FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                        Quarterly or Transitional Report



                   U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                For the quarterly period ended March 31, 2002


[ ]   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 0-14483


                  Davidson Diversified Real Estate II, L.P.
      (Exact name of small business issuer as specified in its charter)



           Delaware                                              62-1207077
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                       55 Beattie Place, P.O. Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.
Yes X  No___
<PAGE>
                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

a)

                  Davidson Diversified Real Estate II, L.P.

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)
                       (in thousands, except unit data)

                                 March 31, 2002

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   772
   Receivables and deposits                                                      257
   Restricted escrows                                                            269
   Other assets                                                                  670
   Investment properties:
      Land                                                    $ 2,603
      Buildings and related personal property                   47,761
                                                                50,364
      Less accumulated depreciation                            (25,833)       24,531

                                                                            $ 26,499
Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                          $ 329
   Tenant security deposit liabilities                                           147
   Accrued property taxes                                                        398
   Other liabilities                                                             430
   Due to an affiliate                                                         6,790
   Mortgage notes payable                                                     25,984

Partners' Deficit
   General partners                                            $ (587)
   Limited partners (1,224.25 units issued and
      outstanding)                                              (6,992)       (7,579)

                                                                            $ 26,499

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>
<PAGE>
b)


                  Davidson Diversified Real Estate II, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                     (in thousands, except per unit data)

<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                       March 31,
                                                                 2002          2001
Revenues:
<S>                                                            <C>            <C>
   Rental income                                               $ 1,566        $ 1,547
   Other income                                                     168           174
      Total revenues                                              1,734         1,721

Expenses:
   Operating                                                        771           869
   General and administrative                                        90            88
   Depreciation                                                     497           493
   Interest                                                         398           534
   Property taxes                                                   114           113
      Total expenses                                              1,870         2,097

Loss before extraordinary item                                     (136)         (376)
Extraordinary loss on early extinguishment of debt
   (Note C)                                                          --          (554)

   Net loss                                                     $ (136)       $ (930)

Net loss allocated to general partners (2%)                      $ (3)         $ (19)
Net loss allocated to limited partners (98%)                       (133)         (911)

                                                                $ (136)       $ (930)
Per limited partnership unit:
   Loss before extraordinary item                              $(108.64)     $(300.59)
   Loss on early extinguishment of debt                              --       (443.54)

Net loss                                                       $(108.64)     $(744.13)

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
c)

                  Davidson Diversified Real Estate II, L.P.

            CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                                   (Unaudited)
                       (in thousands, except unit data)

<TABLE>
<CAPTION>

                                       Limited
                                     Partnership     General      Limited
                                        Units        Partners    Partners     Total

<S>                                   <C>              <C>        <C>        <C>
Original capital contributions        1,224.25         $ 1        $24,485    $24,486

Partners' deficit at
   December 31, 2001                  1,224.25        $ (584)     $(6,859)   $(7,443)

Net loss for the three months
   ended March 31, 2002                    --             (3)        (133)      (136)

Partners' deficit at
   March 31, 2002                     1,224.25        $ (587)     $(6,992)   $(7,579)

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
d)
                  Davidson Diversified Real Estate II, L.P.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                (in thousands)
<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                       March 31,
                                                                   2002        2001
Cash flows from operating activities:
<S>                                                               <C>         <C>
  Net loss                                                        $ (136)     $ (930)
  Adjustments to reconcile net loss to net cash provided by
   (used in) operating activities:
     Depreciation                                                    497         493
     Amortization of discounts and loan costs                         91          62
     Extraordinary loss on early extinguishment of debt               --         554
     Change in accounts:
      Receivables and deposits                                       (64)       (139)
      Other assets                                                  (107)       (144)
      Accounts payable                                              (387)       (197)
      Tenant security deposit liabilities                              8           4
      Accrued property taxes                                         (58)        (30)
      Due to affiliate                                               276         109
      Other liabilities                                               73        (135)
        Net cash provided by (used in) operating activities          193        (353)

