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, 2002


[ ]   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.  $985,000

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, 2002. No market exists for the Limited  Partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  The discussions of the  Registrant's
business  and  results  of  operations,   including  forward-looking  statements
pertaining to such matters,  do not take into account the effects of any changes
to the  Registrant's  business  and results of  operations.  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; 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,  four of which had been sold or foreclosed upon
prior to the calendar year 2001. On July 12, 2001, the Partnership  sold another
of its investment properties, Ashley Woods Apartments. The Partnership continues
to own and operate one investment property as of December 31, 2002. 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
mortgage  obligations  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.

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, 2002 and 2001.

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.

Insurance  coverage is becoming  more  expensive  and  difficult to obtain.  The
current  insurance market is  characterized by rising premium rates,  increasing
deductibles,  and more restrictive  coverage language.  Recent developments have
resulted in  significant  increases in insurance  premiums and have made it more
difficult to obtain  certain types of insurance.  As an example,  many insurance
carriers are excluding  mold-related  risks from their policy coverages,  or are
adding  significant  restrictions to such coverage.  Continued  deterioration in
insurance   market  place   conditions  may  have  a  negative   effect  on  the
Partnership's operating results.

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>

Sale of Property

On July 12, 2001, the Partnership  sold Ashley Woods  Apartments to an unrelated
third party, for a gross sale price of $12,015,000. The net proceeds realized by
the Partnership were approximately $3,655,000 after payment of closing costs and
the assumption of the mortgage  encumbering  the property by the purchaser.  The
Partnership realized a gain of approximately $7,366,000 as a result of the sale.
In addition,  the Partnership recorded a loss on early extinguishment of debt of
approximately $82,000 as a result of the write-off of unamortized loan costs.

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         $ 5,188     $ 3,550       5-30 yrs        S/L           $ 846
</TABLE>

See "Note A - Organization  and Summary of Significant  Accounting  Policies" of
the consolidated 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              2002        Rate    Amortized     Date     Maturity (2)
                         (in thousands)                                 (in thousands)
Versailles on the Lake
 Apartments
<S>                         <C>           <C>      <C>        <C>  <C>     <C>
  1st mortgage              $ 2,421       (1)      30 yrs     9/15/07      $ 2,149
</TABLE>

(1)   Adjustable  rate  based  on  the  Fannie  Mae  discounted  mortgage-backed
      security  index  ("DMBS") plus 85 basis  points.  The rate at December 31,
      2002 was 2.16%.

(2)   See  "Note  B -  Mortgage  Note  Payable"  to the  consolidated  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.  These loans were initially  refinanced under
an interim credit facility ("Interim Credit Facility") which had a term of three
months.  The Interim Credit Facility included  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 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 the
following  two months was  calculated at LIBOR plus 150 basis points and was due
monthly.

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 date of September 15,
2007, with one five-year  extension option.  This Permanent Credit Facility also
creates  separate loans for each property that are not  cross-collateralized  or
cross-defaulted  with the other property  loans.  Each note under this Permanent
Credit Facility will begin as a variable rate loan with the option of converting
to a fixed rate loan after three years.  The interest  rate on the variable rate
loans is the Fannie Mae discounted  mortgage-backed security index plus 85 basis
points.  The rate was 2.16% at December  31, 2002 and will reset  monthly.  Each
loan will  automatically  renew 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 any property is in the
Permanent Credit Facility. The loans are prepayable without penalty.

The  refinancing  of the  Versailles on the Lake  Apartments  loans replaced the
first mortgage of approximately  $2,090,000 and second mortgage of approximately
$88,000 with a new mortgage in the amount of $2,421,000.  Total capitalized loan
costs were  approximately  $68,000  during the year ended December 31, 2002. The
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $7,000  during the year ended  December 31, 2002 due to the write
off of  unamortized  loan costs and debt  discounts.  This amount is included in
interest expense.

The mortgage  encumbering  Versailles on the Lake  Apartments  of  approximately
$2,421,000  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.

Rental Rates and Occupancy

Average  annual rental rate and occupancy for 2002 and 2001 for the property are
as follows:

<TABLE>
<CAPTION>

                                           Average Annual             Average
                                            Rental Rates             Occupancy
                                             (per unit)
 Property                                 2002        2001        2002       2001

<S>                                      <C>         <C>          <C>        <C>
 Versailles on the Lake Apartments       $6,294      $6,790       95%        90%
</TABLE>

The Managing General Partner  attributes the increase in occupancy at Versailles
on the Lake Apartments to increased marketing efforts and competitive pricing by
reducing rental rates.

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.

Real Estate Taxes and Rate

Real estate taxes and rate in 2002 for the property were as follows:

                                                 2002            2002
                                                 Taxes           Rate
                                            (in thousands)

Versailles on the Lake Apartments                $ 84*           3.05%

*Amount per 2001 billings.  Taxes are paid a year in arrears.

Capital Improvements

Versailles on the Lake Apartments

During the year ended December 31, 2002, the Partnership completed approximately
$150,000 of capital  improvements at the property,  consisting primarily of fire
safety upgrades, structural improvements,  swimming pool improvements, 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 $47,000. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.

The capital improvements planned for the year 2003 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 Registrant'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
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which 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 which 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  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its  entirety  through  November  7, 2002 so that the parties
could have an opportunity to discuss settlement.  On October 30, 2002, the court
entered an order extending the stay in effect through January 10, 2003.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. The Court
has  scheduled  the hearing on  preliminary  approval  for April 4, 2003 and the
hearing on final approval for June 2, 2003.

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
a tender offer 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 provides 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.  If the  Court  grants  preliminary  approval  of the
proposed settlement in March, a notice will be distributed to partners providing
detail on the terms of the proposed settlement.

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 first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the  complaint.  Before  completing  briefing on the appeal,  the parties stayed
further proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.

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 pending or outstanding  litigation that is not
of a routine nature arising in the ordinary course of business.

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

During the quarter ended  December 31, 2002, no matters were submitted to a vote
of Unit holders through the solicitation of proxies or otherwise.


                                     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  aggregating  $15,008,000.  As of December 31, 2002,
there were 561 holders of record owning an aggregate of 751.59 Units. Affiliates
of the  Managing  General  Partner  owned 320.55 units or 42.65% at December 31,
2002.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 2001 and 2002:

                                                 Distributions
                                           Aggregate        Per Unit
                                        (in thousands)

             01/01/01 - 12/31/01          $ 3,653 (1)       $4,832.42
             01/01/02 - 12/31/02              385 (2)          512.25

(1)   Consists of approximately $411,000 of cash from operations  (approximately
      $390,000 to the limited partners) and approximately $3,242,000 of proceeds
      from the sale of  Ashley  Woods  Apartments,  all of which was paid to the
      limited partners.

