<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549


                                   FORM 10-Q


            [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1997
                                                          --------------


                         Commission File Number 1-9525
                                                ------


                   INCOME OPPORTUNITY REALTY INVESTORS, INC.       
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)




          NEVADA                                                 75-2615944     
-------------------------------                             -------------------
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)



    10670 North Central Expressway, Suite 300, Dallas, Texas,       75231    
--------------------------------------------------------------   -------------
     (Address of Principal Executive Offices)                     (Zip Code)



                                (214) 692-4700         
                        ------------------------------
                        (Registrant's Telephone Number,
                              Including Area Code)





Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X .  No ___.




Common Stock, $.01 par value                           1,519,888            
----------------------------              ----------------------------------
         (Class)                           (Outstanding at April 30, 1997)



                                      1
<PAGE>   2
                         PART I.  FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

The accompanying Consolidated Financial Statements have not been examined by
independent certified public accountants, but in the opinion of the management
of Income Opportunity Realty Investors, Inc. (the "Company"), all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the Company's consolidated financial position, consolidated results of
operations and consolidated cash flows at the dates and for the periods
indicated, have been included.


                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                          CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                           March31,   December 31,
                                                           1997          1996 
                                                         ---------     --------
                                                           (dollars in thousands)
<S>                                                       <C>            <C>              
                       Assets                                                             
                       ------                                                             
                                                                                          
Notes and interest receivable                                                             
 Performing ...........................................   $ 2,001        $ 1,998          
                                                                                          
Foreclosed real estate held for sale, net of                                              
 accumulated depreciation ($20 in 1997 and 1996) ......       914            914          
                                                                                          
Real estate under contract for sale, net of                                               
 accumulated depreciation ($1,964 in 1996) ............        --          5,709          
                                                          -------        -------          
                                                                                          
                                                              914          6,623          
                                                                                          
Real estate held for investment, net of                                                   
 accumulated depreciation ($5,654 in 1997 and                                             
 $5,311 in 1996) ......................................    51,900         46,693          
                                                                                          
Investment in partnerships ............................     2,351          2,331          
Cash and cash equivalents .............................     2,571          3,186          
Other assets (including $97 in 1997 and $256 in                                           
 1996 from affiliates) ................................     2,655          2,762          
                                                          -------        -------          
                                                                                          
                                                          $62,392        $63,593          
                                                          =======        =======          
</TABLE>





      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.



                                       2
<PAGE>   3
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                    CONSOLIDATED BALANCE SHEETS - Continued





<TABLE>
<CAPTION>
                                                       
                                                    March 31,     December 31,
                                                      1997           1996 
                                                    --------       ----------
                                                      (dollars in thousands)
<S>                                                  <C>            <C>        
        Liabilities and Stockholders' Equity                                   
        ------------------------------------                                   
                                                                               
Liabilities                                                                    
Notes and interest payable .......................   $ 36,275       $ 38,957   
Other liabilities (including $126 in 1997 to                                   
 affiliates) .....................................      2,355          2,255   
                                                     --------       --------   
                                                                               
                                                       38,630         41,212   
                                                                               
                                                                               
Commitments and contingencies                                                  
                                                                               
                                                                               
Stockholders' equity                                                           
Common Stock, $.01 par value;                                                  
 authorized, 10,000,000 shares; issued and                                     
 outstanding, 1,519,888 shares in 1997 and                                     
 1996 ............................................         15             15   
Paid-in capital ..................................     64,804         64,804   
Accumulated distributions in excess of accumulated                             
 earnings ........................................    (41,057)       (42,438)  
                                                     --------       --------   
                                                                               
                                                       23,762         22,381   
                                                     --------       --------   
                                                                               
                                                     $ 62,392       $ 63,593   
                                                     ========       ========   
</TABLE>                                                                       





      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.