Cash flows from investing activities:
  Property improvements and replacements                          (2,917)       (237)
  Net (deposits to) withdrawals from restricted escrows              (39)        308
        Net cash (used in) provided by investing activities       (2,956)         71

Cash flows from financing activities:
  Advances from Managing General Partner                           1,200       3,847
  Payments on mortgage notes payable                                (126)       (116)
  Proceeds from mortgage note payable                              1,737       5,065
  Repayment of mortgage note payable                                  --      (7,812)
  Prepayment penalty                                                  --        (359)
  Loan costs paid                                                    (19)       (417)
        Net cash provided by financing activities                  2,792         208

Net increase (decrease) in cash and cash equivalents                  29         (74)
Cash and cash equivalents at beginning of period                     743       1,130

Cash and cash equivalents at end of period                        $ 772      $ 1,056

Supplemental disclosure of cash flow information:
  Cash paid for interest                                          $ 394       $ 338
Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts payable       $ --        $ 27

At  December  31, 2001  approximately  $850,000  of  property  improvements  and
replacements  were  included  in accounts  payable and are  included in property
improvements and replacements at March 31, 2002.

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>
e)

                  Davidson Diversified Real Estate II, L.P.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  of  Davidson
Diversified Real Estate II, L.P. (the  "Partnership" or "Registrant")  have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of Davidson Diversified  Properties,  Inc.
(the  "Managing  General  Partner"),   all  adjustments  (consisting  of  normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating results for the three month period ended March 31, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 2002. For further  information,  refer to the  consolidated
financial  statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended  December 31, 2001. The Managing
General Partner is a subsidiary of Apartment  Investment and Management  Company
("AIMCO"), a publicly traded real estate investment trust.

Certain  reclassifications have been made to the 2001 balances to conform to the
2002 presentation.

Note B - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for (i) certain
payments to affiliates for services and (ii)  reimbursement  of certain expenses
incurred by affiliates on behalf of the Partnership.

During  the three  months  ended  March 31,  2002 and  2001,  affiliates  of the
Managing  General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's  properties for providing property management services.  The
Registrant paid to such affiliates  approximately $87,000 and $88,000 during the
three months ended March 31, 2002 and 2001,  respectively,  which is included in
operating expenses.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $628,000 and
$65,000  during the three  months  ended March 31, 2002 and 2001,  respectively,
which  is  included  in  general  and  administrative  expenses  and  investment
properties.   Included  in  these  amounts  are  fees  related  to  construction
management  services provided by an affiliate of the Managing General Partner of
approximately  $559,000 for the three months ended March 31, 2002. There were no
construction  management  service  fees paid or accrued  during the three months
ended March 31, 2001. The construction management fees are calculated based on a
percentage of additions to investment properties.

In accordance with the Partnership  Agreement,  the Managing General Partner has
advanced the Partnership  funds to cover  operational  expenses and to assist in
the closing of the refinancing required at Reflections Apartments.  At March 31,
2002,  the  amount  of the  outstanding  loans  and  accrued  interest  to cover
operational  expenses  was  approximately  $3,065,000  and  the  amount  of  the
outstanding   loan  and  accrued   interest  to  assist  the   refinancing   was
approximately  $3,725,000.  Both amounts are included in Due to affiliate on the
accompanying  consolidated balance sheet.  Interest is charged at prime plus 1%.
Interest  expense was  approximately  $83,000 and  $109,000 for the three months
ended March 31, 2002 and 2001, respectively.

The Partnership  accrued a real estate  commission of $18,000 as a result of the
sale of Shoppes at River Rock due to the  Managing  General  Partner  during the
year ended  December  31,  1999 which is included  in other  liabilities  in the
accompanying   consolidated   balance  sheet.  Payment  of  this  commission  is
subordinate to the limited  partners  receiving their original  invested capital
plus a cumulative  non-compounded annual return of 8% on their adjusted invested
capital.