(2)   Consists  of  previously  undistributed  proceeds  from the sale of Ashley
      Woods Apartments, all of which was paid to the limited partners.

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  additional  distributions to its
partners in 2003 or subsequent periods. See "Item 2. Description of Properties -
Capital   Improvements"   for  information   relating  to  anticipated   capital
expenditures at the property.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates owned 320.55 limited partnership units in
the Partnership  representing  42.65% of the  outstanding  Units at December 31,
2002. 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 of limited  partnership  interest in the Partnership in
exchange  for  cash  or a  combination  of  cash  and  units  in  the  operating
partnership of AIMCO either through  private  purchases or tender offers.  Under
the  Partnership  Agreement,  unitholders  holding a  majority  of the Units are
entitled to take action with respect to a variety of matters which would include
voting on certain  amendments to the Partnership  Agreement and voting to remove
the  Managing  General  Partner.  As a result of its  ownership of 42.65% of the
outstanding Units, AIMCO is in a position to influence all voting decisions with
respect to the Partnership. Although the Managing General Partner owes fiduciary
duties to the limited partners of the Partnership,  the Managing General Partner
also owes fiduciary duties to AIMCO as its sole  stockholder.  As a result,  the
duties of the Managing  General Partner,  as managing  general  partner,  to the
Partnership  and its limited  partners may come into conflict with the duties of
the Managing General Partner to AIMCO, as its sole stockholder.

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

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

Results of Operations

The   Partnership's   net  loss  for  the  year  ended  December  31,  2002  was
approximately  $171,000,  as compared to net income of approximately  $7,004,000
for the year ended  December 31, 2001.  The decrease in net income is due to the
recognition of a gain from sale of  discontinued  operations in 2001,  partially
offset by a decrease in loss from  discontinued  operations  resulting  from the
operations  during 2001 of Ashley Woods  Apartments.  Effective January 1, 2002,
the Partnership  adopted  Statement of Financial  Accounting  Standards No. 144,
"Accounting  for  the  Impairment  or  Disposal  of  Long-Lived  Assets",  which
established  standards  for the way  that  public  business  enterprises  report
information  about long-lived assets that are either being held for sale or have
already been disposed of. SFAS No. 144 requires that long-lived  assets held for
sale or already  disposed  of be  reported as a  discontinued  operation  on the
statement of operations. As a result, the accompanying consolidated statement of
operations  for the year ended December 31, 2001 has been restated as of January
1, 2001 to reflect the gain on sale and operations of Ashley Woods Apartments as
gain on sale of discontinued  operations and loss from discontinued  operations,
respectively.  On July 12, 2001, the Partnership sold Ashley Woods Apartments to
an  unrelated  third  party,  for a gross  sale  price of  $12,015,000.  The net
proceeds realized by the Partnership were approximately $3,655,000 after payment
of closing costs and the assumption of the mortgage  encumbering the property by
the purchaser.  The Partnership realized a gain of approximately $7,366,000 as a
result of the sale which is shown as gain on sale of discontinued operations. In
addition,  the  Partnership  recorded  a loss on  early  extinguishment  of debt
approximately  $82,000 as a result of the write-off of  unamortized  loan costs,
which is  included  in loss from  discontinued  operations.  The  results of the
property's  operations  for the year ended  December  31, 2001 of  approximately
$124,000 are  included in loss from  discontinued  operations.  Included in this
amount is approximately $1,263,000 of revenues generated by the property for the
year ended December 31, 2001.

The  Partnership's  loss from continuing  operations for the year ended December
31, 2002 was approximately  $171,000, as compared to approximately  $238,000 for
the  year  ended  December  31,  2001.  The  decrease  in loss  from  continuing
operations  is due to an  increase  in total  revenues  and a decrease  in total
expenses.  The increase in total  revenues is primarily due to increases in both
rental and other income. The increase in rental income is due to the increase in
occupancy and a decrease in concessions,  partially  offset by a decrease in the
average rental rate at Versailles on the Lake Apartments.  The increase in other
income is primarily due to increases in lease  cancellation  fees, late charges,
and utility  reimbursements  at the property,  partially offset by a decrease in
interest  income due to lower  cash  balances  maintained  in  interest  bearing
accounts.

The decrease in total  expenses is due to decreases in both interest and general
and administrative expenses,  partially offset by increases in both depreciation
and  property  tax  expense.   Operating  expenses  remained  constant  for  the
comparable  periods,  as an increase in payroll  related  expenses was offset by
decreases  in  both  maintenance  and  advertising   expense  at  the  property.
Contributing  to the  decrease  in  maintenance  expense is an  increase  in the
capitalization  of certain direct and indirect project costs,  primarily payroll
related  costs,  at the property (see "Item 7.  Financial  Statements,  Note A -
Organization and Summary of Significant Accounting  Policies").  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 and a
decrease in mortgage discount amortization expense, partially offset by the loss
recognized  in  2002  on the  early  extinguishment  of debt  (as  discussed  in
"Liquidity and Capital  Resources" below) and an increase in interest expense on
advances  from  affiliates.  Depreciation  expense  increased  due  to  property
improvements  and  replacements  placed into service  during 2002.  Property tax
expense  increased due to an increase in the assessed value of Versailles on the
Lake Apartments.  General and administrative expenses decreased primarily due to
a decrease  in  professional  expenses  associated  with the  management  of the
Partnership. Included in general and administrative expenses for the years ended
December 31, 2002 and 2001 are management reimbursements to the Managing General
Partner  allowed  under  the  Partnership  Agreement.  Also  included  are costs
associated  with the  quarterly  and annual  communications  with  investors and
regulatory agencies and the annual audit required by the Partnership Agreement.

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,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  December  31,  2002,  the  Partnership  had  cash and  cash  equivalents  of
approximately $72,000,  compared to approximately $474,000 at December 31, 2001.
The decrease in cash and cash  equivalents of  approximately  $402,000 is due to
approximately  $159,000  of cash  used in  operating  activities,  approximately
$151,000 of cash used in investing activities, and approximately $92,000 of cash
used in  financing  activities.  Cash  used in  investing  activities  consisted
primarily of property improvements and replacements and, to a lesser extent, net
deposits to an escrow account  maintained by the mortgage  lender.  Cash used in
financing  activities  consisted  of  repayment  of the  existing  mortgages  at
Versailles  on the Lake  Apartments,  distributions  to  partners,  payments  on
advances  received from affiliates of the Managing General Partner,  payments of
principal made on the mortgages  encumbering  the property,  and loan costs paid
related  to the  refinancing  of the  mortgages  encumbering  the  Partnership's
investment  property,  partially offset by net proceeds  received as a result of
the refinancing at Versailles on the Lake  Apartments,  and, to a lesser extent,
advances  from  affiliates  of the Managing  General  Partner.  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 Registrant 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 $47,000.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as replacement  reserves and 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.  These  loans were  initially  refinanced  under an  interim  credit
facility  ("Interim  Credit  Facility")  which had a term of three  months.  The
Interim  Credit  Facility  included  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 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 the
following  two months was  calculated at LIBOR plus 150 basis points and was due
monthly.