                                      3
<PAGE>   4
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                For the Three Months
                                                   Ended March 31,    
                                              1997                1996 
                                           -----------         -----------      
                                                (dollars in thousands,
                                                   except per share)
<S>                                        <C>                 <C>        
INCOME                                                                          
 Rents .................................   $     2,692         $     2,033      
 Interest ..............................            69                  77      
                                           -----------         -----------      
                                                                                
                                                 2,761               2,110      
                                                                                
                                                                                
                                                                                
EXPENSES                                                                        
 Property operations ...................         1,340               1,042      
 Interest ..............................           877                 496      
 Depreciation ..........................           365                 263      
 Advisory fee to affiliate .............           123                  94      
 Net income fee to affiliate ...........           124                  --      
 General and administrative ............           265                 360      
                                           -----------         -----------      
                                                 3,094               2,255      
                                           -----------         -----------      
                                                                                
(Loss) from operations .................          (333)               (145)     
                                                                                
 Equity in income (loss) of partnerships            17                  (1)     
 Gain on sale of real estate ...........         1,849                  --      
                                           -----------         -----------      
                                                                                
Net income (loss) ......................   $     1,533         $      (146)     
                                           ===========         ===========      
                                                                                
                                                                                
                                                                                
                                                                                
Earnings Per Share                                                              
 Net income (loss) .....................   $      1.01         $      (.09)     
                                           ===========         ===========      
                                                                                
                                                                                
                                                                                
                                                                                
Weighted average Common shares used in                                          
    computing earnings per share .......     1,519,888           1,560,592      
                                           ===========         ===========      
</TABLE>





      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.


                                      4
<PAGE>   5
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                   For the Three Months Ended March 31, 1997
<TABLE>
<CAPTION>
                                                                                                       
                                                                            
                                                                                                       
                                                                                   Accumulated                      
                                                                                   Distributions                    
                                             Common Stock                          in Excess of                     
                                        -----------------------        Paid-In      Accumulated  Stockholders'      
                                        Shares           Amount        Capital       Earnings       Equity          
                                        ------           ------        -------     ------------  -------------          
                                                                      (dollars in thousands)                        
<S>                                    <C>           <C>             <C>            <C>              <C>            
Balance, January 1, 1997 ........      1,519,888      $      15      $  64,804      $ (42,438)      $  22,381       
                                                                                                                    
                                                                                                                    
                                                                                                                    
Dividends ($.10 per share)                    --             --             --           (152)           (152)      
                                                                                                                    
                                                                                                                    
                                                                                                                    
Net income .....................              --             --             --          1,533           1,533       
                                       ---------      ---------      ---------      ---------       ---------       
                                                                                                                    
                                                                                                                    
                                                                                                                    
Balance, March 31, 1997 ........       1,519,888      $      15      $  64,804      $ (41,057)      $  23,762       
                                       =========      =========      =========      =========       =========       
</TABLE>





      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.


                                       5
<PAGE>   6
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                        For the Three Months
                                                            Ended March 31,    
                                                        ---------------------
                                                           1997        1996 
                                                        ---------    --------
                                                        (dollars in thousands)
<S>                                                    <C>           <C>
Cash Flows from Operating Activities
 Rents collected ................................      $ 2,645       $ 2,040
 Interest collected .............................           66            73
 Interest paid ..................................         (825)         (433)
 Payments for property operations ...............       (1,185)       (1,048)
 Advisory fee paid to affiliate .................         (127)          (88)
 General and administrative expenses paid .......         (427)         (218)
 Distribution from equity partnerships' operating
    cash flow ...................................           --             5
 Other ..........................................           60          (449)
                                                       -------       -------

    Net cash (used in) operating activities .....          207          (118)


Cash Flows from Investing Activities
 Acquisition of real estate .....................       (1,988)           --
 Proceeds from sale of real estate ..............        1,609            --
 Funding of equity partnerships .................           (3)          (66)
 Real estate improvements .......................         (149)          (26)
                                                       -------       -------

    Net cash provided by (used in) investing
       activities ...............................         (531)          (92)