Beginning in 2001, the  Partnership  began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally  self-insured for a
portion of losses and  liabilities  related  to workers  compensation,  property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO  limits  through  insurance  policies  obtained  by  AIMCO  from  insurers
unaffiliated  with the Managing General  Partner.  During the three months ended
March 31, 2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately  $105,000 and $116,000,  respectively,  for insurance coverage and
fees associated with policy claims administration which is included in operating
expenses.

Note C - Refinancing of Mortgage Note Payable

On January 16, 2001,  the  mortgages  encumbering  Reflections  Apartments  were
refinanced in order to finance the  rehabilitation of the property.  The maximum
new loan amount is $13,600,000.  Effective  January 16, 2001, the lender made an
initial  advance of  $5,040,000.  Prior to the  initial  advance,  the  Managing
General Partner loaned the Partnership approximately $3,673,000 in order for the
Partnership to close the refinancing of the property. This amount will be repaid
from the  further  refinancing  that  will  occur  after the  completion  of the
rehabilitation  project,  estimated to be September 2002.  During the year ended
December 31, 2001,  the lender  advanced  Reflections  Apartments  an additional
amount of  approximately  $3,845,000 and during the three months ended March 31,
2002 the  lender  advanced  Reflections  Apartments  an  additional  $1,737,000.
Subsequent  advances of up to $2,978,000  will also be made to cover  renovation
work that is needed at the property.  The new loan matures in January 2004, with
2 one-year extension  options.  Interest payments started in February 2001 based
on  LIBOR  plus  280  basis  points  (4.63%  at  March  31,  2002).  Due  to the
rehabilitation  project,  approximately  $174,000  and  $43,000 of the  interest
expense for the three  months ended March 31, 2002 and 2001,  respectively,  was
capitalized.  During  December 2001, the  Partnership  adjusted the  accumulated
expenditures  used in  calculating  capitalized  interest  which  resulted in an
overall  decrease  in fourth  quarter  2001  interest  expense of  approximately
$190,000.  The impact on the first  quarter of 2001 was an  increase in interest
expense of approximately  $28,000. In addition,  monthly cash flow payments will
be made to the lender until the anticipated  completion date of the renovations.
If any  amount  remains  from  these  advances  on the  completion  date  of the
renovation, it will be applied to the principal balance. Principal payments will
begin in February 2003, and monthly deposits into a replacement  reserve will be
required.  In connection with the  refinancing,  the  Partnership  incurred loan
costs of  approximately  $469,000  during  the year  ended  December  31,  2001.
Additional  loan costs of  approximately  $19,000 were incurred during the three
months  ended March 31,  2002.  These loan costs are included in other assets in
the  accompanying  consolidated  balance sheet and are being  amortized over the
life of the  mortgage.  In  connection  with the  refinancing,  the  assets  and
liabilities of the property were  transferred  from one  subsidiary,  Big Walnut
L.P.,  to a  newly  formed  subsidiary,  AIMCO  Greensprings  L.P.  The  loan is
collateralized  by the property as well as the interest of both the  Partnership
and Davidson  Diversified  Properties,  Inc. in AIMCO  Greensprings L.P. The new
mortgage  replaced a first  mortgage of  approximately  $7,518,000  and a second
mortgage of approximately  $294,000. The Partnership recognized an extraordinary
loss on the early extinguishment of debt of approximately $554,000 consisting of
a prepayment penalty of approximately  $359,000 and the write-off of unamortized
loan costs and mortgage discounts of approximately $195,000.

Note D - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants oppose the motion. On April 29, 2002, the Court heard argument on the
motion and ordered  further  briefing  after which time the matter will be taken
under submission. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained in this Form 10-QSB and other filings with the Securities
and Exchange Commission made by the Registrant from time to time. The discussion
of  the   Registrant's   business   and   results   of   operations,   including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2002 and 2001:

                                                 Average Occupancy
                                                 2002        2001
         Big Walnut Apartments
            Columbus, Ohio (1)                    97%         82%

         LaFontenay I & II Apartments
            Louisville, Kentucky (2)              85%         89%

         The Trails Apartments
            Nashville, Tennessee                  93%         93%

         Reflections Apartments
            Indianapolis, Indiana (3)             35%         42%

(1)   The Managing  General Partner  attributes the increase in occupancy at Big
      Walnut  Apartments  to an improved job market and reduced  average  rental
      rates.

