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

                                  Form 10-QSB/A

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

                 For the quarterly period ended September 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>



The issuer  recently  discovered  that it had  inadvertently  omitted  conformed
signatures on certain certifications included in its 10-QSB filing made November
14, 2002.  Original  signatures were complete and on file with the issuer at the
time the 10-QSB filing was made in November;  however,  due to a clerical error,
conformed  signatures were not included in the electronic filing. This amendment
is being filed solely to correct this inadvertent clerical error.

                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

                    Davidson Diversified Real Estate II, L.P.

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

                               September 30, 2002
<TABLE>
<CAPTION>


Assets
<S>                                                                         <C>
   Cash and cash equivalents                                                $  2,318
   Receivables and deposits                                                      793
   Restricted escrows                                                             85
   Other assets                                                                  670
   Investment properties:
      Land                                                    $ 2,603
      Buildings and related personal property                   50,023
                                                                52,626
      Less accumulated depreciation                            (26,754)       25,872
                                                                            $ 29,738

Liabilities and Partners' Deficit

Liabilities
   Accounts payable                                                          $ 443
   Tenant security deposit liabilities                                           154
   Accrued property taxes                                                        555
   Other liabilities                                                             582
   Due to affiliates                                                           8,284
   Mortgage notes payable                                                     27,411

Partners' Deficit
   General partners                                            $ (589)
   Limited partners (1,224.25 units issued and
      outstanding)                                              (7,102)       (7,691)
                                                                            $ 29,738

            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        Nine Months Ended
                                               September 30,             September 30,
                                              2002        2001         2002         2001
Revenues:                                                                        (Restated)
<S>                                         <C>          <C>         <C>           <C>
  Rental income                             $ 1,677      $ 1,543     $ 4,879       $ 4,651
  Other income                                   154         141          476           473
  Casualty gain                                   92          --           92            --
       Total revenues                          1,923       1,684        5,447         5,124

Expenses:
  Operating                                      635         872        2,414         2,522
  General and administrative                      86          97          261           304
  Depreciation                                   491         521        1,490         1,516
  Interest                                       358         511        1,169         1,555
  Property taxes                                 115         129          344           294
  Loss on early extinguishment of debt            17          --           17           554
       Total expenses                          1,702       2,130        5,695         6,745

       Net income (loss)                     $ 221       $ (446)      $ (248)     $ (1,621)

Net income (loss) allocated to general
  partners (2%)                               $ 4         $ (9)        $ (5)       $ (32)
Net income (loss) allocated to limited
  partners (98%)                                 217        (437)        (243)       (1,589)

                                             $ 221       $ (446)      $ (248)     $ (1,621)

Net income (loss) per limited
  partnership unit                          $ 177.25    $(356.96)    $(198.49)   $(1,297.94)

            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 nine months
   ended September 30, 2002                 --            (5)        (243)      (248)

Partners' deficit at
   September 30, 2002                 1,224.25        $ (589)     $(7,102)   $(7,691)

            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>

                                                                  Nine Months Ended
                                                                    September 30,
                                                                    2002        2001
Cash flows from operating activities:
<S>                                                               <C>        <C>
  Net loss                                                        $ (248)    $(1,621)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Depreciation                                                   1,490      1,516
     Amortization of discounts and loan costs                         233        219
     Loss on early extinguishment of debt                              17        554
     Casualty gain                                                    (92)        --
     Change in accounts:
      Receivables and deposits                                       (468)      (131)
      Other assets                                                    (54)       (59)
      Accounts payable                                               (273)       258
      Tenant security deposit liabilities                              15          6
      Accrued property taxes                                           99         55
      Other liabilities                                               225       (353)
      Due to affiliate                                                266         --
         Net cash provided by operating activities                  1,210        444

Cash flows from investing activities:
  Property improvements and replacements                           (5,291)    (3,010)
  Net withdrawals from restricted escrows                             145        196
         Net cash used in investing activities                     (5,146)    (2,814)

