UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                            FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended September 30, 1996
                                or
[  ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the transition period from             to                    

Commission File Number:   0-17094       

USAA Real Estate Income Investments II Limited Partnership  
(Exact name of registrant as specified in its charter)   
  
Texas                                 74-2473951        
(State or other jurisdiction of     (I.R.S. Employer
incorporation or organization)     Identification No.)

8000 Robert F. McDermott Fwy., IH 10 West, Suite 600 
San Antonio, Texas                           78230-3884  
(Address of principal executive offices)     (Zip Code)

(210) 498-7391  
(Registrant's telephone number, including area code)

N/A 
(Former name, former address and former fiscal year, if changed
since last report.)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                             [X]  Yes   [ ]  No

                             1
<PAGE>
                              PART I

                  Item 1.  Financial Statements

<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Balance Sheets
<CAPTION>


                                                   September 30,
                                                       1996           June 30,
                                                    (Unaudited)         1996
<S>                                              <C>                  <C> 
Assets
Rental properties, net                           $    9,414,967        9,493,829
Investment in joint venture                           2,141,468        2,147,966
Temporary investments, at cost 
   which approximates market value -
      Money market fund                                 687,820          804,821
Cash                                                    137,209           30,737
   Cash and cash equivalents                            825,029          835,558

Accounts receivable                                       3,171               --
Deferred charges and other assets                       257,133          230,824

                                                 $   12,641,768       12,708,177


Liabilities and Partners' Equity
Accounts payable, including amounts due 
   to affiliates of $6,259 and $7,981            $       45,992          113,426
Accrued expenses and other liabilities                  184,876          172,579
         Total liabilities                              230,868          286,005

Partners' equity
   General Partner:
      Capital contribution                                1,000            1,000
      Cumulative net income                             702,694          677,435
      Cumulative distributions                         (737,330)        (710,943)
                                                        (33,636)         (32,508)

   Limited Partners (27,141 interests):
      Capital contributions, net of offering 
         costs                                       12,756,270       12,756,270
      Cumulative net income                           6,324,239        6,096,899
      Cumulative distributions                       (6,635,973)      (6,398,489)
                                                     12,444,536       12,454,680
         Total Partners' equity                      12,410,900       12,422,172
                                                 $   12,641,768       12,708,177


See accompanying notes to condensed financial statements.
</TABLE>
                             2

<PAGE>
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Statements of Income
(Unaudited)
<CAPTION>

                                                   Three Months     Three Months
                                                       Ended            Ended
                                                   September 30,    September 30,
                                                       1996             1995
<S>                                              <C>                     <C>
Income
Rental income                                    $      331,051          260,375
Equity in earnings of joint venture                      37,152           40,355
Less direct expenses, including depreciation
  of $78,362 and $59,760                                (79,162)         (63,689)
    Net operating income                                289,041          237,041
Interest income                                           9,488           27,869
    Total income                                        298,529          264,910

Expenses
General and administrative (note 1)                      45,930           35,356
Net income                                       $      252,599          229,554

Net income per limited partnership interest      $         8.38             7.61


See accompanying notes to condensed financial statements.
</TABLE>
                             3


<PAGE>
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Statements of Cash Flows
Three months ended September 30, 1996 and 1995
(Unaudited)
<CAPTION>



                                                       1996             1995
<S>                                              <C>                   <C>  
Cash flows from operating activities:
   Net income                                    $      252,599          229,554
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Depreciation                                    78,362           59,760
         Amortization                                       632              632
         Earnings from joint venture                    (37,152)         (40,355)
         Distributions from joint venture                43,650           58,200
         Decrease (increase) in accounts receivable      (3,171)           6,000
         Decrease (increase) in deferred charges
            and other assets                            (26,941)          11,785
         Decrease in accounts payable and 
            other liabilities                           (55,137)         (38,248)
         Other adjustments                                  500               --

            Cash provided by operating activities       253,342          287,328

Cash flows used in investing activities -
   Additions to rental properties                            --         (122,417)

Cash flows used in financing activities -
   Payment of distributions                            (263,871)        (211,096)

Net decrease in cash and cash equivalents               (10,529)         (46,185)

Cash and cash equivalents at beginning of period        835,558        2,007,371

Cash and cash equivalents at end of period       $      825,029        1,961,186



See accompanying notes to condensed financial statements.
</TABLE>
                             4
<PAGE>
Notes to Condensed Financial Statements
September 30, 1996
(Unaudited)


1. Transactions with Affiliates

  A summary of transactions with affiliates follows for the three
  months ended September 30, 1996:

                                   Quorum
                      USAA       Real Estate
                   Real Estate    Services
                     Company     Corporation

Reimbursement
  of expenses (a)$     15,253           624
Management fees            --         3,254
Lease commissions          --        10,460
    Total        $     15,253        14,338


  (a)  Reimbursement of expenses represents amounts paid or
       accrued as reimbursement of expenses incurred on behalf
       of the Partnership at actual cost and does not include
       any mark-up or items normally considered as overhead.


