DEVELOPMENTS INVOLVING CORNERSTONE REALTY INCOME TRUST, INC.

     AUTHORIZATION  FOR  ADDITIONAL  SHARE  ISSUANCE.  On February 10, 1997,  in
response   to  a  request   from   Cornerstone   Realty   Income   Trust,   Inc.
("Cornerstone"),  the  Company's  Board of  Directors  authorized  the  grant to
Cornerstone  of a  continuing  right to  purchase  such  number of Shares of the
Company as would,  following  any such  purchase,  be up to but not in excess of
9.8% of the total number of Shares of the Company then  outstanding.  This right
will continue for so long as the Company's Initial Offering  continues,  and the
purchase  price for such  Shares  under such right  will be the  current  public
offering  price less the Selling  Commissions  and Marketing  Expense  Allowance
payable with respect thereto.  Shares sold to Cornerstone pursuant to this right
would be in addition to, and not part of, the offering made by the Prospectus.

     The Company  elected to grant to Cornerstone  this ongoing right because it
determined  that the  issuance  of  Shares in this  manner  would  represent  an
appropriate and financially  prudent method of raising additional equity for the
Company.  Glade M. Knight,  who is a Director and the Chairman and  President of
the Company,  also serves as a Director,  and the  Chairman and Chief  Executive
Officer of Cornerstone.  To the extent that  Cornerstone  exercises its right to
acquire up to 9.8% of the  outstanding  Shares of the Company,  Cornerstone  may
become one of the largest,  or perhaps the largest,  shareholder of the Company,
with commensurate voting power.

     On April 25, 1997,  Cornerstone  exercised  the right  described  above and
purchased  417,777  Shares  of the  Company  for  approximately  $3.76  million.
Cornerstone owns approximately 3.38% of the Shares of the Company outstanding on
December 31, 1997.

     POSSIBLE  ACQUISITION  OF THE COMPANY BY  CORNERSTONE.  As described in the
Prospectus,  under  "Investment  Objectives and  Policies-Sale  and  Refinancing
Policies,"  the Company has granted to  Cornerstone  a right of first refusal to
purchase the properties and business of the Company.  Cornerstone has, from time
to time, stated its intention to evaluate the acquisition of the Company and, if
the Board of Directors of Cornerstone  determines it is in the best interests of
Cornerstone and its shareholders, to offer to acquire the Company or its assets.
Any  decision to combine the  Company  and  Cornerstone  can only be made by the
respective  Boards  of  Directors,   and  depending  on  the  structure  of  the
transaction,  the respective  shareholders,  of the two companies.  Accordingly,
there can be no assurance that  Cornerstone  will seek to acquire the Company or
its assets or that any  proposal  by  Cornerstone  to acquire the Company or its
assets would be consummated.  Nevertheless, prospective investors in the Company
should  consider and evaluate  the  possibility  of  Cornerstone  acquiring  the
Company or its assets in making an investment decision relative to the Company.

     Early in 1997,  Cornerstone  stated its  intention to evaluate the possible
acquisition of the Company by the end of 1997. The Company has been informed (by
Cornerstone)  that  Cornerstone,  with the  assistance  of certain  professional
advisors,  evaluated the  desirability  to Cornerstone  and its  shareholders of
acquiring  the  Company  in  1997,  and  determined  that it was not in the best
interest of Cornerstone  and its  shareholders to seek to acquire the Company at
that  time.  However,  the  Company  has been  informed  (by  Cornerstone)  that
Cornerstone  expects to reevaluate  the  desirability  of seeking to acquire the
Company from time to time in the future.

     PROVIDING   OF  CERTAIN  SERVICES  BY  CORNERSTONE.  As  described  in  the
Prospectus  under  "The  Advisor  and  Affiliates," the Company has entered into
contracts  with  Apple  Residential  Advisors,  Inc.  ("ARA"), Apple Residential
Management  Group, Inc. ("ARMG"), and Apple Realty Group, Inc. ("ARG"), pursuant
to  which  ARA,  ARMG  and  ARG,  respectively,  have  agreed to provide certain
Company

                                      S-2

<PAGE>

management,   property  management  and  property  acquisition  and  disposition
services to the Company in exchange for certain compensation  described therein.
ARA and ARMG have  entered into  subcontracts  with  Cornerstone,  each of which
subcontracts has been approved by the Company, pursuant to which Cornerstone has
agreed to provide to the Company the services  previously  agreed to be provided
by ARA and ARMG in exchange for the compensation previously agreed to be paid by
the Company to ARA and ARMG. Further, Cornerstone has acquired all the assets of
ARG   (consisting   principally   of  ARG's   contract  with  the  Company)  for
consideration totalling $2 million, and pursuant to such acquisition has assumed
the  obligations  of  ARG  to the  Company  in  exchange  for  the  compensation
previously agreed to be paid by the Company to ARG.

     The effect of the foregoing transactions is that Cornerstone now renders to
the Company services  previously  agreed to be rendered by ARA, ARMG and ARG, in
exchange for the compensation previously agreed to be paid by the Company.

     CORNERSTONE  OPERATIONS.  Through  December 31, 1997,  Cornerstone had sold
approximately  $354 million in common shares to approximately  14,000 investors,
and had acquired 51 apartment  communities in Virginia,  North  Carolina,  South
Carolina and Georgia. The aggregate cost of the 51 properties (including capital
improvements  thereto) was approximately $488 million. The purchase price of all
such  properties  was paid  either  using the  proceeds  from the sale of common
shares  or using  the  proceeds  from an  unsecured  line of  credit  which  was
subsequently  repaid using proceeds from the sale of common shares,  except that
at December 31, 1997, approximately $146 million remained unpaid on such line of
credit. See also "Update on Experience of Prior Programs" herein.

              DEVELOPMENTS AFFECTING DIRECTORS; COMMITTEE MEMBERS

     In addition to those persons listed as Directors under  "Management" in the
Prospectus,  Lisa B. Kern has been added as a Director.  Information on Ms. Kern
is set forth below.

     LISA  B.  KERN.  Ms.  Kern, age 37, is a portfolio manager with Davenport &
Co.  of  Virginia, Inc., in Richmond, Virginia. Before joining Davenport as Vice
President  in  1996,  Ms.  Kern  advised clients in the areas of investments and
estate  planning. She began her investment career in 1982 as a financial planner
and  later  District  Manager  with  IDS/American Express Advisory. In 1985, Ms.
Kern  received  her  CFP  designation.  In  1989, Ms. Kern joined Crestar Bank's
Trust  and  Investment  Management  Group  as  a  Vice  President. Ms. Kern is a
graduate   of  Randolph  Macon  College  and  received  her  MBA  from  Virginia
Commonwealth University in 1991.

     Effective  February  1, 1998,  Ted W. Smith  resigned  as a Director of the
Company. Mr. Smith also resigned as an officer of ARMG. The Board thus currently
consists of four  individuals,  although the Board has the authority to fill the
position resulting from Mr. Smith's resignation if it so desires.

     The  current  members  of  the  Company's  Executive Committee are Glade M.
Knight  (age  53),  Penelope W. Kyle (age 50), and Bruce H. Matson (age 40). The
current  members  of  the Audit Committee are Penelope W. Kyle and Lisa B. Kern.
The  current members of the Compensation Committee are Bruce H. Matson, Penelope
W.  Kyle  and Lisa B. Kern. For a description of the functions of the Executive,
Audit  and  Compensation  Committees,  see  the  Prospectus  under  the headings
"Management-Committees of Directors," and "Management-The Incentive Plan."

                           UNSECURED LINE OF CREDIT

     As  contemplated  by the  discussion  in the  Prospectus  under the heading
"Business  and  Properties  -  Properties  Owned by the  Company"  the  Board of
Directors  authorized,  and the Company  obtained,  an unsecured line of credit,
which is designed to facilitate  the timely  acquisition  of  properties  deemed
attractive by management.  The unsecured line of credit the ("Unsecured  Line of
Credit") is from First Union  National  Bank of  Virginia.  The  borrowing  is a
revolving loan for a principal amount not to exceed at any time $20 million. The
loan bears  interest at a floating rate equal to the one month London  interbank
offered rate ("LIBOR") plus 2%, requires  monthly payments of interest and has a
due date

                                      S-3

<PAGE>

of March 31, 1998. Although the Unsecured Line of Credit is currently unsecured,
the lender may require  the  securing  of the loan with first  mortgages  on the
Company's properties if the principal amount of any advance is not repaid within
six months of the date of funding.  As of December 31, 1997, there was no unpaid
balance on the Unsecured Line of Credit.

     As of the date of this Supplement,  the documents  evidencing the Unsecured
Line  of  Credit  have  not yet  been  amended  to  reflect  the  reorganization
transactions  described  below in this  Supplement  under "Transfer of Assets to
Subsidiary  Partnership."  Unless and until such documents are so amended,  with
the consent of the lender,  the  Unsecured  Line of Credit will not be available
for use by the Company.

     The  Company has also  obtained a line of credit from First Union  National
Bank of Virginia in the amount of $1 million for general corporate purposes. The
terms of such  borrowing  are the  same of those  under  the  Unsecured  Line of
Credit.

     As the  size of the  Company  grows,  it is  possible  that the size of the
Unsecured  Line of Credit  will be  increased  or that the  Company  will obtain
another  unsecured  line of credit  to  facilitate  the  timely  acquisition  of
properties.