Cash flows from financing activities:
  Advances from affiliates                                          2,781      3,867
  Payments on advances from affiliates                                (77)        --
  Payments on mortgage notes payable                                 (386)      (357)
  Proceeds from mortgage notes payable                              7,462      6,924
  Repayment of mortgage notes payable                              (4,097)    (7,812)
  Prepayment penalty                                                   --       (359)
  Loan costs paid                                                    (172)      (469)
         Net cash provided by financing activities                  5,511      1,794

Net increase (decrease) in cash and cash equivalents                1,575       (576)
Cash and cash equivalents at beginning of period                      743      1,130

Cash and cash equivalents at end of period                        $ 2,318     $ 554

Supplemental disclosure of cash flow information:
  Cash paid for interest                                          $ 1,208    $ 1,421
Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts payable       $ --        $ 25
  Insurance proceeds in receivables and deposits                   $ 132       $ --

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 September 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 nine month periods ended September
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 nine months  ended  September  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  $272,000 and $263,000 for the
nine months ended September 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  $772,000 and
$355,000 for the nine months ended  September  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
$567,000 and $157,000  for the nine months  ended  September  30, 2002 and 2001,
respectively.  The  construction  management  fees  are  calculated  based  on a
percentage of current year additions to investment properties.

In addition to reimbursement for services to affiliates, the Partnership paid an
affiliate of the Managing General Partner  approximately  $57,000 for loan costs
related to the refinancing of Big Walnut Apartments during the nine months ended
September  30,  2002.  These costs were  capitalized  and are  included in other
assets on the consolidated balance sheet.

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 September 30,
2002,  the  amount  of the  outstanding  loans  and  accrued  interest  to cover
operational  expenses  was  approximately  $4,451,000  and  the  amount  of  the
outstanding   loan  and  accrued   interest  to  assist  the   refinancing   was
approximately $3,833,000.  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  $304,000  and $332,000 for the nine months
ended September 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 nine months ended
September  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.

Note C - Refinancing of Mortgage Notes 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 nine months ended  September
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  (4.62% at  September  30,  2002).  Due to the
rehabilitation  project,  approximately  $564,000  and  $188,000 of the interest
expense for the nine months ended September 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 nine months ended  September  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.

During September 2002, the Partnership  refinanced the mortgages encumbering Big
Walnut  Apartments.  The refinancing  replaced a first mortgage of approximately
$3,930,000 and a second mortgage of  approximately  $167,000 with a new mortgage
of $5,720,000.  Total capitalized loan costs were approximately  $153,000 during
the nine months ended September 30, 2002. The  Partnership  recognized a loss on
the early  extinguishment of debt of approximately  $17,000 due to the write-off
of  unamortized  loan costs.  In  addition,  $85,000 was  deposited in an escrow
account to be used to complete required repairs.

Big Walnut Apartments was initially  refinanced under an interim credit facility
("Interim Credit Facility") which has a term of three months. The Interim Credit
Facility includes  properties in other partnerships that are affiliated with the
Partnership.  However,  the Interim Credit Facility  creates  separate loans for
each  property that are not  cross-collaterilized  or  cross-defaulted  with the
other  property  loans.  During  the  three  month  term of the  Interim  Credit
Facility,  the properties will be required to make interest-only  payments.  The
first  month's  interest,  which  was paid at the date of the  refinancing,  was
calculated at LIBOR plus 70 basis points.  Interest for the following two months
will be calculated at LIBOR plus 150 points and is due monthly.

