UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

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

                 For the quarterly period ended June 30, 2002


[ ]   TRANSITION REPORT UNDER 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)

<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS



                  Davidson Diversified Real Estate II, L.P.

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

                                  June 30, 2002

<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $   739
   Receivables and deposits                                                      374
   Restricted escrows                                                            279
   Other assets                                                                  589
   Investment properties:
      Land                                                    $ 2,603
      Buildings and related personal property                   49,026
                                                                51,629
      Less accumulated depreciation                            (26,335)       25,294
                                                                            $ 27,275

Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                          $ 320
   Tenant security deposit liabilities                                           155
   Accrued property taxes                                                        365
   Other liabilities                                                             489
   Due to affiliates                                                           7,973
   Mortgage notes payable                                                     25,885

Partners' Deficit
   General partners                                            $ (593)
   Limited partners (1,224.25 units issued and
      outstanding)                                              (7,319)       (7,912)
                                                                            $ 27,275

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                  Davidson Diversified Real Estate II, L.P.

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

<TABLE>
<CAPTION>


                                             Three Months Ended        Six Months Ended
                                                  June 30,                 June 30,
                                              2002        2001         2002         2001
Revenues:                                                                        (Restated)
<S>                                         <C>          <C>         <C>          <C>
  Rental income                             $ 1,636      $ 1,561     $ 3,202      $ 3,108
  Other income                                   154         158          322          332
       Total revenues                          1,790       1,719        3,524        3,440

Expenses:
  Operating                                    1,008         781        1,779        1,650
  General and administrative                      85         119          175          207
  Depreciation                                   502         502          999          995
  Interest                                       413         510          811        1,044
  Property taxes                                 115          52          229          165
  Loss on early extinguishment of debt            --          --           --          554
       Total expenses                          2,123       1,964        3,993        4,615

       Net loss                              $ (333)     $ (245)      $ (469)     $ (1,175)

Net loss allocated to general
  partners (2%)                               $ (6)       $ (5)        $ (9)       $ (23)
Net loss allocated to limited
  partners (98%)                                (327)       (240)        (460)      (1,152)

                                             $ (333)     $ (245)      $ (469)     $ (1,175)

Net loss per limited partnership unit       $(267.10)   $(196.04)    $(375.74)    $(940.98)

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                  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 six months
   ended June 30, 2002                      --            (9)        (460)      (469)

Partners' deficit at
   June 30, 2002                      1,224.25        $ (593)     $(7,319)   $(7,912)

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                  Davidson Diversified Real Estate II, L.P.

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

                                                                   Six Months Ended
                                                                        June 30,
                                                                   2002        2001
Cash flows from operating activities:
<S>                                                               <C>        <C>
  Net loss                                                        $ (469)    $(1,175)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Depreciation                                                     999        995
     Amortization of discounts and loan costs                         184        127
     Loss on early extinguishment of debt                              --        554
     Change in accounts:
      Receivables and deposits                                       (181)       (66)
      Other assets                                                    (94)      (123)
      Accounts payable                                               (396)       574
      Tenant security deposit liabilities                              16        (31)
      Accrued property taxes                                          (91)       (87)
      Other liabilities                                               132       (294)
      Due to affiliate                                                149        (85)
         Net cash provided by operating activities                    249        389

Cash flows from investing activities:
  Property improvements and replacements                           (4,182)    (1,630)
  Net (deposits to) withdrawals from restricted escrows               (49)       161
         Net cash used in investing activities                     (4,231)    (1,469)

Cash flows from financing activities:
  Advances from affiliates                                          2,587      3,847
  Payments on advances from affiliates                                (77)        --
  Payments on mortgage notes payable                                 (255)      (235)
  Proceeds from mortgage note payable                               1,742      5,554
  Repayment of mortgage note payable                                   --     (7,812)
  Prepayment penalty                                                   --       (359)
  Loan costs paid                                                     (19)      (475)
         Net cash provided by financing activities                  3,978        520

Net decrease in cash and cash equivalents                              (4)      (560)
Cash and cash equivalents at beginning of period                      743      1,130

Cash and cash equivalents at end of period                         $ 739      $ 570

Supplemental disclosure of cash flow information:
  Cash paid for interest                                           $ 807     $ 1,033
Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts payable       $ --        $ 42

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 June 30, 2002.

         See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

                  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 and six month periods ended June 30,
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.