Cash Flows from Financing Activities
 Payments on notes payable ......................         (155)          (89)
 Proceeds from notes payable ....................           --         7,300
 Deferred borrowing costs .......................           (3)         (297)
 Repurchase of Common Stock .....................           --          (621)
 Dividends to stockholders ......................         (152)         (158)
 Payments (to)/from advisor .....................           19          (243)
                                                       -------       -------

    Net cash provided by (used in) financing
 activities .....................................         (291)        5,892

Net increase (decrease) in cash and cash
 equivalents ....................................         (615)        5,682
Cash and cash equivalents, beginning of period ..        3,186         2,988
                                                       -------       -------

Cash and cash equivalents, end of period ........      $ 2,571       $ 8,670
                                                       =======       =======
</TABLE>



      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.



                                      6
<PAGE>   7
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS




<TABLE>
<CAPTION>
                                                         For the Three Months
                                                             Ended March 31,    
                                                        ----------------------
                                                          1997          1996 
                                                        ---------     --------
                                                        (dollars in thousands)
<S>                                                     <C>           <C>
Reconciliation of net income (loss) to net cash
 provided by (used in) operating activities
Net income (loss) ................................      $ 1,533       $  (146)
Adjustments to reconcile net income (loss) to net
 cash provided by (used in) operating activities
 (Gain) on sale of real estate ...................       (1,849)           --
 Depreciation and amortization ...................          396           281
 Equity in loss (income) of partnerships .........          (17)            1
 Distributions from equity partnerships' operating
    cash flow ....................................           --             5
 (Increase) in other assets ......................          (35)         (486)
 Increase in interest payable ....................           18            41
 Increase (decrease) in other liabilities ........          161           186
                                                        -------       -------

    Net cash provided by (used in) operating
    activities ...................................      $   207       $  (118)
                                                        =======       =======
</TABLE>





      The accompanying notes are an integral part of these Consolidated
                            Financial Statements.



                                      7
<PAGE>   8
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.   BASIS OF PRESENTATION

The accompanying Consolidated Financial Statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete financial
statements.  Operating results for the three month period ended March 31, 1997
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997.  For further information, refer to the Consolidated
Financial Statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 (the "1996 Form 10-K").

Shares and per share data have been restated for the two for one forward Common
Stock split effected June 14, 1996.


NOTE 2.   REAL ESTATE AND DEPRECIATION

In January 1997, the Company purchased the Chuck Yeager Building, a 60,060
square foot industrial/office building in Chantilly, Virginia, for $5.1
million.  The Company paid $2.0 million in cash and obtained new mortgage
financing of $3.1 million.  The mortgage bears interest at a variable rate,
currently 10.75% per annum, requires monthly payments of principal and interest
of $72,017, and matures in January 1999.  The Company paid a real estate
acquisition commission of $171,000 to Carmel Realty, Inc. ("Carmel Realty"), an
affiliate of Basic Capital Management, Inc. ("BCM"), the Company's advisor, and
a real estate acquisition fee of $51,000 to BCM based on the $5.1 million
purchase price of the property.

In March 1997, the Company completed the sale of the Plumtree Apartments, a 116
unit apartment complex in Martinez, California, that was under contract for
sale at December 31, 1996.  The apartment complex was sold for $7.8 million in
cash, the Company receiving net cash of $1.6 million after the payoff of $5.7
million in existing mortgage debt and the payment of various closing costs
associated with the sale.  The Company paid a real estate sales commission of
$226,000 to Carmel Realty based upon the $7.8 million sales price of the
property.  The Company recognized a gain on the sale of $1.8 million.


NOTE 3.   COMMITMENTS AND CONTINGENCIES

The Company is involved in various lawsuits arising in the ordinary course of
business.  The Company's management is of the opinion that the outcome of these
lawsuits will have no material impact on the Company's financial condition,
results of operations or liquidity.