The Managing  General Partner  anticipates that the Interim Credit Facility will
be transferred to a different  lender before the end of the three-month  term of
the Interim Credit Facility.  The credit facility  ("Permanent Credit Facility")
with the new  lender  will have a  maturity  of five  years  with one  five-year
extension option. This Permanent Credit Facility will also create separate loans
for each property that are not  cross-collaterilized or cross-defaulted with the
other property loans.  Each note under this Permanent Credit Facility will begin
as a variable rate loan with the option of converting to a fixed rate loan after
three  years.  The  interest  rate on the  variable  rate loans will be 85 basis
points over the Fannie Mae discounted  mortgage-backed  security index,  and the
rate will reset monthly.  Each loan will automatically  renew at the end of each
month.  In addition,  monthly  principal  payments  will be required  based on a
30-year  amortizations  schedule,  using the interest  rate in effect during the
first month that any property is on the  Permanent  Credit  Facility.  The loans
will be prepayable without penalty.

Note D - Casualty

During the nine  months  ended  September  30,  2002,  a net  casualty  gain was
recorded at  Reflections  Apartments.  The casualty  gain related to a fire that
occurred at  Reflections  Apartments in October 2001. The gain was the result of
insurance  proceeds  of  approximately  $132,000  less the net book value of the
damaged property of approximately $40,000. The proceeds are being held in escrow
by the lender until the repairs are  completed  and are included in  receivables
and deposits on the accompanying consolidated balance sheet.

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.  On October  30,  2002,  the court
entered an order extending the stay in effect through January 10, 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 parties are currently in the midst of briefing that appeal.
Note E - Legal Proceedings (continued)

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 Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for forward-looking  statements in certain circumstances.  The matters discussed
in this report contain certain forward-looking  statements,  including,  without
limitation,  statements regarding future financial performance and the effect of
government regulations. The discussions of the Registrant's business and results
of operations,  including forward-looking statements pertaining to such matters,
do not take into account the effects of any changes to the Registrant's business
and  results of  operations.  Actual  results may differ  materially  from those
described in the forward-looking statements and will be affected by a variety of
risks and factors  including,  without  limitation:  national and local economic
conditions; the terms of governmental regulations that affect the Registrant and
interpretations of those regulations;  the competitive  environment in which the
Registrant  operates;  financing risks,  including the risk that cash flows from
operations  may be  insufficient  to meet  required  payments of  principal  and
interest;  real estate risks, including variations of real estate values and the
general  economic  climate in local markets and  competition for tenants in such
markets; and possible environmental liabilities. Readers should carefully review
the Registrant's financial statements and the notes thereto, as well as the risk
factors  described in the documents the Registrant  files from time to time with
the Securities and Exchange Commission.

The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average  occupancy of the properties for the nine
months ended September 30, 2002 and 2001:

                                                     Average Occupancy
                                                      2002       2001
      Big Walnut Apartments
         Columbus, Ohio (1)                           96%         83%
      LaFontenay I & II Apartments
         Louisville, Kentucky (2)                     87%         93%
      The Trails Apartments
         Nashville, Tennessee                         94%         94%
      Reflections Apartments (formerly
         Greensprings Manor Apartments)
         Indianapolis, Indiana (3)                    43%         39%

(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 September 30, 2002 51.03% of the units cannot be rented due
      to the  rehabilitation.  The increase in occupancy  over the prior year is
      due to the rental of rehabilitated apartment units.

Results of Operations

The  Registrant's  net loss for the nine  months  ended  September  30, 2002 was
approximately $248,000 as compared to a net loss of approximately $1,621,000 for
the nine months ended  September  30, 2001.  The net income for the three months
ended September 30, 2002 was approximately $221,000 as compared to a net loss of
approximately  $446,000  for the nine  months  ended  September  30,  2001.  The
decrease in net loss for the nine months ended  September 30, 2002 was primarily
due to a decrease  in total  expenses  and an increase  in total  revenues.  The
increase in net income for the three months ended  September 30, 2002 was due to
an increase in total revenues and a decrease in total expenses.