Effective  April  1,  2002,  the  Partnership  adopted  Statement  of  Financial
Accounting  Standards ("SFAS") No. 145, "Rescission of FASB Statements No. 4, 44
and 64". SFAS No. 4 "Reporting  Gains and Losses from  Extinguishment  of Debt,"
required  that all gains and losses from  extinguishment  of debt be  aggregated
and, if material,  classified as an  extraordinary  item.  SFAS No. 145 rescinds
SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should
only be  classified  as  extraordinary  if they are  unusual in nature and occur
infrequently. Neither of these criteria applies to the Partnership. As a result,
the accompanying consolidated statements of operations reflect the loss on early
extinguishment  of debt at Reflections  Apartments  (see "Note C") in operations
rather than as an extraordinary item.

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 six months ended June 30, 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  $178,000 and $177,000 for the
six months  ended June 30,  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  $730,000 and
$135,000 for the six months ended June 30, 2002 and 2001, respectively. Included
in these amounts are fees related to construction  management  services provided
by an affiliate of the Managing  General Partner of  approximately  $560,000 and
$4,000  for the six  months  ended  June 30,  2002 and 2001,  respectively.  The
construction  management  fees are  calculated  based on a percentage of current
year additions to investment properties.

In accordance with the Partnership  Agreement,  the Managing General Partner has
loaned the Partnership funds to cover operational  expenses and to assist in the
closing of the refinancing required at Reflections Apartments. At June 30, 2002,
the amount of the outstanding  loans and accrued  interest to cover  operational
expenses was approximately $4,196,000 and the amount of the outstanding loan and
accrued interest to assist the refinancing was  approximately  $3,777,000.  Both
amounts  are  included in Due to  affiliates  on the  accompanying  consolidated
balance  sheet.  Interest  is  charged at prime plus 1%.  Interest  expense  was
approximately  $186,000  and $226,000 for the six months ended June 30, 2002 and
2001, respectively.  The Managing General Partner is considering the remedies it
can pursue including accelerating repayment of the outstanding loans it has made
to  the  Partnership  to  cover  operational  expenses  and  to  assist  in  the
refinancing of Reflections Apartments.

The  Partnership  accrued a real estate  commission  of $18,000 upon 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 six months ended June
30,  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 July  2004.  During  the  year  ended
December 31, 2001,  the lender  advanced  Reflections  Apartments  an additional
amount of approximately $3,845,000 and during the six months ended June 30, 2002
the lender advanced Reflections Apartments an additional $1,742,000.  Subsequent
advances of up to $2,973,000 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  (4.64%  at June 30,  2002).  Due to the  rehabilitation
project, approximately $367,000 and $129,000 of the interest expense for the six
months ended June 30, 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 six  months  ended  June 30,  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 a loss on 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 - Casualty

During  October 2001, a fire occurred at  Reflections  Apartments.  Negotiations
concerning  this casualty are ongoing with the insurance  carrier.  No insurance
proceeds  have  been  received  as of June 30,  2002,  and  thus  the  financial
statement impact cannot be practicably  determined at this time. The Partnership
does not expect to realize a loss from this event.

Note E - 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 held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

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 parties are currently in the midst of briefing that appeal.

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 six
months ended June 30, 2002 and 2001:

                                                     Average Occupancy
                                                      2002       2001
      Big Walnut Apartments
         Columbus, Ohio (1)                           96%         82%
      LaFontenay I & II Apartments
         Louisville, Kentucky (2)                     86%         92%
      The Trails Apartments
         Nashville, Tennessee                         94%         93%
      Reflections Apartments (formerly
         Greensprings Manor Apartments)
         Indianapolis, Indiana (3)                    41%         41%

(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
      LaFontenany I & II Apartments to poor market conditions and tenants buying
      homes due to low interest rates.

(3)   The low occupancy at Reflections  Apartments is due to  rehabilitation  at
      the  property.  The  property is currently  undergoing a major  renovation
      project to enhance the  appearance  of the  property to attract  desirable
      tenants.  As of June 30, 2002 51.03% of the units  cannot be rented due to
      the rehabilitation.

Results of Operations

The  Registrant's  net loss for the three and six months ended June 30, 2002 was
approximately $333,000 and $469,000, respectively, as compared to a net loss for
the three and six  months  ended June 30,  2001 of  approximately  $245,000  and
$1,175,000, respectively. The decrease in net loss for the six months ended June
30, 2002 was  primarily  due to a decrease in total  expenses and an increase in
total  revenues.  The  increase in net loss for the three  months ended June 30,
2002 was primarily due to an increase in total expenses  partially  offset by an
increase in total revenues.