(2)   The  Managing  General  Partner  attributes  the  decrease in occupancy at
      LaFontenay I & II Apartments to poor market  conditions and tenants buying
      homes due to low interest rates.

(3)   The  Managing  General  Partner  attributes  the  decrease in occupancy at
      Reflections  Apartments to construction  at the property.  The property is
      currently  undergoing a major renovation project to enhance the appearance
      of the property to attract desirable tenants.  At March 31, 2002 47.25% of
      the units cannot be rented due to the rehabilitation.

Results of Operations

The  Registrant's  net loss for the  three  months  ended  March 31,  2002,  was
approximately  $136,000 compared to a net loss of approximately $930,000 for the
three months ended March 31, 2001. The decrease in net loss was partially due to
the  extraordinary  loss from the early  extinguishment  of debt  related to the
refinancing  of  Reflections  Apartments  in  January  2001 (see  discussion  in
"Liquidity and Capital  Resources").  The loss before the extraordinary item was
approximately  $136,000 for the three months ended March 31, 2002 as compared to
approximately  $376,000 for the three months ended March 31, 2001.  The decrease
in loss before the  extraordinary  item is due to a decrease  in total  expenses
and, to a lesser extent, an increase in total revenues.

Total  expenses  decreased due to decreases in operating and interest  expenses.
Operating  expense  decreased  primarily  due to decreases in contract  courtesy
patrol expense and operating costs capitalized as part of the renovation project
at Reflections  which were offset by an increase in utility expense primarily at
Reflections  Apartments.  Interest expense decreased due to the new financing at
Reflections  Apartments  with variable rate interest that is lower than the 7.6%
rate on the  old  mortgage  and to a  portion  of the  interest  on the  debt at
Reflections  being capitalized as part of the renovation  project.  In addition,
interest on advances from the Managing General Partner  decreased due to a lower
average  interest rate.  These decreases were partially offset by increased loan
cost   amortization   at  Reflections   Apartments.   Included  in  general  and
administrative  expenses  are  reimbursements  to the Managing  General  Partner
allowed under the  Partnership  Agreement  associated with its management of the
Partnership.  Costs associated with the quarterly and annual communications with
investors  and  regulatory  agencies  and  the  annual  audit  required  by  the
Partnership Agreement are also included in general and administrative expenses.

Total revenues increased due to an increase in rental income which was partially
offset by a decrease in other  income for the three months ended March 31, 2002.
Rental income increased due to an increase in occupancy at Big Walnut Apartments
and an increase in the average rental rate at  Reflections  which were partially
offset by decreases in occupancy at Reflections and Lafontenay Apartments. Other
income  decreased  due to a decrease  in utility  reimbursements  at  Lafontenay
Apartments,  reduced  laundry income at  Reflections,  LaFontenay and The Trails
Apartments  and reduced  interest  income due to lower  average cash balances in
interest   bearing   accounts   partially  offset  by  an  increase  in  utility
reimbursements at Big Walnut and The Trails Apartments.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner monitors the rental market  environment of the investment  properties to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing  General Partner attempts to protect the Partnership from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  March  31,  2002,  the  Partnership   had  cash  and  cash   equivalents  of
approximately  $772,000  as compared to  approximately  $1,056,000  at March 31,
2001. Cash and cash equivalents  increased  approximately $29,000 since December
31, 2001 primarily due to approximately $2,792,000 of cash provided by financing
activities and approximately  $193,000 of cash provided by operating  activities
partially  offset  by  approximately   $2,956,000  of  cash  used  in  investing
activities. Cash provided by financing activities consisted of advances from the
Managing  General Partner and additional  proceeds from refinancing the mortgage
note encumbering  Reflections  Apartments partially offset by principal payments
on the mortgages  encumbering the  Partnership's  properties and additional loan
costs paid. Cash used in investing activities consisted of property improvements
and replacements and net deposits to restricted escrow accounts. The Partnership
invests its working capital reserves in interest bearing accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the various  properties  to  adequately  maintain  the
physical  assets and other operating needs of the Partnership and to comply with
Federal,   state,   and  local  legal  and  regulatory   requirements.   Capital
improvements planned for each of the Registrant's properties are detailed below.