Total  expenses  decreased  for the nine months ended  September 30, 2002 due to
decreases in the loss from early  extinguishment of debt,  interest,  operating,
and  general  and  administrative  expenses  partially  offset by an increase in
property  tax  expense.  Total  expenses  decreased  for the three  months ended
September 30, 2002 due to decreases in interest and operating expenses. The loss
on early extinguishment of debt for both years relates to the refinancing of the
mortgages  encumbering  Reflections  Apartments  in January  2001 and Big Walnut
Apartments in September 2002 as discussed in "Liquidity and Capital  Resources".
Interest  expense  decreased  for the three and nine months ended  September 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 expense
decreased  for the  three  and  nine  months  ended  September  30,  2002 due to
decreases in  administrative  and  maintenance  expense  partially  offset by an
increase in property expense.  Administrative expense decreased primarily due to
a decrease  in  contract  security  patrol  expense at  Reflections  Apartments.
Maintenance  expense decreased due to operating costs capitalized as part of the
renovation project at Reflections Apartments.  Property expense increased due to
increases in utilities, commissions and bonuses and payroll and related benefits
expenses at Reflections  Apartments partially offset by decreases in utility and
payroll expenses at Lafontenay Apartments.  General and administrative  expenses
decreased for the three and nine months ended  September 30, 2002  primarily due
to reduced taxes and  professional  fees associated with  administration  of the
Partnership.  Included in general and administrative  expenses at both September
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 September 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.  Property tax expense increased for
the nine months ended September 30, 2002 due to prior year tax refunds  received
at Reflections and Big Walnut Apartments during 2001 and an increase in tax rate
and assessed value at The Trails Apartments.

Total revenues  increased for the three and nine months ended September 30, 2002
primarily due to an increase in rental income and to a casualty gain recorded at
Reflections  Apartments  during 2002. Rental income increased due to an increase
in occupancy at Big Walnut Apartments and an increase in the average rental rate
at  Reflections  Apartments,  which  were  partially  offset  by a  decrease  in
occupancy at  Reflections  and  LaFontenay  Apartments and a decrease in average
rental rates at Big Walnut, LaFontenay and The Trails Apartments.

During the nine  months  ended  September  30,  2002,  a net  casualty  gain was
recorded at  Reflections  Apartments.  The casualty  gain related to a fire that
occurred at  Reflections  Apartments in October 2001. The gain was the result of
insurance  proceeds  of  approximately  $132,000  less the net book value of the
damaged property of approximately $40,000. The proceeds are being held in escrow
by the lender until the repairs are  completed  and are included in  receivables
and deposits on the accompanying consolidated balance sheet.

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  September  30,  2002,  the  Partnership  had cash and  cash  equivalents  of
approximately  $2,318,000 as compared to approximately $554,000 at September 30,
2001.  Cash  and  cash  equivalents  increased  approximately  $1,575,000  since
December 31, 2001 primarily due to approximately  $5,511,000 of cash provided by
financing activities and approximately  $1,210,000 of cash provided by operating
activities,  which was partially offset by approximately $5,146,000 of cash used
in investing  activities.  Cash  provided by financing  activities  consisted of
advances  from  affiliates,  additional  proceeds  from  the  construction  note
encumbering  Reflections  Apartments,  and  proceeds  from the  refinance of Big
Walnut  Apartments.  This was  partially  offset by  principal  payments  on the
mortgages  encumbering the Partnership's  properties,  payments on advances from
affiliates,  repayment of mortgage notes payable, and loan costs paid. Cash used
in investing  activities  consisted of property  improvements and  replacements,
partially  offset  by net  withdrawals  from  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.  The  Managing
General  Partner  monitors  developments  in the  area of legal  and  regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional  compliance
measures with regard to governance,  disclosure, audit and other areas. In light
of these changes,  the  Partnership  expects that it will incur higher  expenses
related  to  compliance,  including  increased  legal  and audit  fees.  Capital
improvements  planned  for each of the  Partnership's  properties  are  detailed
below.