2. Other

  Reference is made to the financial statements in the Annual
  Report filed as part of the Form 10-K for the year ended June
  30, 1996 with respect to significant accounting and financial
  reporting policies as well as to other pertinent information
  concerning the Partnership.  Information furnished in this
  report reflects all normal recurring adjustments which are, in
  the opinion of management, necessary for a fair presentation of
  the results for the periods presented.  Further, the operating
  results presented for these interim periods are not
  necessarily indicative of the results which may occur for the
  remaining nine months of this fiscal year or any other future
  period.

  The financial information included in this interim report as
  of September 30, 1996 and for the three months ended September
  30,1996 and 1995 has been prepared by management without audit
  by independent certified public accountants who do not express
  an opinion thereon. The Partnership's annual report includes
  audited financial statements.

                             5
<PAGE>

                              PART I

    Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations

Liquidity and Capital Resources

At September 30, 1996, the Partnership had cash of $137,209 and
temporary investments of $687,820.  These funds were held in the
working capital reserve for the payment of obligations of the
Partnership.  Deferred charges and other assets included an
acquisition fee paid in 1988 to USAA Investors II, Inc., the
General Partner, in connection with the acquisition of the
interest in the joint venture which owns Sequoia Plaza - Building
I.  Deferred charges also included deferred rent resulting from
recognition of income as required by generally accepted
accounting principles.  Accounts payable included amounts due to
affiliates for reimbursable expenses and to third parties for
expenses incurred for operations.  Accrued expenses and other
liabilities consisted primarily of a security deposit, accrued
property taxes and prepaid rent. 

During the quarter ended September 30, 1996, the Partnership
distributed $237,484 to Limited Partners and $26,387 to the
General Partner for a total of $263,871.

Future liquidity is expected to result from cash generated from
operations of the properties and ultimately through the sale of
such properties, equity in earnings of the joint venture,
interest on temporary investments, and the possible participation
in the profits from the sale of the underlying assets of the
joint venture.

Results of Operations

For the three months ended September 30, 1996 and 1995, income
was generated from rental income from the income-producing
properties, earnings from the joint venture investment and
interest income earned on the funds invested in temporary
investments. 

Expenses incurred during the same periods were associated with
operation of the Partnership's properties and various other costs
required for administration of the Partnership.

Rental properties at September 30, 1996 decreased from June 30,
1996 due to depreciation.  Deferred charges and other assets at
September 30, 1996 increased from June 30, 1996 due to deferred
rent at Continental Plastic.  

Rental income for the three months ended September 30, 1996 was
higher than the three months ended September 30, 1995 as a result
of the lease renewal and the building addition at Continental
Plastic.  Depreciation increased for the three months ended
September 30, 1996 due to depreciation on the building addition
          
                             6
<PAGE>

at Continental Plastic.  Other direct expenses decreased for the
three months ended September 30, 1996 due to an increase in
reimbursements from tenants.

Interest income decreased as a result of lower cash balances for
the three months ended September 30, 1996 as compared to the
three months ended September 30, 1995.

General and administrative expenses for the three months ended
September 30, 1996 increased as compared to the three months
ended September 30, 1995 due to lease commissions paid at the
Continental Plastic building on the lease renewal.

                             7
<PAGE>
                             PART II

                                 
Item 6.    Exhibits and Reports on Form 8-K

(a)    Exhibits  

                                                Sequentially
 Exhibit                                          Numbered
   No.                  Description                 Page

   4     Amended and Restated Agreement of 
         Limited Partnership dated as of February
         11, 1988, attached as Exhibit A to
         the Partnership's Prospectus dated
         February 11, 1988, filed pursuant to
         Rule 424(b), Registration No. 33-16479
         and incorporated herein by this reference.  --

  27     Financial Data Schedule                     10


(b) During the quarter ended September 30, 1996, there were no
    Current Reports on Form 8-K filed.
                                 
                             8
<PAGE>
                            FORM 10-Q
                            SIGNATURES

    USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP


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



USAA REAL ESTATE INCOME INVESTMENTS II
LIMITED PARTNERSHIP (Registrant)

BY:  USAA Investors II, Inc., 
     General Partner


November 12, 1996         BY: /s/Edward B. Kelley
                          Edward B. Kelley 
                          Chairman, President and
                          Chief Executive Officer



November 12, 1996         BY: /s/Martha J. Barrow
                          Martha J. Barrow
                          Vice President -
                          Administration and 
                          Finance/Treasurer  


                             9