                                      8
<PAGE>   9
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Introduction

Income Opportunity Realty Investors, Inc. (the "Company") invests in equity
interests in real estate through acquisitions, leases and partnerships, and has
invested in mortgage loans on real estate, including first, wraparound, and
junior mortgage loans.  The Company is the successor to a California business
trust organized on December 14, 1984 which commenced operations on April 10,
1985.

Liquidity and Capital Resources

Cash and cash equivalents at March 31, 1997 aggregated $2.6 million, compared
with $3.2 million at December 31, 1996.  The Company's principal sources of
cash have been and will continue to be property operations, proceeds from
property sales, financings and refinancings, collection of interest on its
mortgage note receivable and, to a lesser extent, distributions from
partnerships.  The Company's business plan provides for the Company's use of
approximately $4.0 million of its available cash for property acquisitions
during the remainder of 1997.  At March 31, 1997, the Company had a firm
earnest money deposit to purchase the LaMesa Village Plaza, a 92,611 square
foot office/retail center in LaMesa, California, for $8.1 million.  The Company
expects to obtain mortgage financing of $6.0 million to complete the purchase.
The Company anticipates that after closing such acquisition, it will have
sufficient cash to meet its various cash requirements including the payment of
distributions, debt service obligations and property maintenance and
improvements.

In January 1997, the Company purchased the Chuck Yeager Building in Chantilly,
Virginia, for $5.1 million.  The Company paid $2.0 million in cash and obtained
new mortgage financing of $3.1 million.

In March 1997, the Company sold the Plumtree Apartments in Martinez,
California.  The Company received net cash of $1.6 million after the payoff of
$5.7 million in existing mortgage debt and the payment of various closing costs
associated with the sale.

In the first three months of 1997, the Company paid regular quarterly dividends
of $.10 per share or a total of $152,000.

The Company's management reviews the carrying values of the Company's
properties and mortgage note receivable at least annually and whenever events
or a change in circumstances indicate that impairment may exist. Impairment is
considered to exist if, in the case of a property, the future cash flow from
the property (undiscounted and without interest) is less than the carrying
amount of the property.  For notes receivable impairment is considered to exist
if it is probable that all amounts due under the terms of the note will not be
collected.  In those instances  where impairment is found to exist, a provision
for loss is recorded by a charge against earnings.  The Company's mortgage note
receivable review includes an evaluation of the collateral property securing
such note.  The property review generally includes selective property
inspections, a review of the property's current rents compared to market



                                      9
<PAGE>   10
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (Continued)


Liquidity and Capital Resources (Continued)

rents, a review of the property's expenses, a review of maintenance
requirements, a review of the property's cash flow, discussions with the
manager of the property and a review of properties in the surrounding area.


Results of Operations

For the three months ended March 31, 1997, the Company had net income of $1.5
million, as compared with a net loss of $146,000 in the corresponding period in
1996.  Net income for the first quarter of 1997 includes a gain on sale of real
estate of $1.8 million.  Fluctuations in those and other components of the
Company's revenues and expenses between the 1996 and 1997 periods are discussed
below.

Rents in the three months ended March 31, 1997 were $2.7 million as compared to
$2.0 million in the corresponding period in 1996.  Of the increase $645,000 is
due to three properties acquired subsequent to March 31, 1996 and $33,000 is
due to an increase in rental rates at two of the Company's apartment complexes.
These increases are partially offset by a decrease of $65,000 due to the sale
of one of the Company's apartment complexes in March 1997.

Property operations expense in the three months ended March 31, 1997 was $1.3
million as compared to $1.0 million in the corresponding period in 1996.  The
increase is primarily due to the acquisition of three properties subsequent to
March 31, 1996.

Interest income decreased from $77,000 in the three months ended March 31, 1996
to $69,000 in the three months ended March 31, 1997.  The decrease is due to a
decrease in interest earned on the short term investment of the Company's
excess cash.  Interest income for the remaining quarters of 1997 is expected to
be comparable to that of the first quarter of 1997.