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 one
five-year extension option. This Permanent Credit Facility also creates separate
loans for each property  that are not  cross-collateralized  or  cross-defaulted
with the other property  loans.  Each note under this Permanent  Credit Facility
will begin as a variable rate loan with the option of converting to a fixed rate
loan after three  years.  The interest  rate on the  variable  rate loans is the
Fannie Mae discounted  mortgage-backed  security index plus 85 basis points. The
rate was 2.16% at  December  31,  2002 and will  reset  monthly.  Each loan will
automatically  renew 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 any  property  is in the
Permanent Credit Facility. The loans are prepayable without penalty.

The  refinancing  of the  Versailles on the Lake  Apartments  loans replaced the
first mortgage of approximately  $2,090,000 and second mortgage of approximately
$88,000 with a new mortgage in the amount of $2,421,000.  Total capitalized loan
costs were  approximately  $68,000  during the year ended December 31, 2002. The
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $7,000  during the year ended  December 31, 2002 due to the write
off of  unamortized  loan costs and debt  discounts.  This amount is included in
interest expense.

The mortgage  encumbering  Versailles on the Lake  Apartments  of  approximately
$2,421,000  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.

In April 2002,  the Financial  Accounting  Standards  Board issued SFAS No. 145,
"Recession  of FASB No. 4, 44 and 64".  SFAS No. 4  "Reporting  Gains and Losses
from   Extinguishment  of  Debt,"  required  that  all  gains  and  losses  from
extinguishments  of  debt be  aggregated  and,  if  material,  classified  as an
extraordinary item. SFAS No. 145 rescinds SFAS No. 4 and accordingly,  gains and
losses from extinguishment of debt should only be classified as extraordinary if
they are unusual in nature and occur infrequently.  Effective April 1, 2002, the
Partnership  adopted  SFAS  145.  As a  result,  the  accompanying  consolidated
statement of operations  for the year ended  December 31, 2001 has been restated
to reflect the loss on early  extinguishment  of debt at Ashley Woods Apartments
due to the sale of the investment property in July
2001 as  loss  from  discontinued  operations.  In  addition,  the  accompanying
consolidated  statement  of  operations  for the year ended  December  31,  2002
includes the loss on early extinguishment of debt, due to the refinancing of the
mortgages at  Versailles on the Lake  Apartments in September  2002, as interest
expense.

The  Partnership  distributed  the  following  amounts  during  the years  ended
December 31, 2002 and 2001 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                                          Per                               Per
                      Year Ended        Limited         Year Ended        Limited
                     December 31,     Partnership      December 31,     Partnership
                         2002             Unit             2001             Unit

<S>                    <C>              <C>              <C>               <C>
Operations             $   --           $    --          $  411            $  518.90

Sale (1)                  385            512.25           3,242             4,313.52
                       $  385           $512.25          $3,653            $4,832.42
</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  additional  distributions to its
partners in 2003 or subsequent periods.

Other

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates owned 320.55 limited partnership units in
the Partnership  representing  42.65% of the  outstanding  Units at December 31,
2002. 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 of limited  partnership  interest in the Partnership in
exchange  for  cash  or a  combination  of  cash  and  units  in  the  operating
partnership of AIMCO either through  private  purchases or tender offers.  Under
the  Partnership  Agreement,  unitholders  holding a  majority  of the Units are
entitled to take action with respect to a variety of matters which would include
voting on certain  amendments to the Partnership  Agreement and voting to remove
the  Managing  General  Partner.  As a result of its  ownership of 42.65% of the
outstanding Units, AIMCO is in a position to influence all 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  consolidated  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
consolidated  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  following  may  involve  a  higher  degree  of  judgment  and
complexity.

Impairment of Long-Lived Assets

Investment property is recorded at cost, less accumulated  depreciation,  unless
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  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 an impairment in the Partnership's assets.

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 and
the Partnership  fully reserves all balances  outstanding  over thirty days. The
Partnership will offer rental concessions during  particularly slow months or in
response  to  heavy  competition  from  other  similar  complexes  in the  area.
Concessions are charged to income as incurred.

Item 7.     Financial Statements

DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Consolidated Balance Sheet - December 31, 2002

      Consolidated Statements of Operations - Years ended December 31, 2002 and
        2001

      Consolidated  Statement  of Changes  in  Partners'  Deficit - Years  ended
      December 31, 2002 and 2001

      Consolidated Statements of Cash Flows - Years ended December 31, 2002 and
        2001

      Notes to Consolidated Financial Statements

                     Report of Ernst & Young LLP, Independent Auditors



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


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Davidson
Diversified  Real  Estate I, L.P.  as of  December  31,  2002,  and the  related
consolidated  statements of operations,  changes in partners' deficit,  and cash
flows for each of the two years in the period ended  December  31,  2002.  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  consolidated   financial  position  of  Davidson
Diversified  Real Estate I, L.P.  at December  31,  2002,  and the  consolidated
results  of its  operations  and its cash flows for each of the two years in the
period  ended  December 31,  2002,  in  conformity  with  accounting  principles
generally accepted in the United States.

As discussed in Note A to the  consolidated  financial  statements,  in 2002 the
Partnership  adopted  Statement  of  Financial  Accounting  Standards  No.  144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets" and Statement
of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4,
44 and 64." As a result, the accompanying  consolidated financial statements for
2001,  referred  to above,  have been  restated  to conform to the  presentation
adopted in 2002 in accordance with accounting  principles  generally accepted in
the United States.



