AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT


     This Amendment No. 2 to Employment Agreement (the "Agreement"),  made as of
March 1, 1996,  is by and between  Insignia  Financial  Group,  Inc., a Delaware
corporation  with an office at One  Insignia  Financial  Plaza,  Post Office Box
1089,  Greenville,  South Carolina 29602 (the  "Company"),  and Andrew  Lawrence
Farkas,  an  individual  with an office at One Insignia  Financial  Plaza,  Post
Office Box 1089, Greenville, South Carolina 29602 (the "Executive").

                                   Background

     The Company and the Executive entered into an Employment Agreement dated as
of  September  1, 1993 (the  "Original  Agreement")  and an  Amendment  No. 1 to
Employment  Agreement dated as of July 20, 1995 (the  "Amendment").  The Company
and the Executive now desire to amend the Original Agreement,  as amended by the
Amendment.

                             Statement of Agreement

     In consideration of the foregoing,  the mutual covenants and agreements set
forth  herein  and for  other  good and  valuable  consideration,  the  receipt,
adequacy and  sufficiency of which are hereby  acknowledged,  the parties hereto
agree as follows:

     Section 1. Defined Terms.  Capitalized terms used in this Agreement but not
otherwise  defined  herein  shall  have the  meanings  ascribed  thereto  in the
Original Agreement, as amended.
 
     Section 2.  Amendment of Section 3(f) of the  Original  Agreement.  Section
3(f) of the  Original  Agreement,  as amended,  is hereby  amended by  replacing
subsection (viii) and adding a new subsection (ix) to Section 3(f):

     "(viii) During the  Employment  Period,  in so long as the Executive  shall
     travel more than eight (8) days per month  (average  during the course of a
     calendar  year),  the Company  shall  maintain a corporate  jet aircraft no
     smaller  than a Hawker  Sidley Model 700 such as that in use by the Company
     as of the date of this Agreement. The Executive shall have unlimited use of
     the Company's  aircraft during his employment by the Company.  The aircraft
     shall also be available  for use by the other  executives  and directors of
     the  Company,  subject to  availability.  In  addition,  the Company  shall
     provide the Executive with the use of the aircraft (or a similar  chartered
     aircraft  in the event  that the  Company no longer has full time use of an
     aircraft) for fifty (50) hours per year for two (2) years subsequent to the
     Executive's  termination  by  the  Company  for  any  reason  other  than a
     Termination For Cause.


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     (ix) Use of a full time car and driver both in  Greenville,  South Carolina
     and New York,  City, New York, which car and driver shall also be available
     for use by all other executives of the Company as the need shall arise."

     Section 3. Amendment of Section 3 of the Original  Agreement.  Section 3 of
the Original  Agreement,  as amended,  is hereby amended by adding the following
new subsection (m) to Section 3:

     "In the event of a Death Termination Event,  Disability  Termination Event,
     Termination  Without Cause or upon the occurrence of a Change In Control or
     Stock Change In Control,  all options and warrants then held by and granted
     to the Executive will immediately vest and be exercisable by the Executive;
     provided  however  that  in the  event  of a  Death  Termination  Event  or
     Disability Termination Event, any options shall only remain exercisable for
     a period of one year following such  termination  event (but not later than
     the scheduled expiration date of such options)".

     Section 4. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt  requested,  or delivered against receipt to the party to whom it
is to be given,  at the address of such party set forth in the  preamble of this
Agreement  (or to such  other  address as such party  shall  have  furnished  in
writing in accordance with the provisions of this Section). Notice to the Estate
shall be  sufficient  if addressed to the Executive as provided in this Section.
Any notice or other  communication given by certified mail shall be deemed given
at the time of  certification  thereof,  except for a notice  changing a party's
address which shall be deemed given at the time of receipt thereof.

     Section 5. Waiver.  Any waiver by either party of a breach of any provision
of this  Agreement  shall not operate as or be  construed  to be a waiver of any
other breach of such  provision or of any breach of any other  provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this  Agreement  on one or more  occasions  shall not be  considered a waiver or
deprive that party of the right  thereafter  to insist upon strict  adherence to
that term or any other term of this Agreement. Any waiver must be in writing.

     Section 6. Binding  Effect.  The Executive's  rights and obligations  under
this  Agreement  shall not be  transferrable  by assignment  or otherwise,  such
rights  shall not be subject to  commutation,  encumbrance  or the claims of the
Executive's creditors, and any attempt to do any of the foregoing shall be void.
The provisions of this Agreement  shall be binding upon and inure to the benefit
of the  Executive  and his  heirs  and  personal  representatives,  and shall be
binding upon and inure to the benefit of the Company and its successors.

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     Section 7. Third Party  Beneficiaries.  This Agreement does not create, and
shall not be construed as creating,  any rights  enforceable by any person not a
party to this Agreement.

     Section  8.  Headings.  The  headings  in this  Agreement  are  solely  for
convenience  of reference  and shall be given no effect in the  construction  or
interpretation of this Agreement.

     Section 9.  Counterparts.  This  Agreement may be executed in any number of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     Section  10.  Governing  Law.  This  Agreement  shall  be  governed  by and
construed in accordance  with the laws of the State of South  Carolina,  without
reference to the conflict of law provisions hereof.

     Section  11.  Affirmation.  The  parties  hereto  agree  that the  Original
Agreement, and the Amendment, as amended hereby, are in full force and effect on
and as of the date hereof.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.

                                  INSIGNIA FINANCIAL GROUP, INC.


                                  By:   /s/ John K. Lines
                                  -----------------------
                                  Name:   John K. Lines
                                  Title:  General Counsel and Secretary



                                   /s/ Andrew L. Farkas
                                   --------------------
                                   ANDREW LAWRENCE FARKAS