                             PROPERTY ACQUISITIONS

   As of the date of this Supplement,  the Company owns the following properties
(the "Properties"):

<TABLE>
<CAPTION>

                                              NUMBER OF       DATE OF
          NAME                 LOCATION         UNITS       ACQUISITION

------------------------   ----------------   -----------   ------------
<S>                        <C>                <C>           <C>
Brookfield                 Dallas, TX            232           1-28-97
Eagle Crest                Irving, TX            484           1-30-97
Tahoe                      Arlington, TX         240           1-31-97
Mill Crossing              Arlington, TX         184           2-21-97
Polo Run                   Arlington, TX         224           3-31-97
Wildwood                   Euless, TX            120           3-31-97
Toscana                    Dallas, TX            192           3-31-97
Arbors on Forest Ridge     Bedford, TX           210           4-25-97
Pace's Cove                Dallas, TX            328           6-24-97
Remington Hills            Irving, TX            362            8-6-97
Copper Crossing            Fort Worth, TX        200          11-24-97
</TABLE>

          Additional information on the Properties is provided below.

                             BROOKFIELD APARTMENTS
                                 DALLAS, TEXAS

     On January 28, 1997,  the Company  purchased the Brookfield  Apartments,  a
232-unit  apartment  complex having an address of 4060 Preferred Place,  Dallas,
Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates.  The purchase price was $5,458,485,  which was paid entirely in cash
using  proceeds  from the sale of Shares.  Title to the Property was conveyed to
the Company by limited warranty deed.

     LOCATION.  The  following  information  is  based  in part upon information
provided by the Dallas Chamber of Commerce.

     The  Property  is located in south  Dallas,  within the  Dallas/Fort  Worth
Consolidated  Metropolitan  Statistical  area, or as it is called locally,  "The
Metroplex." The  Dallas/Fort  Worth  Metroplex is in the  north-central  part of
Texas and is composed of nine counties. The 1996 population of The Metroplex was
approximately 4,400,000.  Dallas is the second largest city in the state, behind
Houston.

                                      S-4

<PAGE>

     The economy of the Dallas/Fort  Worth area is complex and diversified.  Key
economic  factors  include a large  manufacturing  base  (including  as products
military hardware,  electronics,  automobiles,  industrial equipment,  oil-field
parts,   food   products   and   chemicals),    banking,   insurance   services,
communications,  oil and gas production and air transportation.  Major employers
in the area include Texas Instruments,  Southwestern Bell, General Motors, J. C.
Penney, NationsBank and Vought Aircraft Company.

     The Metroplex is also an established  transportation center for the nation.
The Dallas/Fort Worth International Airport occupies  approximately 17,800 acres
of land  between the two cities.  It is the  largest  commercial  airport in the
United States in terms of land area,  and is the fourth  busiest  airport in the
world, with 1,700 daily arrivals and departures.

     The area also has a  well-established  system of  interstate  highways  and
supporting  secondary routes. The Metroplex is located at the hub of Interstates
35, 45, 20 and 30. Two outer loops,  Interstate 635 in Dallas and Interstate 820
in Fort Worth, surround the respective cities.

     The many  institutions  of higher  learning  in the area  include  Southern
Methodist University, the University of Texas at Dallas, the University of Texas
at Arlington, the University of North Texas, and Texas Christian University.

     The Property is located in a  well-established  area of Dallas near the Red
Bird Mall. The area is characterized by various retail centers,  restaurants and
businesses.  Downtown  Dallas  is an  approximately  15-minute  drive  from  the
Property.  The Property is an  approximately  25-minute  drive from  Dallas/Fort
Worth International Airport.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 232  garden-style
apartments located in 15 two- and three-story  buildings on approximately  seven
acres of land. The Property was completed in 1984.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However, the Company currently has budgeted
approximately  $232,000 (and as of December 31, 1997 had expended  approximately
$215,000)  for  repairs  and  improvements,   including  clubhouse   renovation,
painting, wood replacement, parking lot repair, interior upgrades (including new
appliances) and pool improvements.

     The Property  offers  seven  different  unit types.  The unit mix and rents
being charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>
                                                          APPROXIMATE
                                                           INTERIOR
                                                             SQUARE      MONTHLY
 QUANTITY                       TYPE                        FOOTAGE       RENTAL
----------   ------------------------------------------   ------------   --------
<S>          <C>                                          <C>            <C>
     39      One bedroom, one bath                            578          $445
      9      One bedroom, one bath (view)                     578           465
     36      One bedroom, one bath w/sunroom                  658           490
     12      One bedroom, one bath w/sunroom (view)           658           500
     24      One bedroom, one bath w/WD connections           669           510
     48      One bedroom, one bath w/WD connections,

             FP, bookshelves                                  661           525
     64      Two bedrooms, two baths w/WD connections,
             FP, bookshelves                                  913           650
</TABLE>

     The  apartments  provide a combined total of  approximately  165,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased  gradually.  As an
example,  a two-bedroom,  two-bath  apartment  rented for $520 in 1993,  $530 in
1994, $545 in 1995, $565 in 1996, and $650 in 1997. The average effective annual
rental per square foot at the Property for 1993,  1994,  1995, 1996 and 1997 was
$7.11, $7.24, $7.45, $7.72 and $8.12, respectively.

                                      S-5

<PAGE>

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer and masonite hardboard exteriors on reinforced concrete slab foundations.
Roofs are sloped fiberglass shingles on plywood.

     The Property has an outdoor  swimming  pool with a large deck, a hot tub, a
controlled  access entrance and exit gate, and covered parking for approximately
232  vehicles.  The Property also  includes a clubhouse  with a leasing  office.
There is also uncovered paved parking for residents.

     Apartment units have  wall-to-wall  carpeting in the living areas and vinyl
floors in the kitchen and bath.  Each apartment  unit has a television  hook-up,
miniblinds,  drapes on sliding glass doors and individually  controlled  heating
and air-conditioning  unit. Each kitchen is equipped with a refrigerator/freezer
with ice maker, electric range and oven, dishwasher and garbage disposal.  Also,
as indicated  in the table above,  some units have a  woodburning  fireplace,  a
utility  area with  washer/dryer  connections,  bookshelves,  ceiling  fans or a
sunroom. The owner of the Property pays for cold water, sewer service, gas usage
for hot water and trash  removal.  Tenants  pay for their  electricity  service,
which includes cooking, lighting, heating and air-conditioning.

     There are at least 10 apartment properties which compete with the Property.
All offer  similar  amenities  and  generally  have rents  that are higher  when
compared  with  those of the  Property.  Based on a recent  market  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 96%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  92% in 1992, 93% in 1993, 93% in 1994, 94% in
1995  and 97% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 99%. On December 31, 1997, the Property was
97% occupied.  The residents are a mix of blue-collar and white-collar  workers,
students and retired persons.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

                             ASSESSED
      JURISDICTION             VALUE          RATE            TAX

------------------------   ------------   -----------   -------------
<S>                        <C>            <C>           <C>
County of Dallas  ......    $5,605,190     $ 0.44307     $  24,834.92
City of Dallas .........     5,605,190       2.11213       118,388.90
                                                         ------------
 Total   ...............                                 $ 143,223.82
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $4,718,834) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The  Advisor  and the  Company  believe  that the  Property  is and will be
continue to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid Apple Realty Group, Inc. a property  acquisition fee
equal to 2% of the purchase  price of the  Property,  or  $109,170.  Cornerstone
Realty  Income Trust,  Inc. will serve as property  manager for the Property and
for its services will be paid by the Company a monthly  management  fee equal to
5% of the gross revenues of the Property plus reimbursement of certain expenses.

                                      S-6

<PAGE>

                         EAGLE CREST I & II APARTMENTS
                                 IRVING, TEXAS

     On  January  30,  1997,  the  Company  purchased  the  Eagle  Crest  I & II
Apartments,  a  484-unit  apartment  complex  having  an  address  of 4013  West
Northgate, Irving, Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates. The purchase price was $15,650,000,  which the Company paid entirely
in cash  using  proceeds  from the sale of  Shares.  Title to the  Property  was
conveyed to the Company by limited warranty deed.

     LOCATION. See above under "Brookfield  Apartments" for a description of the
greater  Dallas/Fort  Worth  Consolidated  Metropolitan  Statistical Area, which
includes Irving, Texas.

     Irving is  approximately  eight miles west of the Dallas  central  business
district and  approximately  25 miles east of downtown  Fort Worth.  Irving is a
relatively  young city with a majority of its development  occurring  during the
latter half of this  century.  The  location of Irving  between  Dallas and Fort
Worth,  and near  Dallas/Fort  Worth  International  Airport,  has enabled it to
garner  a  large  portion  of  the  area's  recent   commercial  and  industrial
development.

     Irving  is  the  site  of  Las  Colinas,   one  of  the  nation's   largest
master-planned real estate developments.  The development occupies approximately
12,500 acres and includes  residential  developments,  office  space,  research,
distribution and light industrial facilities, four golf courses, the Las Colinas
Sports Club and an equestrian center.

     Las  Colinas is  targeted  to large  employers  and is the home of numerous
regional  and national  businesses.  The Irving  employment  sector is primarily
white-collar.  Significant  employers in Las Colinas include Exxon,  GTE, Aetna,
Abbott Laboratories, Boeing, US Sprint, Computer Associates, Allstate Insurance,
Zale  Jewelers and the Federal Home Loan Bank Board.  In addition,  Columbia/HCA
Health Care  Corporation  recently signed an agreement to buy  approximately  28
acres in the  development.  The plans for the land include a community  hospital
with medical office complex and a full-service acute-care facility.

     Irving has a well-defined  highway system.  The city is connected to Dallas
by State Highway 114 on the northeast,  State Highway 183 in its central portion
and Interstate 30 on the south.

     The  Property  is located  off of Belt Line Road in Irving.  The  immediate
neighborhood   includes  other   multi-family   communities,   and  residential,
commercial and retail  development.  The Property is  conveniently  located near
restaurants,  businesses,  schools, and churches, and is readily accessible from
Highways  161 and 183.  The  Property is an  approximately  5-minute  drive from
Dallas/Fort Worth International Airport.