Equity in income of partnerships improved to income of $17,000 in the three
months ended March 31, 1997 as compared to a loss of $1,000 in the
corresponding period in 1996.  The increase is mainly due to an increase in
interest income earned by the Nakash Income Associates partnership in which the
Company has a 40% general partnership interest.

Interest expense increased from $496,000 in the three months ended March 31,
1996 to $877,000 in the three months ended March 31, 1997.  Of this increase
$226,000 is due to three property acquisitions subsequent to March 31, 1996,
and $195,000 is due to financing obtained on properties previously
unencumbered.  These increases are partially offset by a decrease of $31,000
due to the sale of an apartment complex in March 1997.  Interest expense for
the remaining quarters of 1997 is expected to be comparable to that of the first
quarter of 1997.



                                      10
<PAGE>   11
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (Continued)

Results of Operations (Continued)

Depreciation expense increased from $263,000 for the three months ended March
31, 1996 to $365,000 in the three months ended March 31, 1997.  The increase is
mainly due to three properties acquired subsequent to March 31, 1996.
Depreciation expense is expected to increase as the Company acquires additional
properties over the remainder of 1997.

Advisory fee expense increased from $94,000 in the three months ended March 31,
1996 to $123,000 for the three months ended March 31, 1997.  The increase is
due to an increase in the Company's gross assets, the basis for such fee.
Advisory fee expense is expected to increase as the Company acquires additional
properties over the remainder of 1997.

Net income fee of $124,000 was incurred for the three months ended March 31,
1997.  Such fee is payable to the Company's advisor based on 7.5% of the
Company's net income.  No such fee was incurred in 1996.

General and administrative expense decreased to $265,000 in the three months
ended March 31, 1997 from $360,000 in the corresponding periods in 1996.  The
decrease is primarily due to the nonreoccurrence of fees relating to the
Company's incorporation partially offset by an increase in fees relating to the
Olive litigation.

Tax Matters

As more fully discussed in the Company's 1996 Form 10-K, the Company has
elected and, in management's opinion, qualified, to be taxed as a real estate
investment trust ("REIT"), as defined under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, (the "Code").  To continue to
qualify for federal taxation as a REIT under the Code, the Company is required
to hold at least 75% of the value of its total assets in real estate assets,
government securities, cash and cash equivalents at the close of each quarter
of each taxable year.  The Code also requires a REIT to distribute at least 95%
of its REIT taxable income plus 95% of its net income from foreclosure
property, all as defined in Section 857 of the Code, on an annual basis to
shareholders.

Inflation

The effects of inflation on the Company's operations are not quantifiable.
Revenues from property operations generally fluctuate proportionately with
inflationary increases and decreases in housing of properties and,
correspondingly, the ultimate realizable value of the Company's real estate and
notes receivable portfolios.  Inflation also has an effect on the Company's
earnings from short-term investments.

Environmental Matters

Under various federal, state and local environmental laws, ordinances and
regulations, the Company may be potentially liable for removal or remediation
costs, as well as certain other potential costs, relating to hazardous or toxic
substances (including governmental fines and injuries





                                      11
<PAGE>   12
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS (Continued)

Environmental Matters (Continued)

to persons and property) where property-level managers have arranged for the
removal, disposal or treatment of hazardous or toxic substances.  In addition,
certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may seek recovery from the Company
for personal injury associated with such materials.

The Company's management is not aware of any environmental liability relating
to the above matters that would have a material adverse effect on the Company's
business, assets or results of operations.

                             --------------------

                          PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Olive Litigation.  In February 1990, the Company, together with Continental
Mortgage and Equity Trust ("CMET"), National Income Realty Trust and
Transcontinental Realty Investors, Inc. ("TCI"), three real estate entities
with, at the time, the same officers, directors or trustees and advisor as the
Company, entered into a settlement of a class and derivative action entitled
Olive et al. v. National Income Realty Trust et al. pending before the United
States District Court for the Northern District of California and relating to
the operation and management of each of the entities (the "Olive Litigation").
On April 23, 1990, the court granted final approval of the terms of a
Stipulation of Settlement.