Big Walnut Apartments: The property has budgeted, but is not limited to, capital
improvements of approximately  $125,000 during 2002 which consists of structural
improvements,  appliance  replacements,  and floor  covering  replacements.  The
Partnership has completed  approximately  $31,000 in capital expenditures at Big
Walnut  Apartments as of March 31, 2002  consisting  primarily of floor covering
replacements. These improvements were funded primarily from operating cash flow.

LaFontenay I & II Apartments:  The property has budgeted, but is not limited to,
capital  improvements  of  approximately  $84,000  during 2002 which consists of
floor covering and appliance replacements,  painting and HVAC replacements.  The
Partnership  has  completed  approximately  $56,000 in capital  expenditures  at
LaFontenay I & II Apartments as of March 31, 2002,  consisting primarily of roof
replacements,  natural gas  enhancements,  plumbing  fixtures and floor covering
replacements.  These  improvements  were  funded  from  operating  cash flow and
replacement reserves.

The  Trails:  The  property  has  budgeted,  but  is  not  limited  to,  capital
improvements  of  approximately  $82,000  during 2002 which consists of swimming
pool improvements,  floor covering,  appliance and water heater replacements and
major  landscaping.  The  Partnership  has  completed  approximately  $10,000 in
capital  expenditures at The Trails Apartments as of March 31, 2002,  consisting
primarily of floor covering  replacements.  These  improvements were funded from
operating cash flow.

Reflections:  In January  2001,  the Managing  General  Partner  refinanced  the
mortgage  encumbering  this  property.  The  proceeds are being used to fund the
rehabilitation  project for this  property  with an  anticipated  completion  in
September 2002. The Managing General Partner is currently evaluating the capital
spending  required to complete  the  rehabilitation  project  during  2002.  The
Partnership has completed  approximately  $1,970,000 in capital  expenditures at
Reflections  Apartments during the three months ended March 31, 2002, consisting
primarily of architect and consultant fees, development services,  furniture and
fixtures, and structural improvements.  These improvements were funded primarily
from refinancing proceeds and operating cash flow.

The additional  capital  expenditures will be incurred only if cash is available
from operations or from Partnership  reserves.  To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness of approximately  $25,984,000,  net of discount,  is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
December 1, 2009.  The Managing  General  Partner will attempt to refinance such
indebtedness  and/or sell the properties  prior to such maturity  dates.  If the
properties cannot be refinanced or sold for a sufficient  amount, the Registrant
will risk losing such properties through foreclosure.