                                                            /s/ERNST & YOUNG LLP



Greenville, South Carolina
February 14, 2003

                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                           CONSOLIDATED BALANCE SHEET
                        (in thousands, except unit data)

                                December 31, 2002

<TABLE>
<CAPTION>


Assets
<S>                                                                           <C>
   Cash and cash equivalents                                                  $ 72
   Receivables and deposits                                                     330
   Restricted escrow                                                             64
   Other assets                                                                  80
   Investment property (Notes B & F):
      Land                                                     $ 191
      Buildings and related personal property                   4,997
                                                                5,188
      Less accumulated depreciation                            (3,550)        1,638

                                                                            $ 2,184
Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                           $ 11
   Tenant security deposit liabilities                                           15
   Accrued property taxes                                                        86
   Other liabilities                                                             89
   Due to affiliates (Note E)                                                   514
   Mortgage note payable (Note B)                                             2,421

Partners' Deficit
   General partners                                             $ (9)
   Limited partners (751.59 units issued and
      outstanding)                                               (943)         (952)

                                                                            $ 2,184

               See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

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


<TABLE>
<CAPTION>

                                                                       Years Ended
                                                                      December 31,
                                                                  2002              2001
                                                                                 (Restated)

Revenues:
<S>                                                           <C>                <C>
  Rental income                                               $    875           $     863
  Other income                                                     110                  82
         Total revenues                                            985                 945

Expenses:
  Operating                                                        452                 454
  General and administrative                                       156                 178
  Depreciation                                                     274                 261
  Interest                                                         186                 209
  Property taxes                                                    88                  81
         Total expenses                                          1,156               1,183

Loss from continuing operations                                   (171)               (238)
Loss from discontinued operations                                   --                (124)
Gain on sale of discontinued operations                             --               7,366

Net (loss) income (Note C)                                    $   (171)          $   7,004

Net (loss) income allocated to general partners               $     (9)          $     166


Net (loss) income allocated to limited partners                   (162)              6,838
                                                              $   (171)          $   7,004
Per limited partnership unit:
  Loss from continuing operations                             $(215.54)          $ (300.69)
  Loss from discontinued operations                                 --             (157.00)
  Gain on sale of discontinued operations                           --            9,555.74
Net (loss) income                                             $(215.54)          $9,098.05
Distributions per limited partnership
  unit                                                        $ 512.25           $4,832.42

               See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                  CONSOLIDATED 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, 2000                       751.59       $ (145)    $(3,602)   $(3,747)

Distributions to partners                     --          (21)     (3,632)    (3,653)

Net income for the year ended
  December 31, 2001                           --          166       6,838      7,004

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)

               See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                      Years Ended
                                                                      December 31,
                                                                     2002      2001
Cash flows from operating activities:
<S>                                                                <C>         <C>
  Net (loss) income                                                $ (171)     $ 7,004
  Adjustments to reconcile net (loss) income to net cash
   (used in) provided by operating activities:
     Depreciation                                                     274          507
     Amortization of discounts and loan costs                          28           47
     Loss on early extinguishment of debt                               7           82
     Gain on sale of discontinued operations                           --       (7,366)
     Change in accounts:
      Receivables and deposits                                       (320)          13
      Other assets                                                     (7)          24
      Accounts payable                                                 (7)         (53)
      Tenant security deposit liabilities                               2           (1)
      Due to affiliates                                                 2           --
      Accrued property taxes                                            3          (89)
      Other liabilities                                                30           (5)
        Net cash (used in) provided by operating activities          (159)         163
Cash flows from investing activities:
  Property improvements and replacements                             (150)        (235)
  Net (deposits to) withdrawals from restricted escrows                (1)          20
  Proceeds from sale of discontinued operations                        --        3,655
        Net cash (used in) provided by investing activities          (151)       3,440
Cash flows from financing activities:
  Payments on mortgage notes payable                                  (73)        (157)
  Proceeds from mortgage note payable                               2,421           --
  Repayment of mortgage notes payable                              (2,178)          --
  Advances from affiliates                                            260           --
  Payments on advances from affiliates                                (69)          --
  Loan costs paid                                                     (68)          --
  Distributions to partners                                          (385)      (3,653)
        Net cash used in financing activities                         (92)      (3,810)

Net decrease in cash and cash equivalents                            (402)        (207)
Cash and cash equivalents at beginning of period                      474          681
Cash and cash equivalents at end of period                          $ 72        $ 474
Supplemental disclosure of cash flow information:
  Cash paid for interest                                           $ 155        $ 522
Supplemental disclosure of non-cash activity:
  Extinguishment of debt and other liabilities upon sale of
   Ashley Woods Apartments                                          $ --       $ 8,007

               See Accompanying Notes to Consolidated Financial Statements
</TABLE>


                    DAVIDSON DIVERSIFIED REAL ESTATE I, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002


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,
2002, 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 director and officers of the
Managing  General  Partner  also  serve as  executive  officers  of  AIMCO.  The
Partnership  Agreement provides that the Partnership is to terminate on December
31, 2007 unless terminated prior to such date.

Principles of Consolidation:  The consolidated  financial statements include the
Partnership's  100% membership  interest in Ashley Woods L.L.C. As a result, the
Partnership  consolidates  its interest in Ashley Woods  whereby all accounts of
Ashley  Woods are  included  in the  consolidated  financial  statements  of the
Partnership with inter-entity accounts being eliminated.

Allocations to Partners:  Net income (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, 2002 and 2001, no  adjustments  for impairment of value were
necessary.

During 2001, AIMCO, an affiliate of the Managing General Partner, commissioned a
project to study process improvement ideas to reduce operating costs. The result
of  the  study  led to a  re-engineering  of  business  processes  and  eventual
redeployment of personnel and related capital  spending.  The  implementation of
these plans  during  2002,  accounted  for as a change in  accounting  estimate,
resulted in a refinement of the Partnership's  process for capitalizing  certain
direct and  indirect  project  costs  (principally  payroll  related  costs) and
increased capitalization of such costs by approximately $36,000 in 2002 compared
to 2001.

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 $49,000 at
December 31, 2002 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 and loss from discontinued
operations,  was approximately  $19,000 and $56,000 for the years ended December
31, 2002 and 2001, respectively.

Restricted  Escrow:  As a result of the  September 16, 2002  refinancing  of the
mortgages  encumbering  the  Partnership's  investment  property,  the  property
deposited  approximately $64,000 with the mortgage lender to establish a capital
reserve account designed for certain capital improvements. At December 31, 2002,
the balance in this escrow is approximately $64,000.

Loan Costs: At December 31, 2002, loan costs of  approximately  $68,000,  net of
accumulated  amortization of approximately  $3,000, 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  year  ended   December  31,  2002  was
approximately $12,000 and is included in interest expense.  Amortization expense
is expected to be approximately $13,000 for each of the years 2003 through 2007.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less.  The  Partnership  recognizes  income as earned on its  leases  and the
Partnership  fully  reserves  all  balances  outstanding  over thirty  days.  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.  Concessions are charged against rental income as
incurred.