     DESCRIPTION OF THE PROPERTY.  The Property  consists of 484 apartment units
in 31 two- and three-story  buildings on  approximately  18 acres of land. There
are 296 apartment  units in Phase I, which was built in 1983,  and 188 apartment
units in Phase II, which was built in 1985.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However, the Company currently has budgeted
approximately  $968,000 (and as of December 31, 1997 had expended  approximately
$774,000)  for  repairs  and  improvements,   including  clubhouse  renovations,
structural repair of shrink/swell soil conditions,  painting,  wood replacement,
interior   upgrades   (including  new  appliances),   parking  lot  resurfacing,
landscaping and pool improvements.

                                      S-7

<PAGE>

     The  Property  offers a wide range of units  types.  The unit mix and rents
being charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>

                                                       APPROXIMATE
                                                        INTERIOR
                                                         SQUARE       MONTHLY
 QUANTITY                     TYPE                       FOOTAGE       RENTAL

----------   ---------------------------------------   ------------   ---------
<S>          <C>                                       <C>            <C>
    116      One bedroom, one bath                          698        $    550
    120      One bedroom, one bath                          796             575
      4      One bedroom, one bath, sunroom, bar            798             610
     48      One bedroom, one bath                          896             620
     24      Two bedrooms, one bath                         912             620
     63      Two bedrooms, two baths                       1023             695
     80      Two bedrooms, two baths                       1089             725
      1      Two bedrooms, two baths, sunroom              1123             745
      4      Two bedrooms, two baths, sunroom, bar         1189             785
     21      Two bedrooms, two baths                       1124         780-790
      3      Two bedrooms, two baths, sunroom              1224             850

</TABLE>

     The  apartments  provide a combined total of  approximately  429,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased  gradually.  As an
example,  a one-bedroom,  one-bath  apartment  rented for $445 in 1993,  $445 in
1994, $469 in 1995, $485 in 1996, and $550 in 1997. The average effective annual
rental per square foot at the Property for 1993,  1994,  1995, 1996 and 1997 was
$7.17, $7.17, $7.56, $7.81 and $8.00, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer and masonite  hardboard siding on reinforced  concrete slab  foundations.
Roofs are sloped fiberglass shingles over plywood.

     The Property has three outdoor swimming pools, two jacuzzis,  three laundry
facilities,  a fitness building,  gas grills and ice machines. The Property also
has a  clubhouse  with a  leasing  office.  There is  ample  paved  parking  for
residents.

     Each  apartment  unit has  wall-to-wall  carpeting  in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and  individually  controlled  heating and  air-conditioning  unit. Each
kitchen has a  refrigerator/freezer,  electric range and oven,  double stainless
steel sink, a dishwasher  and garbage  disposal.  All  apartment  units  include
washer/dryer connections for full-sized appliances. Some apartment units feature
additional  amenities,  such as linen closets, a fireplace with mantle,  ceiling
fans, a pantry closet, a dry bar, an entertainment  center,  vaulted ceilings, a
sunroom and greenhouse  windows.  The owner of the Property pays for cold water,
gas for hot water, sewer service,  and trash removal.  The tenants pay for their
electricity   usage,   which   includes   cooking,    lighting,    heating   and
air-conditioning.

     There  are at  least  four  apartment  properties  which  compete  with the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 94%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  95% in 1992, 94% in 1993, 95% in 1994, 95% in
1995  and 97% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 94%. On December 31, 1997, the Property was
94% occupied. The tenants are a mix of white-collar and blue-collar workers.

                                      S-8

<PAGE>

     The following  tables set forth the 1997 real estate tax information on the
Property:

PHASE I

<TABLE>
<CAPTION>

                                  ASSESSED
         JURISDICTION              VALUE          RATE            TAX
------------------------------   ------------   -----------   -------------
<S>                              <C>            <C>           <C>
County of Dallas  ............    $8,959,260     $ 0.44307    $ 39,195.79
City of Irving ...............     8,959,260       0.49300      44,169.15
Irving School District  ......     8,959,260       1.64840     147,684.44
                                                              -----------
Total ........................                                $231,549.38
</TABLE>

PHASE II

<TABLE>
<CAPTION>

                                  ASSESSED
         JURISDICTION              VALUE          RATE            TAX
------------------------------   ------------   -----------   -------------
<S>                              <C>            <C>           <C>
County of Dallas  ............    $5,763,450     $ 0.44307    $ 25,536.12
City of Irving ...............     5,763,450       0.49300      28,413.81
Irving School District  ......     5,763,450       1.64840      95,004.71
                                                              -----------
Total ........................                                $148,954.64
                                                              -----------
Grand Total ..................                                $380,504.02
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property   (currently   estimated  at  about   $13,744,466)  will  generally  be
depreciated over 27.5 years on a straight-line  basis. The basis of the personal
property portion will be depreciated in accordance with the modified accelerated
cost recovery system of the Code.  Amounts to be spent by the Company on repairs
and improvements will be treated for tax purposes as permitted by the Code based
on the nature of the expenditures.

     The  Advisor  and the  Company  believe  that the  Property  is and will be
continue to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid Apple Realty Group, Inc. a property  acquisition fee
equal to 2% of the purchase  price of the  Property,  or  $313,000.  Cornerstone
Realty  Income Trust,  Inc. will serve as property  manager for the Property and
for its services will be paid by the Company a monthly  management  fee equal to
5% of the gross revenues of the Property plus reimbursement of certain expenses.

                               TAHOE APARTMENTS
                               ARLINGTON, TEXAS

     On January 31, 1997, the Company purchased the Tahoe Apartments, a 240-unit
apartment  complex having an address of 2308 Fair Oaks Drive,  Arlington,  Texas
(the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates.  The purchase price was $5,690,000,  which was paid entirely in cash
using  proceeds  from the sale of Shares.  Title to the Property was conveyed to
the Company by limited warranty deed.

     LOCATION. See above under "Brookfield  Apartments" for a description of the
greater  Dallas/Fort  Worth  Consolidated  Metropolitan  Statistical Area, which
includes Arlington, Texas.

     The Property is located in the city of Arlington,  which is located between
Dallas and Fort  Worth.  Arlington  is  approximately  13 miles east of the Fort
Worth Central  Business  district and  approximately 20 miles west of the Dallas
Central Business District.

     Owing  in  large  part to its  location  between  Dallas  and  Fort  Worth,
Arlington  has  become  a focus  of  business  development  in the  area.  Major
employers  include General Motors,  National  Semiconductor,  Johnson & Johnson,
Doskocil Manufacturing Company and Arlington Memorial Hospital. The area is also
the site of several large  warehousing and distribution  companies whose primary
market is the Metroplex.

                                      S-9

<PAGE>

     The  University of Texas at Arlington  has an  enrollment of  approximately
23,000  students.  Arlington  also serves as a major medical  center for its own
population and for residents of outlying communities as well. Arlington Memorial
Hospital  has a staff of  approximately  1,680 and HCA South  Arlington  Medical
Center has  approximately  640 employees,  making both of them among the largest
employers in the city.

     The immediate area surrounding the Property  consists of other  multifamily
housing,  residential,  commercial  and  retail  development.  The  Property  is
conveniently located near restaurants,  businesses, schools and churches, and is
readily accessible from Interstate 20 and Interstate 30.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 240  garden-style
apartment units in 18 two- and three-story  buildings on approximately 9.8 acres
of land. The Property was built in 1979.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However, the Company currently has budgeted
approximately  $900,000 (and as of December 31, 1997 had expended  approximately
$705,000) for repairs and improvements including clubhouse renovation, retaining
wall repairs,  landscaping,  exterior painting and exterior siding  replacement,
interior  upgrades  (including  new  appliances),  parking lot  resurfacing  and
landscaping.

     The Property offers five different unit types. The unit mix and rents being
charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>
                                        APPROXIMATE
                                         INTERIOR
                                           SQUARE       MONTHLY
 QUANTITY              TYPE                FOOTAGE       RENTAL
----------   -------------------------   ------------   --------
<S>          <C>                         <C>            <C>
     64      One bedroom, one bath            480         $400
     64      One bedroom, one bath            575          430
     48      One bedroom, one bath            634          465
     32      Two bedrooms, two baths          941          640
     32      Two bedrooms, two baths        1,027          695

</TABLE>

     The  apartments  provide a combined total of  approximately  161,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
one bedroom,  one bath apartment  rented for $345 in 1993, $365 in 1994, $394 in
1995,  $404 in 1996, and $430 in 1997. The average  effective  annual rental per
square  foot at the  Property  for 1993,  1994,  1995,  1996 and 1997 was $6.91,
$7.31, $7.89, $8.09 and $8.44, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer and masonite hardboard exteriors on reinforced concrete slab foundations.
Roofs are sloped fiberglass shingles over plywood.

     The  Property  has  an  outdoor  swimming  pool,  a hot  tub,  two  laundry
facilities,  a fitness center,  a sand volleyball  court and covered parking for
approximately  32  vehicles.  The Property  also has a clubhouse  with a leasing
office. There is also uncovered paved parking for residents.

     Each  apartment  unit has  wall-to-wall  carpeting  in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up, miniblinds,  vertical blinds and an individually controlled heating and
air-conditioning unit. Each kitchen is equipped with a refrigerator/freezer with
icemaker,  electric range and oven, dishwasher,  microwave and garbage disposal.
Some units have a woodburning fireplace and washer/dryer connections.  The owner
of the Property pays for cold water,  sewer  service,  natural gas for hot water
and trash removal.  Tenants pay for their  electricity  service,  which includes
cooking, lighting, heating and air-conditioning.

     There  are at  least  four  apartment  properties  which  compete  with the
Property.  All offer similar  amenities and generally have rents that are higher
when compared with those of the Property.  Based on a recent  telephone  survey,
the Advisor estimates that occupancy in nearby competing properties now averages
approximately 94%.