On January 16, 2001,  the  mortgages  encumbering  Reflections  Apartments  were
refinanced in order to finance the  rehabilitation of the property.  The maximum
new loan amount is $13,600,000.  Effective  January 16, 2001, the lender made an
initial  advance of  $5,040,000.  Prior to the  initial  advance,  the  Managing
General Partner loaned the Partnership approximately $3,673,000 in order for the
Partnership to close the refinancing of the property. This amount will be repaid
from the  further  refinancing  that  will  occur  after the  completion  of the
rehabilitation  project,  estimated to be September 2002.  During the year ended
December 31, 2001,  the lender  advanced  Reflections  Apartments  an additional
amount of  approximately  $3,845,000 and during the three months ended March 31,
2002 the  lender  advanced  Reflections  Apartments  an  additional  $1,737,000.
Subsequent  advances of up to $2,978,000  will also be made to cover  renovation
work that is needed at the property.  The new loan matures in January 2004, with
2 one-year extension  options.  Interest payments started in February 2001 based
on  LIBOR  plus  280  basis  points  (4.63%  at  March  31,  2002).  Due  to the
rehabilitation  project,  approximately  $174,000  and  $43,000 of the  interest
expense for the three  months ended March 31, 2002 and 2001,  respectively,  was
capitalized.  In addition, monthly cash flow payments will be made to the lender
until the anticipated completion date of the renovations.  If any amount remains
from these advances on the completion date of the renovation, it will be applied
to the principal  balance.  Principal  payments will begin in February 2003, and
monthly deposits into a replacement reserve will be required. In connection with
the refinancing,  the Partnership incurred loan costs of approximately  $469,000
during the year ended December 31, 2001.  Additional loan costs of approximately
$19,000 were incurred  during the three months ended March 31, 2002.  These loan
costs are  included in other  assets in the  accompanying  consolidated  balance
sheet and are being amortized over the life of the mortgage.  In connection with
the  refinancing,  the assets and  liabilities of the property were  transferred
from one  subsidiary,  Big Walnut  L.P.,  to a newly  formed  subsidiary,  AIMCO
Greensprings  L.P.  The loan is  collateralized  by the  property as well as the
interest of both the Partnership and Davidson  Diversified  Properties,  Inc. in
AIMCO   Greensprings  L.P.  The  new  mortgage  replaced  a  first  mortgage  of
approximately  $7,518,000 and a second mortgage of approximately  $294,000.  The
Partnership recognized an extraordinary loss on the early extinguishment of debt
of approximately  $554,000  consisting of a prepayment  penalty of approximately
$359,000 and the write-off of unamortized  loan costs and mortgage  discounts of
approximately $195,000.

Pursuant to the Partnership Agreement,  the term of the Partnership is scheduled
to expire on December 31, 2008. Accordingly,  prior to such date the Partnership
will need to either  sell its  investment  properties  or extend the term of the
Partnership.

No cash  distributions were made during the three months ended March 31, 2002 or
2001. The Registrant's  cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from  operations,  the  availability  of cash  reserves,  and the timing of debt
maturities,  refinancings  and/or property sales. In light of the rehabilitation
project at  Reflections  and the  significant  amounts  accrued to the  Managing
General  Partner at March 31, 2002, it is not  anticipated  that the Partnership
will make distributions in the foreseeable future. In addition,  the Partnership
may be restricted  from making  distributions  by the requirement to deposit net
operating  income (as defined in the  mortgage  note) into the  reserve  account
until the reserve  account is funded in an amount equal to a minimum of $400 and
a maximum of $1,000 per apartment unit for Big Walnut  Apartments for a total of
approximately  $100,000 to $251,000.  As of March 31, 2002, the reserve  account
balance was approximately $251,000 for Big Walnut Apartments.

In addition to its indirect  ownership of the  managing  and  associate  general
partner  interest in the  Partnership,  AIMCO and its  affiliates  currently own
610.25 limited  partnership units in the Partnership  representing 49.85% of the
outstanding  units.  A number of these  units were  acquired  pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates  will  acquire  additional  limited  partnership   interests  in  the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO either through private  purchases or tender offers.  Under the Partnership
Agreement,  unitholders  holding a majority  of the units are  entitled  to take
action  with  respect to a variety  of matters  which  would  include  voting on
certain  amendments  to the  Partnership  Agreement  and  voting to  remove  the
Managing  General  Partner.  As a  result  of its  ownership  of  49.85%  of the
outstanding units, AIMCO is in a position to significantly  influence all voting
decisions with respect to the Registrant. When voting on matters, AIMCO would in
all likelihood vote the units it acquired in a manner  favorable to the interest
of the Managing  General Partner  because of its  affiliation  with the Managing
General Partner.
<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of  California  for the  County  of San  Mateo.  The  plaintiffs  named as
defendants,  among others,  the  Partnership,  its Managing  General Partner and
several of their  affiliated  partnerships  and corporate  entities.  The action
purports  to  assert  claims  on  behalf  of a class  of  limited  partners  and
derivatively  on behalf  of a number  of  limited  partnerships  (including  the
Partnership)  which are named as nominal  defendants,  challenging,  among other
things,  the  acquisition  of  interests  in certain  Managing  General  Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one  time,  affiliates  of  Insignia;  past  tender  offers  by the  Insignia
affiliates to acquire limited partnership units;  management of the partnerships
by the  Insignia  affiliates;  and the series of  transactions  which  closed on
October 1, 1998 and February 26, 1999 whereby  Insignia and Insignia  Properties
Trust,  respectively,  were merged  into AIMCO.  The  plaintiffs  seek  monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking  dismissal
of the action.  In lieu of responding  to the motion,  the  plaintiffs  filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.