Total expenses decreased for the six months ended June 30, 2002 due to decreases
in the  loss  from  early  extinguishment  of debt,  interest  and  general  and
administrative  expenses partially offset by increases in operating and property
tax expenses.  Total expenses increased for the three months ended June 30, 2002
due to  increases in operating  and  property tax expenses  partially  offset by
decreases in interest and general and administrative expenses. The loss on early
extinguishment  of debt relates to the  refinancing of the mortgage  encumbering
Reflections  Apartments in January 2001 as discussed in  "Liquidity  and Capital
Resources".  Interest expense  decreased for the three and six months ended June
30, 2002 due to the new financing at Reflections  Apartments  with variable rate
interest that is lower than the 7.60% rate on the old mortgage.  In addition,  a
portion  of  the  interest  on the  debt  at  Reflections  Apartments  has  been
capitalized  as part of the  renovation  project.  Interest on advances from the
Managing General Partner  decreased even though the principal  balance increased
due to a lower average  interest rate.  These decreases were partially offset by
increased loan cost amortization at Reflections  Apartments.  Operating expenses
increased  for the three and six months  ended June 30,  2002  primarily  due to
increases  in  property  and  insurance  expenses  partially  offset by  reduced
administrative  and maintenance  expenses.  Property  expenses  increased due to
increased  utility,   payroll  and  related  benefits  expenses  at  Reflections
Apartments.  Insurance expense increased due to increased  insurance premiums at
all of the  Partnership's  properties.  Administrative  expense decreased due to
reduced contract courtesy patrol expense at Reflections Apartments.  Maintenance
expense  decreased due to operating costs  capitalized as part of the renovation
project at Reflections  Apartments and insurance proceeds received at LaFontenay
Apartments during 2002 partially offset by increased  contract labor expenses at
Reflections and LaFontenay  Apartments.  Property tax expense  increased for the
three and six  months  ended  June 30,  2002 due to a prior  year tax  refund at
Reflections  and Big Walnut  Apartments  during 2001 and an increase in tax rate
and assessed value at The Trails Apartments. General and administrative expenses
decreased  for the three and six months  ended June 30,  2002  primarily  due to
reduced  taxes and  professional  fees  associated  with  administration  of the
Partnership.  Included in general and  administrative  expenses at both June 30,
2002 and 2001 are  reimbursements  to the Managing General Partner allowed under
the Partnership Agreement.  Also included in general and administrative expenses
at both  June 30,  2002 and 2001 are the  costs  associated  with the  quarterly
communications  with  investors  and  regulatory  agencies  and the annual audit
required by the Partnership Agreement.

Total  revenues  increased  for the three and six  months  ended  June 30,  2002
primarily due to an increase in rental income. Rental income increased due to an
increase in  occupancy at Big Walnut  Apartments  and an increase in the average
rental rate at  Reflections  Apartments  and reduced  concessions at Big Walnut,
LaFontenay and The Trails Apartments,  which were partially offset by a decrease
in occupancy at LaFontenay  Apartments and a decrease in average rental rates at
Big Walnut, LaFontenay 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 June 30, 2002, the Partnership had cash and cash equivalents of approximately
$739,000 as compared to  approximately  $570,000 at June 30, 2001. Cash and cash
equivalents decreased approximately $4,000 since December 31, 2001 primarily due
to  approximately  $4,231,000  of cash used in  investing  activities  which was
largely  offset  by  approximately  $3,978,000  of cash  provided  by  financing
activities and approximately  $249,000 of cash provided by operating activities.
Cash  used in  investing  activities  consisted  of  property  improvements  and
replacements and net deposits to restricted  escrow  accounts.  Cash provided by
financing  activities  consisted  of advances  from  affiliates  and  additional
proceeds from the construction note encumbering Reflections Apartments partially
offset by principal  payments on the  mortgages  encumbering  the  Partnership's
properties, payments on advances from affiliates and additional loan costs paid.
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 $124,000 during the current year which consists of
structural  improvements,  appliances,  air conditioning unit and floor covering
replacements,   and  heating  and  water/sewer  upgrades.  The  Partnership  has
completed approximately $77,000 in capital expenditures at Big Walnut Apartments
as of June 30, 2002  consisting  primarily of floor  covering  replacements  and
structural improvements. These improvements were funded primarily from operating
cash flow.  Additional capital improvements may be considered and will depend on
the  physical  condition of the  property as well as the  anticipated  cash flow
generated by the property and replacement reserves.