                                      S-10

<PAGE>

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  94% in 1992, 93% in 1993, 95% in 1994, 89% in
1995  and 94% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 91%. On December 31, 1997, the Property was
92% occupied. The tenants are a mix of white-collar and blue-collar workers.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

                             ASSESSED
      JURISDICTION            VALUE          RATE             TAX
-------------------------   ------------   ------------   -------------
<S>                         <C>            <C>            <C>
County of Tarrant  ......    $5,451,821    $1.995196       $ 108,774.52
City of Arlington  ......     5,451,821     0.63800           34,782.62
                                                           ------------
 Total ..................                                  $ 143,557.14
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $5,296,527) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid Apple Realty Group, Inc. a property  acquisition fee
equal to 2% of the purchase  price of the  Property,  or  $113,800.  Cornerstone
Realty  Income Trust,  Inc. will serve as property  manager for the Property and
for its services will be paid by the Company a monthly  management  fee equal to
5% of the gross revenues of the Property plus reimbursement of certain expenses.

                           MILL CROSSING APARTMENTS
                               ARLINGTON, TEXAS

     On February 21, 1997, the Company purchased the Mill Crossing Apartments, a
184-unit  apartment complex having an address of 2713 North Collins,  Arlington,
Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates.  The purchase price was $4,544,121,  which was paid entirely in cash
using  proceeds  from the sale of Shares.  Title to the Property was conveyed to
the Company by limited warranty deed.

     LOCATION.  The  Property  is located in the city of Arlington, Texas, which
is  part  of  "The Metroplex." For information on The Metroplex, see "Brookfield
Apartments"  herein.  For  information  on  Arlington,  see  "Tahoe  Apartments"
herein.

     The immediate area surrounding the Property  consists of other  multifamily
housing,  residential,  commercial  and  retail  development.  The  Property  is
conveniently located near restaurants,  businesses, schools and churches, and is
readily accessible from Interstate 20 and Interstate 30.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 184  garden-style
apartment units in 14 two-story buildings on approximately eight acres of land.
The Property was built in 1979.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However, the Company currently has budgeted
approximately  $400,000 (and as of December 31, 1997 had expended  approximately
$333,000)  for  repairs  and   improvements,   including   painting,   clubhouse
renovations,  parking lot repair,  interior upgrades (including new appliances),
landscaping and pool improvements.

                                      S-11

<PAGE>

     The Property  offers several  different unit types.  The unit mix and rents
being charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>

                                                   APPROXIMATE
                                                    INTERIOR
                                                     SQUARE       MONTHLY
 QUANTITY                   TYPE                     FOOTAGE       RENTAL
----------   -----------------------------------   ------------   --------
<S>          <C>                                   <C>            <C>
     24      Efficiency                                 452         $400
     48      One bedroom/one bath                       553          425
     24      One bedroom/one bath downstairs            652          460
     24      One bedroom/one bath upstairs              652          470
     24      Two bedrooms/two baths downstairs          860          600
     24      Two bedrooms/two baths upstairs            860          610
      8      Two bedrooms/two baths                   1,075          750
      8      Two bedrooms/two baths/view              1,075          760

</TABLE>

     The  apartments  provide a combined total of  approximately  127,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates of the past five years have generally  increased.  As an example, a
one bedroom,  one bath apartment  rented for $360 in 1993, $380 in 1994, $385 in
1995,  $395 in 1996 and $425 in 1997.  The average  effective  annual rental per
square  foot at the  Property  for 1993,  1994,  1995,  1996 and 1997 was $6.95,
$7.33, $7.43 $7.62 and $8.34, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer and masonite hardboard exteriors on reinforced concrete slab foundations.
Roofs are sloped fiberglass shingles over plywood.

     The Property has an outdoor  swimming pool,  clubhouse with leasing office,
and two laundry facilities. There is ample paved parking for the tenants.

     Each  apartment  unit has  wall-to-wall  carpeting  in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up,  miniblinds and an individually controlled heating and air conditioning
unit. Each kitchen is equipped with a  refrigerator/freezer,  electric range and
oven, dishwasher,  microwave and garbage disposal.  Certain units also feature a
woodburning  fireplace,  bookshelves or vaulted  ceilings,  and all  two-bedroom
units have washer/dryer connections for full-sized appliances.  The owner of the
Property pays for cold water, natural gas for hot water, sewer service and trash
removal.  Tenants  pay for their  electricity  usage,  which  includes  cooking,
lighting, heating and air conditioning.

     There are at least six apartment properties that compete with the Property.
All offer  similar  amenities  and  generally  have rents  that are higher  when
compared with those at the Property.  Based on a recent  telephone  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 94%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  92% in 1992, 93% in 1993, 94% in 1994, 93% in
1995  and 94% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 93%. On December 31, 1997, the Property was
91% occupied. The tenants are a mix of white-collar and blue-collar workers.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

                             ASSESSED
      JURISDICTION            VALUE         TAX RATE          TAX
-------------------------   ------------   ------------   ------------
<S>                         <C>            <C>            <C>
County of Tarrant  ......    $4,200,000    $1.995196       $ 83,798.24
City of Arlington  ......     4,200,000     0.63800          26,796.00
                                                           -----------
 Total ..................                                  $110,594.24
</TABLE>

                                      S-12

<PAGE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $4,182,047) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid Apple Realty Group, Inc. a property  acquisition fee
equal to 2% of the  purchase  price of the  Property,  or  $90,882.  Cornerstone
Realty  Income Trust,  Inc. will serve as property  manager for the Property and
for its services will be paid by the Company a monthly  management  fee equal to
5% of the gross revenues of the Property plus reimbursement of certain expenses.

                              POLO RUN APARTMENTS
                               ARLINGTON, TEXAS

     On March  31,  1997,  the  Company  purchased  the Polo Run  Apartments,  a
224-unit  apartment  complex  having an  address  of 901  Greenway  Glen  Drive,
Arlington, Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates. The purchase price was $6,858,974, which was paid entirely using the
Unsecured Line of Credit. The Company  subsequently  repaid this borrowed amount
using  proceeds  from the sale of Shares.  Title to the Property was conveyed to
the Company by limited warranty deed.

     LOCATION.  The  Property is located off of Road to Six Flags in  Arlington,
Texas,  which is part of "The Metroplex." For information on The Metroplex,  see
"Brookfield  Apartments"  herein.  For  information  on  Arlington,  see  "Tahoe
Apartments" herein.

     The immediate area surrounding the Property consists of other  multi-family
housing and  residential,  commercial  and retail  development.  The Property is
located  near  restaurants,  businesses,  schools and  churches,  and is readily
accessible from Interstates 20 and 30. The Property is an  approximately  20- to
25-minute  drive from both downtown  Dallas and downtown Fort Worth,  as well as
the Dallas/Fort Worth International Airport.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 224  garden-style
apartment units located in 23 two-story  buildings on approximately 9.2 acres of
land. The Property was completed in 1984.

     The Company  believes that the Property has generally been well  maintained
and is generally in very good  condition.  However,  the Company  currently  has
budgeted  approximately  $400,000  (and as of  December  31,  1997 had  expended
approximately $350,000) for repairs and improvements, including painting, siding
repairs,   pool  renovations,   clubhouse   renovations  and  interior  upgrades
(including new appliances).

     The Property offers four units types.  The unit mix and rents being charged
new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                   APPROXIMATE
                                                                    INTERIOR
                                                                     SQUARE       MONTHLY
 QUANTITY                           TYPE                             FOOTAGE       RENTAL
----------   ---------------------------------------------------   ------------   --------
<S>          <C>                                                   <C>            <C>
     56      One bedroom, one bathroom w/fireplace                     656          $495
     16      One bedroom, one bathroom w/fireplace and dining

              room                                                     720           535
     88      Two bedrooms, two bathrooms w/fireplace and dining
              room                                                     913           620
     64      Two bedrooms, two bathrooms w/fireplace, dining
             room and vanity                                           981           650

</TABLE>

                                      S-13

<PAGE>

     The  apartments  provide a combined total of  approximately  191,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
two-bedroom,  two-bath  apartment rented for $495 in 1993, $510 in 1994, $530 in
1995,  $560 in 1996, and $620 in 1997. The average  effective  annual rental per
square  foot at the  Property  for 1993,  1994,  1995,  1996 and 1997 was $6.55,
$6.75, $7.01, $7.41 and $7.64, respectively.

     The buildings are wood frame construction with combination brick veneer and
masonite hardboard exteriors on reinforced concrete slab foundations.  Roofs are
sloped fiberglass shingled on plywood.

     The Property  has two outdoor  swimming  pools and a clubhouse  with weight
room,  party room  (with full bar and  kitchen),  billiards,  steam  rooms and a
leasing office. There is ample paved parking for tenants.

     Apartment units have  wall-to-wall  carpeting in the living areas and vinyl
floors in the  kitchen  and bath.  Each  apartment  unit has a cable  television
hook-up,  miniblinds and an individually controlled heating and air conditioning
unit. Each kitchen is equipped with a  refrigerator/freezer,  electric range and
oven, microwave oven, dishwasher and garbage disposal. Each unit also includes a
wood-burning  fireplace  and a washer and dryer.  The owner of the Property pays
for cold  water,  sewer  service,  gas usage  for hot  water and trash  removal.
Tenants pay for their electricity  service,  which includes  cooking,  lighting,
heating and air conditioning.

