date:  March 30, 2004


                                           /s/Thomas M. Herzog
                                    Name:  Thomas M. Herzog
                                    Date:  March 30, 2004



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