LaFontenay I & II Apartments:  The property has budgeted, but is not limited to,
capital  improvements  of  approximately  $84,000  during the current year which
consists of floor  covering,  appliance,  painting  and HVAC  replacements.  The
Partnership  has  completed  approximately  $104,000 in budgeted and  unbudgeted
capital  expenditures  at  LaFontenay  I & II  Apartments  as of June 30,  2002,
consisting primarily of structural  improvements,  HVAC, floor covering and roof
replacements.  These  improvements  were  funded  from  operating  cash flow and
replacement reserves. Additional capital improvements may be considered and will
depend on the physical condition of the property as well as the anticipated cash
flow generated by the property and replacement reserves.

The  Trails:  The  property  has  budgeted,  but  is  not  limited  to,  capital
improvements of approximately  $89,000 during the current year which consists of
swimming pool  improvements,  water heater and floor covering  replacements  and
major  landscaping.  The  Partnership  has  completed  approximately  $32,000 in
capital  expenditures at The Trails  Apartments as of June 30, 2002,  consisting
primarily  of  floor  covering  replacements.  These  improvements  were  funded
primarily from  operating  cash flow.  Additional  capital  improvements  may be
considered and will depend on the physical  condition of the property as well as
the anticipated cash flow generated by the property and replacement reserves.

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 July
2004. The Managing General Partner is currently  evaluating the capital spending
required to complete the rehabilitation project during 2002. The Partnership has
completed  approximately  $3,119,000  in  capital  expenditures  at  Reflections
Apartments  during the six months ended June 30, 2002,  consisting  primarily of
architect and consultant  fees,  development  services,  furniture and fixtures,
water submetering and structural  improvements.  These  improvements were funded
primarily from refinancing proceeds and operating cash flow.  Additional capital
improvements may be considered and will depend on the physical  condition of the
property as well as the  anticipated  cash flow  generated  by the  property and
further refinancing proceeds.

The additional  capital  expenditures will be incurred only if cash is available
from operations,  Partnership reserves or further refinancing  proceeds.  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  $25,885,000,  net of discount,  is amortized over
varying periods with required balloon payments ranging from November 15, 2002 to
December  1,  2009.  The  mortgage  indebtedness  at Big  Walnut  Apartments  of
approximately  $4,128,000,  net of discount, is amortized over 120 months with a
balloon  payment of  approximately  $4,061,000  due on November  25,  2002.  The
Partnership is currently planning on refinancing the debt encumbering Big Walnut
Apartments  prior to its  November  2002  maturity.  If the  property  cannot be
refinanced, the Registrant will risk losing such property 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 July  2004.  During  the  year  ended
December 31, 2001,  the lender  advanced  Reflections  Apartments  an additional
amount of approximately $3,845,000 and during the six months ended June 30, 2002
the lender advanced Reflections Apartments an additional $1,742,000.  Subsequent
advances of up to $2,973,000 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  (4.64%  at June 30,  2002).  Due to the  rehabilitation
project, approximately $367,000 and $129,000 of the interest expense for the six
months ended June 30, 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 six  months  ended  June 30,  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 a loss on 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.

No cash  distributions  were made  during the six months  ended June 30, 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  Apartments  and  the  significant  amounts  due to the
Managing  General  Partner  at June 30,  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 June 30, 2002, the reserve
account balance was approximately $252,000 for Big Walnut Apartments.

Other

In addition to its indirect  ownership of the  managing  and  associate  general
partner interest in the Partnership,  AIMCO and its affiliates owned 620 limited
partnership  units in the  Partnership  representing  50.65% of the  outstanding
units at June 30, 2002. 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 units of limited partnership  interest in the
Partnership  in  exchange  for cash or a  combination  of cash and  units in the
operating  partnership  of AIMCO  either  through  private  purchases  or tender
offers.  In this regard,  on June 25, 2002, a tender offer by AIMCO  Properties,
L.P. to acquire all of the units not owned by affiliates of AIMCO for a purchase
price of $2,393.00 per unit expired. Pursuant to this offer, AIMCO acquired 9.50
units during the quarter ended June 30, 2002.  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 50.65% of the outstanding  units,  AIMCO is in a
position to control all such voting  decisions  with respect to the  Registrant.
Although  the Managing  General  Partner  owes  fiduciary  duties to the limited
partners of the  Partnership,  the Managing  General Partner also owes fiduciary
duties to AIMCO as its sole stockholder. As a result, the duties of the Managing
General  Partner,  as managing  general  partner,  to the  Partnerships  and its
limited  partners may come into conflict with the duties of the Managing General
Partner to AIMCO, as its sole stockholder.