     There  are at  least  six  apartment  properties  which  compete  with  the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 94%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  94% in 1992, 95% in 1993, 93% in 1994, 94% in
1995  and 96% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 94%. On December 31, 1997, the Property was
92% occupied.  The residents are a mix of white-collar and blue-collar  workers,
students and retired persons.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

      JURISDICTION          ASSESSED VALUE       RATE             TAX

-------------------------   ----------------   ------------   -------------
<S>                         <C>                <C>            <C>
County of Tarrant  ......      $5,173,615      $1.995196       $ 103,223.77
City of Arlington  ......       5,173,615       0.63800           33,007.66
                                                               ------------
 Total ..................                                      $ 136,231.43
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $6,480,250) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income  Trust,  Inc. a property
acquisition fee equal to 2% of the purchase price of the Property,  or $137,179.
Cornerstone  Realty  Income Trust,  Inc. will serve as property  manager for the
Property and for its services  will be paid by the Company a monthly  management
fee equal to 5% of the gross  revenues of the  Property  plus  reimbursement  of
certain expenses.

                                      S-14

<PAGE>

                              WILDWOOD APARTMENTS
                                 EULESS, TEXAS

     On March 31,  1997,  the  Company  purchased  the  Wildwood  Apartments,  a
120-unit  apartment  complex  having an address of 200 West Bear Creek,  Euless,
Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates. The purchase price was $3,963,519, which was paid entirely using the
Unsecured Line of Credit. The Company  subsequently repaid such borrowing on the
Unsecured  Line of Credit using  proceeds from the sale of Shares.  Title to the
Property was conveyed to the Company by limited warranty deed.

     LOCATION.  The Property is located in Euless,  within Tarrant County, which
is a part of "The  Metroplex."  For information on The Metroplex see "Brookfield
Apartments" herein.

     The  Property  is located  in the  northern  portion  of Euless.  Euless is
located between Dallas and Fort Worth,  approximately  17 miles east of the Fort
Worth central  business  district and  approximately 20 miles west of the Dallas
central business district.

     The immediate area surrounding the Property consists of other  multi-family
housing and  residential,  commercial  and retail  development.  The Property is
located near restaurants, businesses, schools and churches.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 120  garden-style
apartments located in 10 two-story  buildings on approximately 10 acres of land.
The Property was built in 1984.

     The Company  believes that the Property has generally been well  maintained
and is generally in very good  condition.  However,  the Company  currently  has
budgeted  approximately  $225,000  (and as of  December  31,  1997 had  expended
approximately   $198,000)  for  certain  repairs  and  improvements,   including
painting, siding repair, pool renovations and clubhouse renovations.

     The Property  offers  eight  different  unit types.  The unit mix and rents
being charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>
                                                      APPROXIMATE
                                                       INTERIOR
                                                        SQUARE       MONTHLY
 QUANTITY                     TYPE                      FOOTAGE       RENTAL
----------   --------------------------------------   ------------   --------
<S>          <C>                                      <C>            <C>
     17      One bedroom, one bathroom                     525         $469
      7      One bedroom, one bathroom (upgraded)          525          499
     12      One bedroom, one bathroom                     650          544
     12      One bedroom, one bathroom (upgraded)          650          564
     13      One bedroom, one bathroom                     750          569
     19      One bedroom, one bathroom (upgraded)          750          589
     16      Two bedrooms, two bathrooms                   900          780
     24      Two bedrooms, two bathrooms                 1,000          810

</TABLE>

     The apartments provide a combined total of approximately 90,000 square feet
of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally  increased.  As an example a
one-bedroom,  one-bath  apartment rented for $340 in 1993, $355 in 1994, $395 in
1995,  $420 in 1996, and $469 in 1997. The average  effective  annual rental per
square  foot at the  Property  for 1993,  1994,  1995,  1996 and 1997 was $6.96,
$7.27, $8.09, $8.60 and $9.32, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer and wood  siding on  concrete  slab  foundations.  Roofs are  pitched and
covered with composition shingles.

     The Property  has an outdoor  swimming  pool with a  waterfall,  a jacuzzi,
covered picnic areas, a playground,  a sand volleyball court, basketball courts,
a laundry room and a health club.  The Property  also has a clubhouse.  There is
ample paved parking for tenants, and there are 124 covered parking spaces.

                                      S-15

<PAGE>

     Apartments units have wall-to-wall  carpeting in the living areas and vinyl
floors in the kitchen and bath. Each apartment has a cable  television  hook-up,
miniblinds and an individually  controlled  heating and air  conditioning  unit.
Units also  include  ceiling  fans,  intrusion  alarms,  private  balconies  and
door-to-door  trash and  recycling  service.  Each  kitchen is  equipped  with a
refrigerator-freezer,  electric range and oven,  dishwasher,  microwave oven and
garbage  disposal.  All  but 24 of the  units  have a  fireplace  and all of the
two-bedroom units include full-sized washer/dryer connections. The Property also
has valet  laundry  service with free delivery for tenants  without  washers and
dryers.  The  owner of the  Property  pays for gas usage for hot water and trash
removal.  Tenants pay for their  electricity  service,  which includes  cooking,
lighting, heating and air conditioning.  Historically, the owner of the Property
was responsible  for water and sewer charges.  However,  in February,  1997, the
Property  was  converted to  individually-metered  water and sewer  service.  As
leases are renewed or replaced,  the tenants will become  responsible  for these
charges.

     There  are at  least  six  apartment  properties  which  compete  with  the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable when compared with those of the Property. Based on a recent telephone
survey, the Advisor estimates that occupancy in nearby competing  properties now
averages approximately 94%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  93% in 1992, 94% in 1993, 94% in 1994, 95% in
1995  and 96% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 94%. On December 31, 1997, the Property was
93% occupied.  The residents are a mix of white-collar and blue-collar  workers,
students and retired persons.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

          JURISDICTION              ASSESSED VALUE       RATE           TAX

---------------------------------   ----------------   -----------   ------------
<S>                                 <C>                <C>           <C>
County of Tarrant ...............      $3,680,000       $ 1.08135     $ 39,793.68
Grapevine School District  ......       3,680,000         1.53779       56,590.67
                                                                      -----------
 Total   ........................                                     $ 96,384.35
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $3,402,216) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income  Trust,  Inc. a property
acquisition  fee equal to 2% of the purchase price of the Property,  or $79,270.
Cornerstone  Realty  Income Trust,  Inc. will serve as property  manager for the
Property and for its services  will be paid by the Company a monthly  management
fee equal to 5% of the gross  revenues of the  Property  plus  reimbursement  of
certain expenses.

                              TOSCANA APARTMENTS
                                 DALLAS, TEXAS

     On March 31, 1997, the Company purchased the Toscana Apartments, a 192-unit
apartment complex having an address of 17910 Kelly Boulevard, Dallas, Texas (the
"Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates. The purchase price was $5,854,531. The Company paid all but $125,000
in cash using  proceeds from the sale of Shares,  and the balance was paid using
the Unsecured Line of Credit. The borrowed amount was subsequently  repaid using
proceeds  from the sale of Shares.  Title to the  Property  was  conveyed to the
Company by limited warranty deed.

                                      S-16

<PAGE>

     LOCATION.  The  Property  is  located  near the  intersection  of Kelly and
Frankford  in the  north  section  of  Dallas,  Texas,  which  is  part  of "The
Metroplex."  For  information on The  Metroplex,  see  "Brookfield  Apartments,"
herein.

     The  area   surrounding   the  Property   consists   principally  of  other
multi-family  housing and residential,  commercial and retail  development.  The
Property  is  approximately  a  20-minute  drive  from  downtown  Dallas  and an
approximately 20-minute drive from the Dallas/Fort Worth International Airport.

     DESCRIPTION  OF  THE  PROPERTY.  The  Property consists of 192 garden-style
apartment units in six two-story  buildings on approximately four acres of land.
The Property was completed in 1986.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However, the Company currently has budgeted
approximately  $192,000 (and as of December 31, 1997 had expended  approximately
$95,000)   for  repairs  and   improvements,   including   painting,   clubhouse
renovations, parking area repair and interior upgrades.

     The Property offers six different units types. The unit mix and rents being
charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>

                                                      APPROXIMATE
                                                       INTERIOR
                                                        SQUARE       MONTHLY
 QUANTITY                     TYPE                      FOOTAGE       RENTAL
----------   --------------------------------------   ------------   --------
<S>          <C>                                      <C>            <C>
     64      Efficiency                                   500          $450
     52      One bedroom, one bathroom                    600           530
     12      One bedroom, one bathroom                    650           540
      8      One bedroom, one bathroom                    650           550
     42      One bedroom, one bathroom                    700           560
     14      One bedroom, one bathroom (upgraded)         700           575

</TABLE>

     The  apartments  provide a combined total of  approximately  115,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
650 square-foot  apartment  rented for $395 in 1993, $425 in 1994, $470 in 1995,
$490 in 1996, and $540 in 1997. The average  effective  annual rental per square
foot at the  Property  for 1993,  1994,  1995,  1996 and 1997 was $7.68,  $8.26,
$9.13, $9.52 and $9.82, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer,  stucco and painted wood siding on concrete slab foundations.  Roofs are
sloped fiberglass shingles on plywood.

     The Property has an outdoor  swimming  pool with a fountain,  a jacuzzi and
cabana,  a volleyball  area, an  exercise/weights  room, a sauna,  three tanning
beds, an aerobics room with aerobics classes offered,  a billiard room,  limited
access gates and covered parking. The Property also includes a clubhouse.  There
is ample paved parking for tenants.

     Each  apartment  unit has  wall-to-wall  carpeting  in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up,  miniblinds and an individually controlled heating and air conditioning
unit.  Each  kitchen is  equipped  with a  refrigerator/freezer  with  icemaker,
electric range and oven, microwave,  dishwasher and garbage disposal.  Each unit
also includes a wood burning  fireplace,  a stacked  washer/dryer  unit, ceiling
fans, alarm system and vaulted ceilings. The owner of the Property pays for cold
water, sewer service, gas usage for hot water and trash removal. Tenants pay for
their  electricity  usage,  which includes  cooking,  lighting,  heating and air
conditioning.

     There  are at  least  four  apartment  properties  which  compete  with the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 95%.

                                      S-17

<PAGE>

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  95% in 1992, 95% in 1993, 94% in 1994, 96% in
1995  and 96% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 96%. On December 31, 1997, the Property was
94% occupied. The residents are primarily white-collar workers.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

           JURISDICTION               ASSESSED VALUE       RATE           TAX

----------------------------------   ----------------   -----------   ------------
<S>                                  <C>                <C>           <C>
County of Denton   ...............      $4,775,529       $ 0.25590     $ 12,220.58
City of Dallas  ..................       5,972,590         0.65160       38,917.40
Carrollton-Farmers School District       5,972,590         1.49619       89,361.20
                                                                       -----------
 Total ...........................                                      140,499.18
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $5,332,335) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income  Trust,  Inc. a property
acquisition fee equal to 2% of the purchase price of the Property,  or $117,091.
Cornerstone  Realty  Income Trust,  Inc. will serve as property  manager for the
Property and for its services  will be paid by the Company a monthly  management
fee equal to 5% of the gross  revenues of the  Property  plus  reimbursement  of
certain expenses.

                     THE ARBORS ON FOREST RIDGE APARTMENTS
                                BEDFORD, TEXAS

     On April 25,  1997,  the  Company  purchased  The  Arbors  on Forest  Ridge
Apartments,  a 210-unit apartment complex having an address of 2200 Forest Ridge
Drive, Bedford, Texas (the "Property").

     The  seller  was  unaffiliated  with the  Company,  the  Advisor  and their
Affiliates.  The purchase price was $7,748,907.  The Company borrowed the entire
purchase price under the Unsecured Line of Credit and  subsequently  repaid this
borrowed  amount using  proceeds from the sale of Shares.  Title to the Property
was conveyed to the Company by limited warranty deed.

     LOCATION.  The Property is located in Bedford within Tarrant County,  which
is part of "The  Metroplex."  For  information on The Metroplex see  "Brookfield
Apartments" herein.

     Bedford is located between Dallas and Fort Worth,  being  approximately  15
miles east of the Fort Worth  central  business  district and  approximately  20
miles  west  of  the  Dallas  central  business  district.  The  immediate  area
surrounding  the  Property  consists  of other  multi-family  and  single-family
housing and  commercial  and retail  development.  The  Property is located near
restaurants,  businesses,  schools and churches,  and is readily accessible from
Interstates 121 and 183. The Property is an  approximately  10-minute drive from
the Dallas/Fort Worth International Airport.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 210  garden-style
apartment units located in 19 two-story  buildings on approximately 8.9 acres of
land. The Property was completed in 1986.

     The Company  believes that the Property has generally been well  maintained
and is generally in good condition.  However the Company  currently has budgeted
$250,000 (and as of December 31, 1997 had expended  approximately  $230,000) for
repairs and improvements,  including painting, siding repairs, pool renovations,
clubhouse renovations, interior upgrades and landscaping.

                                      S-18

<PAGE>

     The Property  offers a variety of unit types.  The unit mix and rents being
charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                 APPROXIMATE
                                                                  INTERIOR
                                                                   SQUARE       MONTHLY
 QUANTITY                          TYPE                            FOOTAGE       RENTAL
----------   -------------------------------------------------   ------------   --------
<S>          <C>                                                 <C>            <C>
      8      Contemporary One Bedroom/One Bath Basic                 581          $520
     10      Contemporary One Bedroom/One Bath w/Fireplace           581           565
      2      Contemporary One Bedroom/One Bath large                 604           525
      8      Contemporary One Bedroom/One Bath large                 615           535
              w/Fireplace

      9      Luxury One Bedroom/One Bath Down                        684           575
      9      Luxury One Bedroom/One Bath Up                          684           585
     14      Luxury One Bedroom/One Bath Down w/Fireplace            684           615
     14      Luxury One Bedroom/One Bath Up w/Fireplace              684           625
      8      Luxury One Bedroom/One Bath w/View                      684           635
     12      Luxury One Bedroom/One Bath w/View w/Fireplace          684           640
      8      Conventional One Bedroom/One Bath Lofted Study          716           585
     11      Conventional One Bedroom/One Bath Lofted Study          716           600
              w/Fireplace

      9      Conventional One Bedroom/One Bath Lofted Study          750           620
              Large w/Fireplace
     12      Executive One Bedroom/One Bath Down                     775           600
     12      Executive One Bedroom/One Bath Up                       775           610
     12      Executive One Bedroom/One Bath Down w/Fireplace         775           610
     12      Executive One Bedroom/One Bath Up w/Fireplace           775           620
     10      Executive One Bedroom/One Bath Study Down               871           670
     10      Executive One Bedroom/One Bath Study Up                 893           685
      4      Executive One Bedroom/One Bath Study Down               871           720
              w/Fireplace
      4      Executive One Bedroom/One Bath Study Up                 893           735
              w/Fireplace
      6      Executive One Bedroom/One Bath Study                    871           735
              Down w/View
      6      Executive One Bedroom/One Bath Study Up w/View          893           745

</TABLE>

     The  apartments  provide a combined total of  approximately  169,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
one-bedroom, one-bath apartment ("executive-down") rented for $460 in 1993, $500
in 1994,  $545 in 1995,  $560 in 1996, and $600 in 1997.  The average  effective
annual  rental per square foot at the Property for 1993,  1994,  1995,  1996 and
1997 was $6.65, $7.52, $7.88, $8.10 and $9.85, respectively.

     The  buildings  are wood frame  construction  with a  combination  of brick
veneer  and  wood  siding  on  concrete  slab  foundations.  Roofs  are  pitched
composition shingles.

     The Property includes a swimming pool and deck, hot  tub/whirlpool,  weight
room, sand volleyball court,  basketball court, gas grills, picnic area, laundry
room,  curb-side  trash  pick-up  and  access  gates.  The  Property  also has a
clubhouse.  There is ample paved  parking for tenants,  each of whom is assigned
one covered parking space and one uncovered parking space.

     Each apartment unit has wall-to-wall carpeting in the living area and vinyl
floors in the  kitchen  and bath.  Each  apartment  unit has a cable  television
hook-up and an individually  controlled  heating and air conditioning unit. Each
apartment has ceiling fans and a private balcony or patio, and maid service is

                                      S-19

<PAGE>

available for an extra charge. Each kitchen has a refrigerator/freezer  with ice
maker, electric range and oven, dishwasher,  microwave and garbage disposal. All
the apartment  units except the junior one bedroom units have a fireplace.  Some
units also feature decorator  bookcases,  pass through bar, vaulted ceilings and
washer/dryer  connections.  Currently,  the owner of the Property  pays for cold
water,  sewer service and trash removal.  The tenants pay for their  electricity
service,  which  includes  cooking,   lighting,   heating,  hot  water  and  air
conditioning.  The apartment  units have recently  been  separately  metered for
water and sewer charges, and it is expected that tenants will bear these charges
as leases are renewed or new leases are entered into.

     There  are at  least  five  apartment  properties  which  compete  with the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 94%.

     According to information provided by the seller,  physical occupancy at the
Property  averaged  approximately  93% in 1992, 94% in 1993, 96% in 1994, 95% in
1995  and 96% in 1996.  Based in part on  information  provided  by the  seller,
physical  occupancy in 1997 averaged 96%. On December 31, 1997, the Property was
95% occupied.  The residents are a mix of white-collar  and blue-collar  workers
and retired persons.

     The following  table sets forth the 1997 real estate tax information on the
Property:

<TABLE>
<CAPTION>

      JURISDICTION          ASSESSED VALUE       RATE            TAX

-------------------------   ----------------   -----------   ------------
<S>                         <C>                <C>           <C>
County of Tarrant  ......      $6,200,000       $2.531853     $156,978.88
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $7,477,108) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income  Trust,  Inc. a property
acquisition fee equal to 2% of the purchase price of the Property,  or $154,978.
Cornerstone  Realty  Income Trust,  Inc. will serve as property  manager for the
Property and for its services  will be paid by the Company a monthly  management
fee equal to 5% of the gross  revenues of the  Property  plus  reimbursement  of
certain expenses.

                             PACE'S COVE APARTMENTS
                                 DALLAS, TEXAS

     On June 24,  1997,  the Company  purchased  the Pace's Cove  Apartments,  a
328-unit  apartment  complex  at 13100  Pandora  Drive  in  Dallas,  Texas  (the
"Property").  The seller was  unaffiliated  with the Company,  the Advisor,  and
their  Affiliates.  The purchase price was $9,277,355.  The Company borrowed the
entire purchase price under the Unsecured Line of Credit and subsequently repaid
this  borrowed  amount  using  proceeds  from the sale of  Shares.  Title to the
Property was conveyed to the Company by limited warranty deed.

     LOCATION.  The Property is located in the northern portion of Dallas within
"The  Metroplex."  For  information on The Metroplex see "Brookfield Apartments"
herein.

     The neighborhood  surrounding the Property  consists of other  multi-family
and single-family housing and commercial and retail development. The Property is
an approximately  20-minute drive from Dallas/Fort Worth  International  Airport
and an approximately 15-minute drive from downtown Dallas.

                                      S-20

<PAGE>

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 328  garden-style
apartment units located in 19 two- and three-story buildings on approximately 13
acres of land. The Property was constructed in 1982.

     The Company  believes that the Property has generally been well  maintained
and is generally in good  condition.  However,  the Company  initially  budgeted
approximately  $75,000 (and as of December  31, 1997 had expended  approximately
that  amount)  for  certain  repairs  and  improvements,   including   clubhouse
renovations and interior upgrades.

     The Property  offers a variety of unit types.  The unit mix and rents being
charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>

                                                            APPROXIMATE
                                                             INTERIOR
                                                             SQUARE       MONTHLY
 QUANTITY                       TYPE                         FOOTAGE       RENTAL
----------   -------------------------------------------   ------------   --------
<S>          <C>                                           <C>            <C>
     42      One bedroom/one bath                               504         $440
     42      One bedroom/one bath upstairs                      504          450
     40      One bedroom/one bath                               572          460
     40      One bedroom/one bath upstairs                      572          470
     42      One bedroom/one bath w/fireplace                   690          530
     42      One bedroom/one bath w/fireplace upstairs          690          540
     20      One bedroom/one bath/den w/fireplace               757          605
     30      Two bedrooms/two baths w/fireplace                 925          660
     30      Two bedrooms/two baths w/fireplace               1,026          695

</TABLE>

     The  apartments  provide a combined total of  approximately  220,000 square
feet of net rentable area.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
downstairs one-bedroom,  one-bath apartment (504 square feet) rented for $330 in
1993,  $370 in 1994,  $390 in 1995,  $420 in 1996, and $440 in 1997. The average
effective  annual rental per square foot at the Property for 1993,  1994,  1995,
and 1996 was $7.14, $7.14, $8.01, $8.44, $9.09 and $9.80, respectively.

     The  buildings are  wood-frame  construction  with a  combination  of brick
veneer and stucco with  painted  trim on concrete  slab  foundations.  Roofs are
pitched and covered with asphalt shingles on plywood sheathing.

     The  Property  has two  outdoor  swimming  pools,  a hot  tub and  jacuzzi,
volleyball  area,  fitness  center,  laundry  facility  and covered  parking for
approximately  328  vehicles.  The  Property  also  includes a clubhouse  with a
leasing office. There is also ample uncovered paved parking for residents.

     Each apartment unit has wall-to-wall carpeting in the living area and vinyl
floors in the  kitchen  and bath.  Each  apartment  unit has a cable  television
hook-up,  miniblinds,  and an individual heating and air-conditioning unit. Each
kitchen has a  refrigerator/freezer,  electric  range and oven,  dishwasher  and
garbage  disposal.  Each  unit has  full-sized  washer/dryer  connections  and a
security alarm. The owner of the Property pays for cold water, sewer charges and
trash removal. The tenants pay for electricity service,  which includes cooking,
lighting, heating, hot water and air-conditioning.

     There  are at  least  seven  apartment  properties  that  compete  with the
Property.  All offer similar  amenities and generally  have rents that are lower
when compared with those of the Property.  Based on a recent  telephone  survey,
the Advisor estimates that occupancy at nearby competing properties now averages
approximately 94%.

     According to information provided by the Seller,  physical occupancy at the
Property  averaged  approximately  92% in 1992, 91% in 1993, 93% in 1994, 94% in
1995, and 93% in 1996. Based in part on information provided by seller, physical
occupancy in 1997  averaged  94%. As of December 31, 1997,  the Property was 96%
occupied. The residents are a mix of white-collar and blue-collar workers.

                                      S-21

<PAGE>

     The following  table sets forth the 1997 real estate tax information on the
Property.

<TABLE>
<CAPTION>

       JURISDICTION           ASSESSED VALUE       RATE             TAX

---------------------------   ----------------   ------------   ------------
<S>                           <C>                <C>            <C>
   City of Dallas .........      $9,448,220      $0.443070       $ 41,862.23
   County of Dallas  ......       9,448,220       2.11213         199,558.69
                                                                 -----------
   Total ..................                                      $241,420.92
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $8,631,504) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property  will be  adequately
covered by property and liability insurance.

     ACQUISITION  AND MANAGEMENT SERVICES AND FEES. The Company paid Cornerstone
Realty  Income  Trust,  Inc.  a  property  acquisition  fee  equal  to 2% of the
purchase  price  of  the Property, or $185,547. Cornerstone Realty Income Trust,
Inc.  will  also serve as property manager for the Property and for its services
will  be  paid  by the Company a monthly management fee equal to 5% of the gross
revenues of the Property plus reimbursement of certain expenses.

                         REMINGTON HILLS AT LAS COLINAS
                                 IRVING, TEXAS

     On August 6, 1997,  the  Company  purchased  the  Chaparosa  and  Riverhill
Apartments ("Chaparosa" and "Riverhill,"  respectively,  and, collectively,  the
"Property")  located at 1201 Meadow  Creek Drive and 1101  Meadow  Creek  Drive,
respectively,  in Irving,  Texas.  Chaparosa  and Riverhill are adjacent to each
other and the Company now operates  them as a combined  community  under the new
name  "Remington  Hills at Las  Colinas."  The Property  comprises 362 apartment
units. The purchase price for the Property was $13,100,000 (allocated $5,825,000
to Chaparosa and  $7,275,000 to  Riverhill),  and the sellers were  unaffiliated
with the Company,  the Advisor and their  Affiliates.  The Company  borrowed the
entire purchase price under the Unsecured Line of Credit and subsequently repaid
this  borrowed  amount  using  proceeds  from the sale of  Shares.  Title to the
Property was conveyed to the Company by limited warranty deed.

     LOCATION.  The Property is located in the city of Irving,  Texas,  which is
part of "The  Metroplex."  For  information  on The Metroplex,  see  "Brookfield
Apartments"  herein.  For  information  on  Irving,  see  "Eagle  Crest  I &  II
Apartments" herein.

     The  Property is located in the area of Las  Colinas.  The  immediate  area
surrounding  the  Property  consists  of other  multi-family  and  single-family
housing, and commercial and retail development. The Property is an approximately
15-minute drive from downtown Dallas.

     DESCRIPTION  OF THE  PROPERTY.  The  Property  consists  of 362 garden- and
townhouse-style  apartment  units  in  38  two-  and  three-story  buildings  on
approximately 16.8 acres of land.  Chaparosa was built in 1984 and Riverhill was
built in 1985.

                                      S-22

<PAGE>

     The  portion  of the  Property  formerly  known as  Chaparosa  offers  five
different  unit types.  The unit mix and rents  being  charged new tenants as of
December, 1997 are as follows:

<TABLE>
<CAPTION>

                                           APPROXIMATE
                                            INTERIOR
                                             SQUARE       MONTHLY
 QUANTITY               TYPE                 FOOTAGE       RENTAL
----------   ---------------------------   ------------   --------
<S>          <C>                           <C>            <C>
      42     One bedroom/one bath               713         $660
      32     One bedroom/one bath               830          695
      42     Two bedrooms/two baths           1,077          865
      34     Two bedrooms/two baths           1,148          890
      20     Two bedrooms/two baths TH        1,222          905

</TABLE>

     The  portion  of the  Property  formerly  known  as  Riverhill  offers  six
different  unit types.  The unit mix and rents  being  charged new tenants as of
December, 1997 are as follows:

<TABLE>
<CAPTION>
                                                APPROXIMATE
                                                 INTERIOR
                                                  SQUARE       MONTHLY
 QUANTITY                  TYPE                   FOOTAGE       RENTAL
----------   --------------------------------   ------------   --------
<S>          <C>                                <C>            <C>
      32     One bedroom/one bath                    665         $650
      36     One bedroom/one bath                    773          675
      16     One bedroom/1.5 baths TH w/den          928          805
      24     Two bedrooms/two baths                  974          825
      48     Two bedrooms/two baths                1,062          850
      36     Two bedrooms/2.5 baths TH             1,176          890

</TABLE>

     The apartments collectively provide a total of approximately 346,000 square
feet of net rentable area.

     The Company  believes  that  Chaparosa and Riverhill  were  generally  well
maintained  and  are in good  condition.  However,  the  Company  currently  has
budgeted  approximately  $2,000,000  (and as of December  31, 1997 had  expended
approximately $311,000) for repairs and improvements to the Property,  including
foundation  repairs,  painting,  wood  replacement,   clubhouse  renovation  and
appliance and carpet replacement.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased.  As an example, a
two-bedroom, two-bath apartment (1,222 square feet) at Chaparosa rented for $615
in  1993,  $715 in  1994,  $725 in 1995,  $750 in  1996,  and  $905 in  1997.  A
one-bedroom,  one-bath  apartment (665 square feet) at Riverhill rented for $465
in 1993, $485 in 1994, $505 in 1995, $525 in 1996, and $650 in 1997. The average
effective  annual rental per square foot at Chaparosa for 1993, 1994, 1995, 1996
and 1997 was $6.53,  $7.59,  $7.70, $7.96 and $9.10,  respectively.  The average
effective  annual rental per square foot at Riverhill for 1993, 1994, 1995, 1996
and 1997 was $7.29, $7.61, $7.92, $8.24 and $8.72, respectively.

     Buildings are wood-frame  construction with crawl spaces. Roofs are pitched
and covered with red tiles. Exteriors are stucco and brick veneer.

     The portion of the Property formerly known as Chaparosa features an outdoor
swimming pool and hot tub, a lighted tennis court, a central  laundry  facility,
and a clubhouse  with a rental  office and lounge.  The portion of the  Property
formerly  known as  Riverhill  features an outdoor  swimming  pool and  enclosed
whirlpool spa, a lighted tennis court,  and a clubhouse with a kitchen,  lounge,
game room and rental  office.  The  Property  has access to Canal Park and ample
paved parking for tenants.

     All  apartment  units  have  wall-to-wall carpeting in the living areas and
vinyl  floors in the kitchen and baths, as well as cable television hook-ups and
individually  controlled heating and air-conditioning units. Each apartment unit
has  washer/dryer connections, a woodburning fireplace and outside storage. Each

                                      S-23

<PAGE>

kitchen is equipped with a  refrigerator/freezer  with icemaker,  electric range
and oven, microwave,  dishwasher and garbage disposal. The owner of the property
pays for cold water,  sewer service,  cable television,  alarm service and trash
removal. The tenants pay for their electricity service, which includes heat, hot
water, air-conditioning, cooking and lights.