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,
2002,  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.

Reclassifications: Certain reclassifications have been made to the 2001 balances
to conform to the 2002 presentation.

Recent  Accounting  Pronouncements:  In August 2001,  the  Financial  Accounting
Standards Board issued SFAS No. 144,  "Accounting for the Impairment or Disposal
of Long-Lived  Assets".  SFAS No. 144 provides accounting guidance for financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
SFAS No.  144  supersedes  SFAS  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of". The Partnership
adopted SFAS No. 144 effective  January 1, 2002. As a result,  the  accompanying
consolidated  statement of operations  for the year ended  December 31, 2001 has
been  restated as of January 1, 2001 to reflect the gain on sale and  operations
of Ashley Woods  Apartments as gain on sale of discontinued  operations and loss
from discontinued operations, respectively, due to its sale in July 2001.

In April 2002,  the Financial  Accounting  Standards  Board issued SFAS No. 145,
"Recession  of FASB No. 4, 44 and 64".  SFAS No. 4  "Reporting  Gains and Losses
from   Extinguishment  of  Debt,"  required  that  all  gains  and  losses  from
extinguishments  of  debt be  aggregated  and,  if  material,  classified  as an
extraordinary item. SFAS No. 145 rescinds SFAS No. 4 and accordingly,  gains and
losses from extinguishment of debt should only be classified as extraordinary if
they are unusual in nature and occur infrequently. SFAS No. 145 is effective for
fiscal years beginning  after May 15, 2002,  with early adoption an option.  The
Partnership  adopted  SFAS No. 145  effective  April 1, 2002.  As a result,  the
accompanying  consolidated  statement of operations  for the year ended December
31, 2001 has been restated to reflect the loss on early  extinguishment  of debt
at Ashley Woods  Apartments due to the sale of the  investment  property in July
2001 as  loss  from  discontinued  operations.  In  addition,  the  accompanying
consolidated  statement  of  operations  for the year ended  December  31,  2002
includes the loss on early extinguishment of debt, due to the refinancing of the
mortgages at  Versailles on the Lake  Apartments in September  2002, as interest
expense.

Note B - Mortgage Note Payable

<TABLE>
<CAPTION>

                          Principal     Monthly                           Principal
                         Balance At     Payment     Stated                 Balance
                        December 31,   Including   Interest   Maturity      Due At
       Property             2002        Interest     Rate       Date       Maturity
                             (in thousands)                             (in thousands)
Versailles on the Lake
 Apartments
<S>                        <C>           <C>          <C>     <C>  <C>     <C>
  1st mortgage             $ 2,421       $   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, 2002 was 2.16%.

On September 16, 2002,  the  Partnership  refinanced  the mortgages  encumbering
Versailles on the Lake Apartments.  These loans were initially  refinanced under
an interim credit facility ("Interim Credit Facility") which had a term of three
months.  The Interim Credit Facility included  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 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 the
following  two months was  calculated at LIBOR plus 150 basis points and was due
monthly.

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 date of September 15,
2007, with one five-year  extension option.  This Permanent Credit Facility also
creates  separate loans for each property that are not  cross-collateralized  or
cross-defaulted  with the other property  loans.  Each note under this Permanent
Credit Facility will begin as a variable rate loan with the option of converting
to a fixed rate loan after three years.  The interest  rate on the variable rate
loans is the Fannie Mae discounted  mortgage-backed security index plus 85 basis
points.  The rate was 2.16% at December  31, 2002 and will reset  monthly.  Each
loan will  automatically  renew 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 any property is in the
Permanent Credit Facility. The loans are prepayable without penalty.

The  refinancing  of the  Versailles on the Lake  Apartments  loans replaced the
first mortgage of approximately  $2,090,000 and second mortgage of approximately
$88,000 with a new mortgage in the amount of $2,421,000.  Total capitalized loan
costs were  approximately  $68,000  during the year ended December 31, 2002. The
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $7,000  during the year ended  December 31, 2002 due to the write
off of  unamortized  loan costs and debt  discounts.  This amount is included in
interest expense.

The mortgage  encumbering  Versailles on the Lake  Apartments  of  approximately
$2,421,000  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  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, 2002, are as follows (in thousands):

                               2003         $    56
                               2004              57
                               2005              58
                               2006              60
                               2007           2,190
                               Total        $ 2,421


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 consolidated  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)  income and Federal
taxable (loss) income (in thousands, except per unit data):

                                                2002           2001
Net (loss) income as reported               $     (171)    $    7,004
Add (deduct):
  Depreciation differences                         114            (27)
  Unearned income                                   25            (63)
  Other                                            (12)            37
Gain on sale of property                            --            818
Federal taxable (loss) income               $      (44)    $    7,769
Federal taxable (loss) income per
  limited partnership unit                  $   (36.37)    $10,075.73

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities at December 31, 2002 (in thousands):

                                                         2002
Net  liabilities  as  reported                          $ (952)
Differences  in  basis  of  assets  and
liabilities:
  Buildings and land                                        99
  Accumulated depreciation                                (891)
  Other                                                    118
Net liabilities - Federal tax basis                   $ (1,626)

Note D - Disposition of Investment Property

On July 12, 2001, the Partnership  sold Ashley Woods  Apartments to an unrelated
third party, for a gross sale price of $12,015,000. The net proceeds realized by
the Partnership were approximately $3,655,000 after payment of closing costs and
the assumption of the mortgage  encumbering  the property by the purchaser.  The
Partnership realized a gain of approximately  $7,366,000 as a result of the sale
which is shown as gain on sale of  discontinued  operations on the  accompanying
consolidated  statement of operations.  In addition,  the Partnership recorded a
loss on early extinguishment of debt of approximately $82,000 as a result of the
write-off of unamortized loan costs, which is included in loss from discontinued
operations. The results of the property's operations for the year ended December
31,  2001 of  approximately  $124,000  are  included  in loss from  discontinued
operations on the accompanying  consolidated statements of operations.  Included
in this amount is approximately $1,263,000 of revenues generated by the property
for the year ended December 31, 2001.

Note E - 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.

During the years ended  December 31, 2002 and 2001,  affiliates  of the Managing
General  Partner  were  entitled  to  receive  5% of  gross  receipts  from  the
Partnership's  properties  as  compensation  for providing  property  management
services.  The  Partnership  paid to such affiliates  approximately  $51,000 and
$125,000  for the years ended  December 31, 2002 and 2001,  respectively.  These
amounts  are  included  in  operating   expenses  and  loss  from   discontinued
operations.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $122,000 and $154,000 for the
years ended December 31, 2002 and 2001, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the Managing General Partner of  approximately  $5,000 and $49,000 for the years
ended  December 31, 2002 and 2001,  respectively.  The  construction  management
service fees are  calculated  based on a percentage of current year additions to
investment properties.  These amounts are included in general and administrative
expenses and investment property.

In accordance  with the  Partnership  Agreement,  the Managing  General  Partner
loaned the Partnership  approximately $260,000 during 2002 to cover non-resident
withholding taxes. At December 31, 2002, the amount of the outstanding loans and
accrued  interest  was  approximately   $193,000  and  is  included  in  due  to
affiliates.  Interest  is charged at the prime rate plus 1% or 5.25% at December
31,  2002.   Interest   expense  for  the  year  ended  December  31,  2002  was
approximately $11,000.  During the year ended December 31, 2002, the Partnership
made   payments  of   principal  of   approximately   $69,000  and  interest  of
approximately  $9,000 on these  advances.  There were no loans from the Managing
General  Partner or associated  interest  expense during the year ended December
31, 2001.

The  Partnership  is liable to an  affiliate  of the  Managing  General  Partner
through  common  ownership  for  real  estate  commissions  in  the  amounts  of
approximately  $125,000 for Revere Village Apartments and approximately $196,000
for Essex  Apartments  which were sold in previous  years.  The total  amount of
approximately  $321,000 is included on the consolidated  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  return 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.

Beginning in 2001,  the  Partnership  began  insuring 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,  2002 and 2001,  the  Partnership  was  charged by AIMCO and its  affiliates
approximately $16,000 and $41,000, respectively, for insurance coverage and fees
associated with policy claims administration.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates owned 320.55 limited partnership units in
the Partnership  representing  42.65% of the  outstanding  Units at December 31,
2002. 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 of limited  partnership  interest in the Partnership in
exchange  for  cash  or a  combination  of  cash  and  units  in  the  operating
partnership of AIMCO either through  private  purchases or tender offers.  Under
the  Partnership  Agreement,  unitholders  holding a  majority  of the Units are
entitled to take action with respect to a variety of matters which would include
voting on certain  amendments to the Partnership  Agreement and voting to remove
the  Managing  General  Partner.  As a result of its  ownership of 42.65% of the
outstanding Units, AIMCO is in a position to influence all 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 F - 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                   $ 2,421       $ 191        $ 3,847          $ 1,150
</TABLE>

                        Gross Amount At Which
                               Carried
                              At December 31, 2002
                           (in thousands)

<TABLE>
<CAPTION>

                              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   $ 4,997   $ 5,188   $ 3,550      1970      04/84    5-30 yrs
</TABLE>

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

                                              Years Ended December 31,
                                                 2002          2001
Investment Property

Balance at beginning of year                    $ 5,038       $14,929
    Sale of investment property                      --       (10,126)
    Property improvements                           150           235
Balance at end of year                          $ 5,188       $ 5,038

Accumulated Depreciation

Balance at beginning of year                    $ 3,276       $ 8,599
    Sale of investment property                      --        (5,830)
    Depreciation expense                            274           507
Balance at end of year                          $ 3,550       $ 3,276

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2002  and  2001  is  approximately   $5,287,000  and  $5,138,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at  December  31,  2002 and 2001 is  approximately  $4,441,000  and  $4,281,000,
respectively.

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
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which 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 which 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  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants  oppose the motion.  On April 29,  2002,  the Court held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its  entirety  through  November  7, 2002 so that the parties
could have an opportunity to discuss settlement.  On October 30, 2002, the court
entered an order extending the stay in effect through January 10, 2003.

On January 8, 2003,  the parties filed a  Stipulation  of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. The Court
has  scheduled  the hearing on  preliminary  approval  for April 4, 2003 and the
hearing on final approval for June 2, 2003.

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
a tender offer 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 provides 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.  If the  Court  grants  preliminary  approval  of the
proposed settlement in March, a notice will be distributed to partners providing
detail on the terms of the proposed settlement.

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 first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the  complaint.  Before  completing  briefing on the appeal,  the parties stayed
further proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.

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 that
is not of a routine nature arising in the ordinary course of business.

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

            None.

                                    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  director  and  executive  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 officers
and director.

Name                        Age    Position

Patrick J. Foye              45    Executive Vice President and Director
Paul J. McAuliffe            46    Executive Vice President and Chief
                                     Financial Officer
Thomas C. Novosel            44    Senior Vice President and Chief Accounting
                                     Officer

Patrick J. Foye has been  Executive  Vice President and Director of the Managing
General  Partner  since October 1, 1998.  Mr. Foye has served as Executive  Vice
President  of AIMCO  since  May 1998,  where he is  responsible  for  continuous
improvement,  acquisitions of partnership securities,  consolidation of minority
interests,  and corporate and other  acquisitions.  Prior to joining AIMCO,  Mr.
Foye was a Merger and  Acquisitions  Partner in the law firm of  Skadden,  Arps,
Slate, Meagher & Flom LLP from 1989 to 1998.

Paul J. McAuliffe has been Executive Vice President and Chief Financial  Officer
of the Managing General Partner since April 1, 2002. Mr. McAuliffe has served as
Executive  Vice  President  of AIMCO  since  February  1999 and Chief  Financial
Officer of AIMCO since  October 1999.  From May 1996 until he joined AIMCO,  Mr.
McAuliffe was Senior Managing Director of Secured Capital Corp.

Thomas C. Novosel has been Senior Vice President and Chief Accounting Officer of
the Managing  General  Partner  since April 1, 2002.  Mr.  Novosel has served as
Senior Vice  President and Chief  Accounting  Officer of AIMCO since April 2000.
From October 1993 until he joined  AIMCO,  Mr.  Novosel was a partner at Ernst &
Young LLP, where he served as the director of real estate advisory  services for
the  southern  Ohio  Valley  area  offices  but did not work on any  assignments
related to AIMCO or the Partnership.

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 executive  officers and director of the Managing General Partner fulfill the
obligations  of the Audit  Committee  and  oversee the  Partnership's  financial
reporting process on behalf of the Managing General Partner.  Management has the
primary  responsibility  for the financial  statements and the reporting process
including  the  systems  of  internal  controls.  In  fulfilling  its  oversight
responsibilities,  the executive  officers and director of the Managing  General
Partner reviewed the audited  financial  statements with management  including a
discussion  of the  quality,  not  just  the  acceptability,  of the  accounting
principles,  the  reasonableness  of significant  judgments,  and the clarity of
disclosures in the financial statements.