Pending the ruling on such  demurrers,  settlement  negotiations  commenced.  On
November 2, 1999,  the parties  executed and filed a Stipulation  of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the  settlement  was obtained on November 3, 1999 from the Court,  at which time
the Court set a final  approval  hearing for  December  10,  1999.  Prior to the
December  10,  1999  hearing,  the  Court  received  various  objections  to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement.  On
December 14, 1999, the Managing  General  Partner and its affiliates  terminated
the  proposed  settlement.  In  February  2000,  counsel  for some of the  named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated  the  settlement.  On June  27,  2000,  the  Court  entered  an order
disqualifying  them  from the case and an  appeal  was  taken  from the order on
October 5, 2000. On December 4, 2000, the Court  appointed the law firm of Lieff
Cabraser  Heimann & Bernstein  LLP as new lead  counsel for  plaintiffs  and the
putative class.  Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001,  the  Managing  General  Partner  and its  affiliates  filed a
demurrer to the third amended  complaint.  On May 14, 2001,  the Court heard the
demurrer to the third amended  complaint.  On July 10, 2001, the Court issued an
order  sustaining  defendants'  demurrer on certain  grounds.  On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs  filed a fourth amended class and  derivative  action  complaint.  On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration.  On
October 5, 2001, the Managing General Partner and affiliated  defendants filed a
demurrer to the fourth amended complaint,  which was heard on December 11, 2001.
On February 2, 2002,  the Court served its order  granting in part the demurrer.
The  Court has  dismissed  without  leave to amend  certain  of the  plaintiffs'
claims.  On February 11, 2002,  plaintiffs  filed a motion  seeking to certify a
putative  class  comprised of all  non-affiliated  persons who own or have owned
units  in  the  partnerships.   The  Managing  General  Partner  and  affiliated
defendants oppose the motion. On April 29, 2002, the Court heard argument on the
motion and ordered  further  briefing  after which time the matter will be taken
under submission. The Court has set the matter for trial in January 2003.

During the third  quarter of 2001, a complaint  (the "Heller  action") was filed
against  the same  defendants  that are named in the  Nuanes  action,  captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended  complaint.  The first amended complaint in the Heller action is
brought as a purported  derivative  action,  and asserts  claims for among other
things  breach  of  fiduciary  duty;  unfair  competition;   conversion,  unjust
enrichment;  and judicial  dissolution.  Plaintiffs in the Nuanes action filed a
motion to  consolidate  the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed  without  leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing  General  Partner and affiliated
defendants  moved to strike the first  amended  complaint  in its  entirety  for
violating  the Court's July 10, 2001 order  granting in part and denying in part
defendants'  demurrer in the Nuanes action, or alternatively,  to strike certain
portions of the complaint based on the statute of limitations.  Other defendants
in the action  demurred to the fourth  amended  complaint,  and,  alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions  and took the matters  under  submission.  On February 4, 2002,  the
Court  served  notice of its order  granting  defendants'  motion to strike  the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002,  the plaintiffs  filed a notice  appealing the order striking
the complaint.

The Managing  General Partner does not anticipate that any costs,  whether legal
or  settlement  costs,  associated  with  these  cases will be  material  to the
Partnership's overall operations.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits

                  None.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 2002.
<PAGE>
                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                    DAVIDSON DIVERSIFIED REAL ESTATE II, L.P.


                                    By:   Davidson Diversified Properties, Inc.
                                          Its Managing General Partner


                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President


                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President and
                                          Controller


                                    Date: