Item 2.  Acquisition or Disposition of Assets

                             BITTER CREEK APARTMENTS
                              Grand Prairie, Texas

         On May 8,  1998,  Apple REIT  Limited  Partnership  (together  with its
parent company,  Apple Residential Income Trust, Inc., the "Company")  purchased
the Bitter Creek  Apartments  located at 2934 Alouette in Grand  Prairie,  Texas
(the "Property").

         The Property  comprises 472 apartment units. The purchase price for the
Property was  $13,505,000.  The seller was Bitter  Creek,  L.P., a Texas limited
partnership  which  was not  affiliated  with  the  Company,  Apple  Residential
Advisors, Inc. (the "Advisor") or their affiliates.  The purchase price was paid
entirely in cash using  proceeds  from the sale of common shares of the Company.
Title to the Property was conveyed to the Company by limited warranty deed.

         LOCATION.  The  Property  is located on Highway  360 in Grand  Prairie,
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." The following information is based in part upon information provided
by the Dallas Chamber of Commerce.

         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.  The Dallas metropolitan area is the second largest in
the state, behind Houston.

         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
17,600 acres of land between the two cities. It is the second largest commercial
airport in the United  States in terms of land area,  and is the second  busiest
airport in the world, with more than 2,500 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



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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  immediate  area   surrounding  the  Property   consists  of  other
multi-family housing,  single-family housing, commercial and retail development.
The Property is an  approximately  10-minute  drive from the  Dallas/Fort  Worth
International Airport, an approximately 20-minute drive from downtown Fort Worth
and an approximately 20-minute drive from downtown Dallas.

         DESCRIPTION  OF THE  PROPERTY.  The Property  consists of 472 apartment
units in 36  buildings  on  approximately  20.7 acres of land.  The Property was
constructed in 1982.

         The Property  offers five different unit types.  The unit mix and rents
being charged new tenants as of March 1998 are as follows:

<TABLE>
<CAPTION>
                                                Approximate Interior
    Quantity                    Type              Square Footage        Monthly Rental
    --------                    ----              --------------        --------------
<S>                <C>                             <C>                <C> 
       48             One bedroom, one                   600                $439
                      bathroom
      192             One bedroom, one                   720                 459
                      bathroom
      128             Two bedrooms, two                  950                 529
                      bathrooms
       72             Two bedrooms, two                1,000                 579
                      bathrooms
       32             Three bedrooms, two              1,150                 699
                      bathrooms
</TABLE>

         All unit  types are  available  with a  fireplace  for an extra $10 per
month. The apartments  provide a total of  approximately  397,000 square feet of
net rentable area.


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<PAGE>



         The  Company  believes  that  the  Property  has  generally  been  well
maintained  and  is  in  good  condition.  However,  the  Company  has  budgeted
approximately  $354,000 for repairs and capital  improvements  to the  Property.
These repairs and  improvements  will include  clubhouse  renovations,  exterior
painting and wood replacement, interior upgrades and a new fitness center.

         The following information is provided by the seller. Physical occupancy
at the property  averaged  approximately  94% in 1993, 92% in 1994, 91% in 1995,
92% in 1996 and 96% in 1997.  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-bathroom  apartment (1,000 square
feet) rented for $499 in 1993, $509 in 1994, $519 in 1995, $529 in 1996 and $539
in 1997. The average effective annual rental per square foot at the property for
1993,  1994,  1995,  1996  and 1997 was  $6.83,  6.96,  7.10,  7.24,  and  7.37,
respectively.

         The Property has two outdoor  swimming pools with  fountains,  a tennis
court,  four laundry  facilities and a sand  volleyball  court.  There is also a
clubhouse with a kitchen, entertainment area and a leasing office.

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

         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
kitchen has a  refrigerator/freezer,  electric  range and oven,  dishwasher  and
garbage  disposal.   Each  unit  (except  the  smallest  one-bedroom  unit)  has
full-sized  washer/dryer  connections.  A total of 232  units  have  woodburning
fireplaces,  and each  second-floor  unit has  vaulted  ceilings.  Each unit has
walk-in closets,  outside storage,  a covered balcony or patio and ceiling fans.
The owner of the  property  pays for cold  water,  sewer  charges,  gas (for hot
water)  and trash  removal.  The  tenants  pay for  electricity  service,  which
includes cooking, lighting, heating and air-conditioning.

         There  are at least  12  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  at  nearby  competing  properties  averaged
approximately 92% at March 31, 1998.

         As of April 14, 1998, the Property was approximately 92% occupied.


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<PAGE>



         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                     $8,700,000               $1.99520                  $173,582.05
City of Grand Prairie                  8,929,790                0.68000                    60,722.40
       Total                                                                             $234,304.45
</TABLE>

         The basis of the depreciable  residential  real property portion of the
Property  (currently  estimated at about  $10,526,521)  will 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 Internal Revenue Code of 1986, as amended (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.

         MATERIAL  FACTORS  CONSIDERED IN ASSESSING  THE  PROPERTY.  The factors
considered  by the Advisor and the  Company to be  relevant  in  evaluating  the
Property for acquisition by the Company included the following:

         1. The Dallas/Fort  Worth area generally and the specific area in which
the Property is located  were  perceived  as being  characterized  by a diverse,
stable and steadily  growing  economy.  Accordingly,  it was believed  that such
economy  and  its  anticipated  growth  and  development  would  support  stable
occupancy rates and reasonable increases in rents at the Property.

         2.  Based  upon an  engineering  report  and its own  inspections,  the
Advisor  believes that the Property has been well maintained and is generally in
good  condition,  although  the Advisor  believes  that the planned  repairs and
improvements will allow an increase in rents at the Property.

         3. The Property has an advantageous  location -  approximately  mid-way
between  Dallas  and Fort  Worth and near the  Dallas/Fort  Worth  International
Airport - and is  located  in a  rapidly-growing  area  proximate  to centers of
employment and retail development.

         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 $270,000.  Cornerstone  Realty  Income  Trust,  Inc. will serve as
property  manager  for the  Property  and for its  services  will be paid by the
Company a


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<PAGE>



monthly  management  fee equal to 5% of the gross  revenues of the Property plus
reimbursement of certain expenses.

         The Company is not aware of any material  adverse  factors  relating to
the  Property  not set forth in this  report  that  would  cause  the  financial
information contained in this report not to be necessarily  indicative of future
operating results.


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