The executive  officers and director of the Managing  General  Partner  reviewed
with the independent auditors,  who are responsible for expressing an opinion on
the conformity of those audited financial statements with accounting  principles
generally accepted in the United States,  their judgments as to the quality, not
just the  acceptability,  of the  Partnership's  accounting  principles and such
other  matters as are required to be discussed  with the Audit  Committee or its
equivalent under auditing standards  generally accepted in the United States. In
addition,  the  Partnership  has  discussed  with the  independent  auditors the
auditors' independence from management and the Partnership including the matters
in the written  disclosures  required by the  Independence  Standards  Board and
considered  the   compatibility   of  non-audit   services  with  the  auditors'
independence.

The executive  officers and director of the Managing  General Partner  discussed
with the  Partnership's  independent  auditors  the overall  scope and plans for
their audit. In reliance on the reviews and discussions  referred to above,  the
executive  officers and director of the Managing  General  Partner have approved
the  inclusion of the audited  financial  statements  in the Form 10-KSB for the
year  ended  December  31,  2002 for filing  with the  Securities  and  Exchange
Commission.

The Managing  General Partner has  reappointed  Ernst & Young LLP as independent
auditors to audit the financial statements of the Partnership for 2003. Fees for
2002 were  audit  services  of  approximately  $27,000  and  non-audit  services
(principally tax-related) of approximately $12,000.

Item 10.    Executive Compensation

Neither the officers nor director 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  of the
Registrant as of December 31, 2002.

                        Entity                     Number of Units    Percentage

      AIMCO Properties, L.P.                            216.15           28.76%
        (an affiliate of AIMCO)
      Cooper River Properties, L.L.C.                    85.65           11.40%
        (an affiliate of AIMCO)
      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.,  Insignia  Properties,  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 Stanford Place 3, 4582 S. Ulster St.  Parkway,  Suite 1100,
Denver, CO 80237.

As of December 31, 2002, no director or officer of the Managing  General Partner
owns,  nor do the  director 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.

During the years ended  December 31, 2002 and 2001,  affiliates  of the Managing
General  Partner  were  entitled  to  receive  5% of  gross  receipts  from  the
Partnership's  properties  as  compensation  for providing  property  management
services.  The  Partnership  paid to such affiliates  approximately  $51,000 and
$125,000  for the years ended  December 31, 2002 and 2001,  respectively.  These
amounts  are  included  in  operating   expenses  and  loss  from   discontinued
operations.

Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $122,000 and $154,000 for the
years ended December 31, 2002 and 2001, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the Managing General Partner of  approximately  $5,000 and $49,000 for the years
ended  December 31, 2002 and 2001,  respectively.  The  construction  management
service fees are  calculated  based on a percentage of current year additions to
investment properties.  These amounts are included in general and administrative
expenses and investment property.

In accordance  with the  Partnership  Agreement,  the Managing  General  Partner
loaned the Partnership  approximately $260,000 during 2002 to cover non-resident
withholding taxes. At December 31, 2002, the amount of the outstanding loans and
accrued  interest  was  approximately   $193,000  and  is  included  in  due  to
affiliates.  Interest  is charged at the prime rate plus 1% or 5.25% at December
31,  2002.   Interest   expense  for  the  year  ended  December  31,  2002  was
approximately $11,000.  During the year ended December 31, 2002, the Partnership
made   payments  of   principal  of   approximately   $69,000  and  interest  of
approximately  $9,000 on these  advances.  There were no loans from the Managing
General  Partner or associated  interest  expense during the year ended December
31, 2001.

The  Partnership  is liable to an  affiliate  of the  Managing  General  Partner
through  common  ownership  for  real  estate  commissions  in  the  amounts  of
approximately  $125,000 for Revere Village Apartments and approximately $196,000
for Essex  Apartments  which were sold in previous  years.  The total  amount of
approximately  $321,000 is included on the consolidated  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  return 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.

Beginning in 2001,  the  Partnership  began  insuring 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,  2002 and 2001,  the  Partnership  was  charged by AIMCO and its  affiliates
approximately $16,000 and $41,000, respectively, for insurance coverage and fees
associated with policy claims administration.

In addition to its indirect  ownership of the general  partner  interests in the
Partnership,  AIMCO and its affiliates owned 320.55 limited partnership units in
the Partnership  representing  42.65% of the  outstanding  Units at December 31,
2002. 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 of limited  partnership  interest in the Partnership in
exchange  for  cash  or a  combination  of  cash  and  units  in  the  operating
partnership of AIMCO either through  private  purchases or tender offers.  Under
the  Partnership  Agreement,  unitholders  holding a  majority  of the Units are
entitled to take action with respect to a variety of matters which would include
voting on certain  amendments to the Partnership  Agreement and voting to remove
the  Managing  General  Partner.  As a result of its  ownership of 42.65% of the
outstanding Units, AIMCO is in a position to influence all voting decisions with
respect to the Partnership. Although the Managing General Partner owes fiduciary
duties to the limited partners of the Partnership,  the Managing General Partner
also owes fiduciary duties to AIMCO as its sole  stockholder.  As a result,  the
duties of the Managing  General Partner,  as managing  general  partner,  to the
Partnership  and its limited  partners may come into conflict with the duties of
the Managing General Partner to AIMCO, as its sole stockholder.
Item 13.    Exhibits and Reports on Form 8-K

            (a)   Exhibits:

                  See Exhibit Index attached.

            (b) Reports on Form 8-K:

                  None filed during the quarter ended December 31, 2002.

Item 14.    Controls and Procedures

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, within 90 days of
the filing  date of this  annual  report,  evaluated  the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls
and  procedures  are  adequate.  There have been no  significant  changes in the
Partnership's  internal  controls or in other  factors that could  significantly
affect the  Partnership's  internal  controls since the date of evaluation.  The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.

                                   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/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer

                                  Date:   March 28, 2003

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the Partnership and in the capacities and on the
date indicated.