     There  are at  least  five  apartment  properties  that  compete  with  the
Property.  All offer similar  amenities and generally have rents that are higher
when compared to those of the Property.  Based on a recent telephone survey, the
Advisor  estimates  that occupancy in nearby  competing  properties now averages
approximately 95%.

     According  to  information  provided by the seller,  physical  occupancy at
Chaparosa  averaged  approximately 94% in 1992, 94% in 1993, 95% in 1994, 97% in
1995 and 97% in 1996. According to information provided by the seller,  physical
occupancy at Riverhill  averaged  approximately 94% in 1992, 96% in 1993, 95% in
1994, 96% in 1995 and 96% in 1996. Based in part on information  provided by the
seller, physical occupancy in 1997 averaged 95% at both Chaparosa and Riverhill.

     As of December 31, 1997,  occupancy at the Property was 91%. Tenants at the
Property are principally white-collar workers.

     The following  tables set forth the 1997 real estate tax information on the
Property:

CHAPAROSA

<TABLE>
<CAPTION>

          JURISDICTION             ASSESSED VALUE       RATE            TAX

--------------------------------   ----------------   -----------   ------------
<S>                                <C>                <C>           <C>
County of Dallas ...............      $6,053,350       $ 0.44307     $ 26,820.58
City of Irving   ...............       6,053,350         0.49300       29,843.02
Carrollton Farmers Branch School
 District  .....................       6,053,350         1.49619       90,569.62
                                                                     -----------
 Total  ........................                                     $147,233.22
</TABLE>

RIVERHILL

<TABLE>
<CAPTION>

          JURISDICTION             ASSESSED VALUE       RATE            TAX

--------------------------------   ----------------   -----------   ------------
<S>                                <C>                <C>           <C>
County of Dallas ...............      $7,206,540       $ 0.44307     $ 31,930.02
City of Irving   ...............       7,206,540         0.49300       35,528.24
Carrollton Farmers Branch School
 District  .....................       7,206,540         1.49619      107,823.53
                                                                     -----------
 Total  ........................                                     $175,281.79
                                                                     -----------
 GRAND TOTAL  ..................                                     $322,515.01
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property   (currently   estimated  at  about   $10,705,670)  will  generally  be
depreciated over 27.5 years on a straight-line  basis. The basis of the personal
property portion will be depreciated in accordance with the modified accelerated
cost recovery system of the Code.  Amounts to be spent by the Company on repairs
and improvements will be treated for tax purposes as permitted by the Code based
on the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income Trust,  Inc., a property
acquisition  fee equal to 2% of the purchase price of the Property,  or $116,500
for Chaparosa and $145,500 for Riverhill.  Cornerstone Realty Income Trust, Inc.
will serve as property  manager for the Property  and for its  services  will be
paid by the Company a monthly  management  fee equal to 5% of the gross revenues
of the Property plus reimbursement of certain expenses.

                                      S-24

<PAGE>

                                COPPER CROSSING
                               FORT WORTH, TEXAS

     On November 24, 1997, the Company purchased the Copper Crossing  Apartments
located at 5644 Riverwalk Drive in Fort Worth, Texas (The "Property").

     The Property  comprises 200  apartment  units.  The purchase  price for the
Property was $4,750,000. The seller was Copper Crossing Investors, Ltd., a Texas
limited partnership which is not affiliated with the Company,  Apple Residential
Advisors,  Inc. or their  Affiliates.  The entire  purchase price was paid using
proceeds  from the sale of shares.  Title to the  Property  was  conveyed to the
Company by limited warranty deed.

     LOCATION. The Property is located off of Bryant-Irvin in Fort Worth, Texas,
in Tarrant County,  which is part of the greater  Dallas/Fort Worth Consolidated
Metropolitan  Statistical Area, or as it is called locally, "The Metroplex." For
information on The Metroplex, see "Brookfield Apartments" herein.

     The immediate area surrounding the Property consists of other multi-family,
single-family,  commercial and retail development.  The Property is located near
restaurants,  businesses,  schools, and churches, and is readily accessible from
Interstate 20,  Highway 183 and Interstate  820, which are the major highways in
the area.

     The Property is close to Hulen Mall, a major regional  mall.  This regional
mall has spurred significant construction and corresponding retail growth in the
Hulen Mall/Benbrook area. The Property is an approximately  30-minute drive from
the Dallas/Fort Worth International  Airport, an approximately  15-minutes drive
from the Fort Worth central  business  district and an  approximately  30-minute
drive from the Dallas central business district.

     DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 200  garden-style
apartment units in 13 two-story  buildings on  approximately  6.9 acres of land.
The Property was constructed in 1981.

     The  Property  offers four  different  unit  types.  The unit mix and rents
currently being charged new tenants as of December, 1997 are as follows:

<TABLE>
<CAPTION>

                                                 APPROXIMATE
                                                  INTERIOR
                                                   SQUARE       MONTHLY
   QUANTITY                   TYPE                 FOOTAGE       RENTAL
---------------   ----------------------------   ------------   --------
<S>               <C>                            <C>            <C>
      56          One bedroom/one bathroom           563          $425
      40          One bedroom/one bathroom           663           435
      32          One bedroom/one bathroom           745           500
      72          Two bedrooms/two bathrooms         915           590
</TABLE>

     The apartments provide a total of approximately  148,000 square feet of net
rental area.

     The Company  believes that the Property has generally been well  maintained
and is in good  condition.  According  to the seller,  in the past two years the
seller  spent over  $400,000  in capital  improvements  to the  exterior  of the
Property,   including  new  roofs,  exterior  rehabilitation,   and  repair  and
replacement of awnings.

     The Company  currently has budgeted  approximately  $100,000 for additional
capital improvements to the Property.  These improvements will include clubhouse
renovations and upgrading the landscaping at the Property.  In addition,  at the
time that the Company  acquired the Property there were 12 apartment units which
had been damaged by fire.  These damaged  apartment  units are  currently  being
repaired and are all expected to be available for  occupancy by April 1998.  All
costs of the repair are being  funded with the  proceeds  of  Property  casualty
insurance.

     Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have both  increased and  decreased.  As an
example, a one-bedroom, one-bathroom apartment unit (563 square feet) rented for
$300 in 1993,  $299 in 1994,  $315 in 1995,  $345 in 1996, and $425 in 1997. The
average  effective annual rental per square foot at the Property for 1993, 1994,
1995, 1996 and 1997 was $5.74, $5.72, $6.03, $6.60 and $7.08, respectively.

                                      S-25

<PAGE>

     The  buildings are  wood-frame  construction  with a  combination  of brick
veneer and masonite hardboard on reinforced concrete slab foundations. Roofs are
sloped fiberglass shingled on plywood.

     The  Property  has an outdoor  swimming  pool with a large deck,  a fitness
center, a laundry facility,  a sand volleyball court and picnic areas.  There is
also a clubhouse  which  includes an  entertainment  area and a leasing  office.
There is ample paved parking for the tenants.

     All  apartment  units have  wall-to-wall  carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually  controlled  heating and air conditioning unit. Each
kitchen  is  equipped  with a  refrigerator/freezer,  electric  range  and oven,
dishwasher  and  garbage  disposal.   Each  apartment  unit  has  a  woodburning
fireplace,  a screened porch or balcony,  ceiling fans, mini blinds and vertical
blinds.  The  largest  one-bedroom  units  and  the  two-bedroom  units  include
full-sized  washer/dryer  connections.  The owner of the Property  pays for cold
water, gas usage for hot water, sewer service and trash removal. Tenants pay for
their own electricity service, which includes cooking, lighting, heating and air
conditioning.

     There  are at  least  five  apartment  properties  that  compete  with  the
Property.  All  offer  similar  amenities  and  generally  have  rents  that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Advisor estimates that occupancy in the nearby competing properties now averages
approximately 94%.

     According to information provided by the Seller,  physical occupancy at the
Property  averaged  approximately  85% in 1992, 87% in 1993, 96% in 1994, 95% in
1995,  94% in 1996,  and 95% during 1997. As of December 31, 1997,  the Property
was 91% occupied,  counting as vacant the 12 units recently  damaged by fire. Of
the 188 units  available  for  rental,  182,  or 96% of 188,  were  rented as of
December 31, 1997. The tenants are a mix of  white-collar  workers,  blue-collar
workers, students and retired persons.

     The following  table sets forth the 1997 real estate tax information of the
Property:

<TABLE>
<CAPTION>

                             ASSESSED
      JURISDICTION            VALUE          RATE           TAX
-------------------------   ------------   -----------   ------------
<S>                         <C>            <C>           <C>
County of Tarrant  ......    $3,300,000     $ 2.01160     $ 66,382.67
City of Benbrook   ......     3,300,000       0.78500       25,905.00
                                                          -----------
 Total ..................                                 $ 92,287.67
</TABLE>

     The basis of the  depreciable  residential  real  property  portion  of the
Property (currently estimated at about $3,988,383) will generally be depreciated
over 27.5 years on a  straight-line  basis.  The basis of the personal  property
portion will be depreciated  in accordance  with the modified  accelerated  cost
recovery  system of the Code.  Amounts to be spent by the Company on repairs and
improvements  will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.

     The Advisor and the Company  believe that the Property is and will continue
to be adequately covered by property and liability insurance.

     ACQUISITION AND MANAGEMENT  SERVICES AND FEES. In consideration of services
rendered to the Company in connection  with the selection and acquisition of the
Property,  the Company paid  Cornerstone  Realty Income Trust,  Inc., a property
acquisition  fee equal to 2% of the purchase price of the Property,  or $95,000.
Cornerstone  Realty  Income Trust,  Inc. will serve as property  manager for the
Property and for its services  will be paid by the Company a monthly  management
fee equal to 5% of the gross  revenues of the  Property  plus  reimbursement  of
certain expenses.

                                      S-26