Big Walnut Apartments: The property has budgeted, but is not limited to, capital
improvements of approximately $136,000 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 $146,000 in budgeted and unbudgeted capital expenditures
at Big Walnut  Apartments  during  the nine  months  ended  September  30,  2002
consisting primarily of floor covering  replacements,  structural  improvements,
air conditioning  unit  replacements and survey fees.  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 capital reserves.

LaFontenay I & II Apartments:  The property has budgeted, but is not limited to,
capital  improvements  of  approximately  $99,000  during the current year which
consists of air conditioning  unit, floor covering,  and appliance  replacements
and  structural  improvements.   The  Partnership  has  completed  approximately
$168,000 in budgeted and unbudgeted  capital  expenditures  at LaFontenay I & II
Apartments during the nine months ended September 30, 2002, consisting primarily
of  structural  improvements,  HVAC,  appliances,  natural gas line upgrades and
floor covering and roofing  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.

The  Trails:  The  property  has  budgeted,  but  is  not  limited  to,  capital
improvements of approximately $105,000 during the current year which consists of
swimming pool improvements,  water heater, appliance, window, and floor covering
replacements and major landscaping.  The Partnership has completed approximately
$64,000 in capital  expenditures at The Trails Apartments during the nine months
ended September 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.

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  $4,063,000  in  capital  expenditures  at  Reflections
Apartments during the nine months ended September 30, 2002, consisting primarily
of architect and consultant fees,  development services,  building construction,
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.

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 nine months ended  September
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  September  30,  2002).  Due to the
rehabilitation  project,  approximately  $564,000  and  $188,000 of the interest
expense for the nine months ended September 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 nine months ended  September  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.

During September 2002, the Partnership  refinanced the mortgages encumbering Big
Walnut  Apartments.  The refinancing  replaced a first mortgage of approximately
$3,930,000 and a second mortgage of  approximately  $167,000 with a new mortgage
of $5,720,000.  Total capitalized loan costs were approximately  $153,000 during
the nine months ended September 30, 2002. The  Partnership  recognized a loss on
the early  extinguishment of debt of approximately  $17,000 due to the write-off
of  unamortized  loan costs.  In  addition,  $85,000 was  deposited in an escrow
account to be used to complete required repairs.

Big Walnut Apartments was initially  refinanced under an interim credit facility
("Interim Credit Facility") which has a term of three months. The Interim Credit
Facility includes  properties in other partnerships that are affiliated with the
Partnership.  However,  the Interim Credit Facility  creates  separate loans for
each  property that are not  cross-collaterilized  or  cross-defaulted  with the
other  property  loans.  During  the  three  month  term of the  Interim  Credit
Facility,  the properties will be required to make interest-only  payments.  The
first  month's  interest,  which  was paid at the date of the  refinancing,  was
calculated at LIBOR plus 70 basis points.  Interest for the following two months
will be calculated at LIBOR plus 150 points and is due monthly.

The Managing  General Partner  anticipates that the Interim Credit Facility will
be transferred to a different  lender before the end of the three-month  term of
the Interim Credit Facility.  The credit facility  ("Permanent Credit Facility")
with the new  lender  will have a  maturity  of five  years  with one  five-year
extension option. This Permanent Credit Facility will also create separate loans
for each property that are not  cross-collaterilized or cross-defaulted with the
other property loans.  Each note under this Permanent Credit Facility will begin
as a variable rate loan with the option of converting to a fixed rate loan after
three  years.  The  interest  rate on the  variable  rate loans will be 85 basis
points over the Fannie Mae discounted  mortgage-backed  security index,  and the
rate will reset monthly.  Each loan will automatically  renew at the end of each
month.  In addition,  monthly  principal  payments  will be required  based on a
30-year  amortizations  schedule,  using the interest  rate in effect during the
first month that any property is on the  Permanent  Credit  Facility.  The loans
will be prepayable without penalty.