On May 4, 1994, the parties entered into a Modification of Stipulation of
Settlement dated April 27, 1994 (the "Olive Modification") that settled
subsequent claims of breaches of the settlement that were asserted by the
plaintiffs and that modified certain provisions of the April 1990 settlement.
The Olive Modification was preliminarily approved by the court on July 1, 1994,
and final court approval was entered on December 12, 1994.  The effective date
of the Olive Modification was January 11, 1995.

The Court retained jurisdiction to enforce the Modification, and during August
and September 1996, the Court held evidentiary hearings to assess compliance
with the terms of the Modification by various parties.  The Court issued no
ruling or order with respect to the matters addressed at the hearings.

Separately, in 1996, legal counsel for the plaintiffs notified the Company's
Board of Directors that he intends to assert that certain actions taken by the
Board of Directors breached the terms of the Modification.  On January 27,
1997, the parties entered into an Amendment to the Modification effective
January 9, 1997 (the




                                      12
<PAGE>   13
ITEM 1.   LEGAL PROCEEDINGS (Continued)

"Amendment"), which was submitted to the Court for approval on January 29,
1997.  The Amendment provides for the settlement of all matters raised at the
evidentiary hearings and by plaintiffs' counsel in his notices to the Company's
Board of Directors.  On May 2, 1997, a hearing was held for the Court to
consider approval of the amendment.  As of May 7, 1997, the Court had not
issued an order either approving or disapproving the amendment.

The Amendment provides for the addition of three new unaffiliated members to
the Company's Board of Directors and sets forth new requirements for the
approval of any transactions with certain affiliates until April 28, 1999.  In
addition, the Company, CMET, TCI and their shareholders released the defendants
from any claims relating to the plaintiffs' allegations and matters which were
the subject of the evidentiary hearings.  The plaintiffs' allegations of any
breaches of the Modification shall be settled by mutual agreement of the
parties or, lacking such agreement, by an arbitration proceeding.

Under the Amendment, all shares of the Company owned by Gene E. Phillips or any
of his affiliates shall be voted at all stockholders' meetings held until April
28, 1999 in favor of all new Board members added under the Amendment.  The
Amendment also requires that, until April 28, 1999, all shares of the Company
owned by Gene E. Phillips or his affiliates in excess of forty percent (40%) of
the Company's outstanding shares shall be voted in proportion to the votes cast
by all non-affiliated shareholders of the Company.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K


(a)       Exhibits:


Exhibit
Number                                    Description                       
-------            ---------------------------------------------------------


 27.0              Financial Data Schedule


(b)     Reports on Form 8-K as follows:

        A Current Report on Form 8-K, dated November 13, 1996, was filed with
        respect to Item 2. "Acquisition or Disposition of Assets," and Item 7.
        "Financial Statements and Exhibits," which was amended on Form 8-K/A,
        filed January 15, 1997.





                                      13
<PAGE>   14

                                 SIGNATURE PAGE



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



                                  INCOME OPPORTUNITY REALTY INVESTORS, 
                                  INC.
                                  
                                  
                                  
                                  
                                  
Date:     May 7, 1997             By:  /s/ Randall M. Paulson          
     ------------------------        ----------------------------------
                                     Randall M. Paulson
                                     President
                                  
                                  
                                  
                                  
                                  
Date:     May 7, 1997             By:  /s/ Thomas A. Holland            
     ------------------------        -----------------------------------
                                     Thomas A. Holland
                                     Executive Vice President and
                                     Chief Financial Officer
                                     (Principal Financial and
                                     Accounting Officer)




                                      14
<PAGE>   15
                   INCOME OPPORTUNITY REALTY INVESTORS, INC.

                                  EXHIBITS TO
                         QUARTERLY REPORT ON FORM 10-Q

                   For the Three Months Ended March 31, 1997





Exhibit                                                                   Page
Number                           Description                             Number
-------        ------------------------------------------------          ------

 27.0          Financial Data Schedule.                                    16





                                       15