Critical Accounting Policies and Estimates

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to  make  estimates  and  assumptions.  The  Partnership  believes  that  of its
significant  accounting  policies,  the following may involve a higher degree of
judgment and complexity.

Impairment of Long-Lived Assets

Investment  properties  are  recorded at cost,  less  accumulated  depreciation,
unless  considered  impaired.  If  events  or  circumstances  indicate  that the
carrying  amount of a property may be  impaired,  the  Partnership  will make an
assessment of its  recoverability  by estimating  the  undiscounted  future cash
flows,  excluding  interest  charges,  of the property.  If the carrying  amount
exceeds the aggregate  future cash flows,  the  Partnership  would  recognize an
impairment  loss to the extent the carrying amount exceeds the fair value of the
property.

Real  property  investments  are  subject  to varying  degrees of risk.  Several
factors  may  adversely  affect  the  economic  performance  and  value  of  the
Partnership's  investment  properties.  These  factors  include  changes  in the
national,  regional and local economic  climate;  local  conditions,  such as an
oversupply  of  multifamily   properties;   competition   from  other  available
multifamily  property  owners and changes in market  rental  rates.  Any adverse
changes in these factors could cause an impairment in the Partnership's assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less.
Rental income  attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during  particularly slow months or in
response  to  heavy  competition  from  other  similar  complexes  in the  area.
Concessions are charged to income as incurred.



<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 held a hearing on
plaintiffs' motion for class  certification and took the matter under submission
after further  briefing,  as ordered by the court, was submitted by the parties.
On July 10, 2002,  the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the  pre-trial  and  discovery  cut-off  dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement.

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 parties are currently in the midst of briefing that appeal.

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

                  Exhibit 3.1,  Partnership  Agreement  dated June 11, 1984,  as
                  amended  is  incorporated  by  reference  to  Exhibit A to the
                  Prospectus of the  Registrant  dated October 16, 1984 as filed
                  with the Commission pursuant to Rule 424(b) under the Act.

                  Exhibit 3.2,  Amendment No. 1 to the Partnership  dated August
                  1, 1985 is  incorporated  by  reference  to  Exhibit 3B to the
                  Registrant's  Annual  Report on Form 10-K for the fiscal  year
                  ended December 31, 1985.

                  Exhibit 4.1, Certificate of Limited Partnership dated June 11,
                  1984  is  incorporated  by  reference  to  Exhibit  4  to  the
                  Registrant's  Annual  Report on Form 10-K for the fiscal  year
                  ended December 31, 1987.

                  Exhibit 4.2,  Certificate of Amendment of Limited  Partnership
                  dated July 17, 1984 is incorporated by reference to Exhibit 4A
                  to the Registrant's  Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1987.

                  Exhibit 4.3, Restated Certificate of Limited Partnership dated
                  October 5, 1984 is  incorporated by reference to Exhibit 4B to
                  the  Registrant's  Annual  Report on Form 10-K for the  fiscal
                  year ended December 31, 1987.

                  Exhibit 99,  Certification  of Chief  Executive  Officer and
                  Chief Financial Officer.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended June 30, 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/Thomas C. Novosel
                                          Thomas C. Novosel
                                          Senior Vice President
                                          and Chief Accounting Officer


                                    Date: August 14, 2002


<PAGE>


Exhibit 99


                          Certification of CEO and CFO
                     Pursuant to 18 U.S.C. Section 1350,
                            As Adopted Pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly  Report on Form 10-QSB of Davidson  Diversified
Real Estate II, L.P. (the  "Partnership"),  for the quarterly  period ended June
30, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the  "Report"),  Patrick  J. Foye,  as the  equivalent  of the Chief  Executive
Officer of the  Partnership,  and Paul J.  McAuliffe,  as the  equivalent of the
Chief Financial Officer of the Partnership,  each hereby certifies,  pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                    /s/  Patrick J. Foye
                                    Name:  Patrick J. Foye
                                    Date:  August 14, 2002


                                    /s/  Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  August 14, 2002


This  certification  accompanies  the  Report  pursuant  to  Section  906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002, be deemed filed by the  Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.