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  encumbering  Reflections,  The Trails and LaFontenay Apartments of
approximately  $21,691,000,  net of discount,  is amortized over varying periods
with required  balloon  payments ranging from January 2004 to December 2009. The
Managing  General  Partner will attempt to refinance  and/or sell the properties
prior to such maturity date. If the properties  cannot be refinanced or sold for
a sufficient  amount,  the Partnership  may risk losing such properties  through
foreclosure.

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 the  investment  properties  or extend the term of the
Partnership.

No cash  distributions were made during the nine months ended September 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 September 30, 2002,  it is not  anticipated
that the Partnership will make distributions in the foreseeable future.

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 (the "Units") in the Partnership  representing  50.64% of the
outstanding  units at September  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. 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 50.64% 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 Partnership 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.

ITEM 3.     CONTROLS AND PROCEDURES

The principal  executive officer and principal financial officer of the Managing
General Partner, who are the equivalent of the Partnership's principal executive
officer and principal financial officer,  respectively,  have, within 90 days of
the filing date of this quarterly  report,  evaluated the  effectiveness  of the
Partnership's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules  (13a-14(c)  and  (15d-14(c))  and have  determined  that such  disclosure
controls and procedures are adequate.  There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect the  Partnership's  internal  controls since the date of evaluation.  The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.



<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.  On October  30,  2002,  the court
entered an order extending the stay in effect through January 10, 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 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 10OO,  Multifamily  Note secured by a Mortgage or Deed
                  of Trust dated  September 16, 2002,  between Big Walnut,  L.P.
                  and  GMAC  Commercial  Mortgage   Corporation,   a  California
                  Corporation, related to Big Walnut Apartments.

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

            b)    Reports on Form 8-K:

                  None filed during the quarter ended September 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: January 9, 2003



<PAGE>




                                  CERTIFICATION


I, Patrick J. Foye, certify that:


1. I have reviewed this quarterly report on Form 10-QSB of Davidson  Diversified
Real Estate II, L.P.;


2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
      material   information   relating  to  the   registrant,   including   its
      consolidated  subsidiaries,  is made  known to us by others  within  those
      entities, particularly during the period in which this quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  November 13, 2002

                                /s/Patrick J. Foye
                                Patrick J. Foye
                                Executive    Vice    President    of    Davidson
                                Diversified Properties,  Inc., equivalent of the
                                chief executive officer of the Partnership


<PAGE>



                                  CERTIFICATION


I, Paul J. McAuliffe, certify that:


1. I have reviewed this quarterly report on Form 10-QSB of Davidson  Diversified
Real Estate II, L.P.;


2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


      a)  Designed  such  disclosure  controls  and  procedures  to ensure  that
      material   information   relating  to  the   registrant,   including   its
      consolidated  subsidiaries,  is made  known to us by others  within  those
      entities, particularly during the period in which this quarterly report is
      being prepared;


      b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures  as of a date  within 90 days prior to the filing  date of this
      quarterly report (the "Evaluation Date"); and


      c)  Presented  in  this  quarterly   report  our  conclusions   about  the
      effectiveness  of the  disclosure  controls  and  procedures  based on our
      evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):


      a) All  significant  deficiencies  in the design or  operation of internal
      controls which could adversely affect the registrant's  ability to record,
      process,  summarize and report  financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


      b) Any fraud,  whether or not material,  that involves management or other
      employees  who  have  a  significant  role  in the  registrant's  internal
      controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  November 13, 2002

                                /s/Paul J. McAuliffe
                                Paul J. McAuliffe
                                Executive  Vice  President  and Chief  Financial
                                Officer of Davidson Diversified Properties,
                                Inc.,  equivalent of the chief financial officer
                                of the Partnership


<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
September 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:  November 13, 2002


                                    /s/  Paul J. McAuliffe
                                    Name:  Paul J. McAuliffe
                                    Date:  November 13, 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.