/s/Patrick J. Foye      Executive Vice President      Date: March 28, 2003
Patrick J. Foye         and Director


/s/Thomas C. Novosel    Senior Vice President         Date: March 28, 2003
Thomas C. Novosel       and Chief Accounting Officer


                                  CERTIFICATION


I, Patrick J. Foye, 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  annual  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 annual
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  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 annual report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 annual  report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      annual report (the "Evaluation Date"); and


      c) Presented in this annual report our conclusions about the effectiveness
      of the disclosure  controls and  procedures  based on our evaluation as of
      the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 28, 2003

                               /s/Patrick J. Foye
                                 Patrick J. Foye
                                 Executive   Vice   President  of  Davidson
                                 Diversified Properties,  Inc.,  equivalent
                                 of the  chief  executive officer of the
                                 Partnership

                                  CERTIFICATION


I, Paul J. McAuliffe, 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  annual  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 annual
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  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 annual report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  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 annual  report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      annual report (the "Evaluation Date"); and


      c) Presented in this annual report our conclusions about the effectiveness
      of the disclosure  controls and  procedures  based on our evaluation as of
      the Evaluation Date;


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


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: March 28, 2003

                              /s/Paul J. McAuliffe
                                Paul J. McAuliffe
                                Executive Vice President and Chief Financial
                                Officer of Davidson Diversified Properties,
                                Inc., equivalent of the chief financial officer
                                of the Partnership


                     DAVIDSON DIVERSIFIED REAL ESTATE I, LP

                                  EXHIBIT INDEX



Exhibit           Description

2    Agreement  and Plan of Merger,  dated as of October 1, 1998, by and between
     AIMCO  and IPT;  incorporated  by  reference  to  Exhibit  2.1  filed  with
     Registrant's Current Report on Form 8-K dated October 1, 1998.

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.

   10J            Partnership Agreement of Ashley Woods Associates dated May 16,
                  1990 owned 99.9% by the Partnership relating to refinancing of
                  Ashley  Woods  Apartments  is  incorporated  by  reference  to
                  Exhibit 10EE to the  Partnership's  Annual Report on Form 10-K
                  for the fiscal year ended December 31, 1991.

   10K            Multifamily Note with Addendum dated June 14, 1990 executed by
                  Ashley Woods Associates payable to PW Funding Inc. relating to
                  Ashley  Woods  Apartments  is  incorporated  by  reference  to
                  Exhibit 10FF to the  Partnership's  Annual Report on Form 10-K
                  for the fiscal year ended December 31, 1991.

   10L            Multifamily  Open-end  Mortgage with Rider dated June 14, 1990
                  executed  by Ashley  Woods  Associates  in favor of PW Funding
                  Inc.  relating to Ashley Woods  Apartments is  incorporated by
                  reference to Exhibit 10GG to the  Partnership's  Annual Report
                  on Form 10-K for the fiscal year ended December 31, 1991.

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.

   10Q            Contracts related to refinancing of debt:

                  (a)   First Deed of Trust and Security Agreement dated October
                        28, 1992  between  Davidson  Diversified  Real Estate I,
                        Limited Partnership and First Commonwealth Realty Credit
                        Corporation, a Virginia Corporation, securing Versailles
                        on the Lake is  incorporated by reference to Exhibit 10Q
                        (a) to the  Partnership's  Annual  Report on Form 10-KSB
                        for the fiscal year ended December 31, 1992.

                  (b)   Second  Deed  of  Trust  and  Security  Agreement  dated
                        October  28,  1992  between  Davidson  Diversified  Real
                        Estate I,  Limited  Partnership  and First  Commonwealth
                        Realty  Credit  Corporation,   a  Virginia  Corporation,
                        securing  Versailles  on the  Lake  is  incorporated  by
                        reference to Exhibit 10Q (b) to the Partnership's Annual
                        Report on Form 10-KSB for the fiscal year ended December
                        31, 1992.

                  (c)   First  Assignment  of Leases and Rents dated October 28,
                        1992 between Davidson Diversified Real Estate I, Limited
                        Partnership   and  First   Commonwealth   Realty  Credit
                        Corporation, a Virginia Corporation, securing Versailles
                        on the Lake is  incorporated by reference to Exhibit 10Q
                        (c) to the  Partnership's  Annual  Report on Form 10-KSB
                        for the fiscal year ended December 31, 1992.

                  (d)   Second  Assignment of Leases and Rents dated October 28,
                        1992 between Davidson Diversified Real Estate, I Limited
                        Partnership   and  First   Commonwealth   Realty  Credit
                        Corporation, a Virginia Corporation, securing Versailles
                        on the Lake is  incorporated by reference to Exhibit 10Q
                        (d) to the  Partnership's  Annual  Report on Form 10-KSB
                        for the fiscal year ended December 31, 1992.

                  (e)   First Deed of Trust Note dated  October 28, 1992 between
                        Davidson  Diversified Real Estate I Limited  Partnership
                        and  First  Commonwealth   Realty  Credit   Corporation,
                        relating to  Versailles on the Lake is  incorporated  by
                        reference to Exhibit 10Q (e) to the Partnership's Annual
                        Report on Form 10-KSB for the fiscal year ended December
                        31, 1992.

                  (f)   Second Deed of Trust Note dated October 28, 1992 between
                        Davidson  Diversified Real Estate I, Limited Partnership
                        and  First   Commonwealth   Realty  Credit   Corporation
                        relating to  Versailles on the Lake is  incorporated  by
                        reference to Exhibit 10Q (f) to the Partnership's Annual
                        Report on Form 10-KSB for the fiscal year ended December
                        31,1992.

   10S            Purchase and Sale Contract for Ashley Woods Apartments between
                  Registrant  and Ashley Woods Limited  Partnership,  related to
                  the  sale of  Ashley  Woods.  (Incorporated  by  reference  to
                  Exhibit 10S, filed on Form 8-K dated July 12, 2001.)

   10T            First Amendment to Purchase and Sale Contract for Ashley Woods
                  Apartments, related to the sale of Ashley Woods. (Incorporated
                  by reference to Exhibit 10T,  filed on Form 8-K dated July 12,
                  2001.)

   10U            Second  Amendment  to Purchase  and Sale  Contract  for Ashley
                  Woods  Apartments,  related  to  the  sale  of  Ashley  Woods.
                  (Incorporated  by reference to Exhibit 10U,  filed on Form 8-K
                  dated July 12, 2001.)

   10V            Assignment  of  Purchase  and  Sale  Contract  between  Equity
                  Investments,  Inc.,  a Nebraska  Corporation  and Ashley Woods
                  Limited Partnership,  a Nebraska Limited Partnership,  related
                  to the sale of Ashley  Woods.  (Incorporated  by  reference to
                  Exhibit 10V, filed on Form 8-K dated July 12, 2001.)

   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.)

99   Certification of Chief Executive Officer and Chief Financial Officer.


Exhibit 99


                          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, 2002 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  Patrick J. Foye, as the equivalent of the chief executive officer of
the Partnership, and Paul J. McAuliffe, 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/Patrick J. Foye
                              Name: Patrick J. Foye
                              Date: March 28, 2003


                                    /s/Paul J. McAuliffe
                              Name: Paul J. McAuliffe
                              Date: March 28, 2003



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