--------------------------------------------------------------------------------








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

                               ------------------



                                   FORM 10-QSB


                               ------------------



             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                  For the quarterly period ended March 31, 2001


                               ------------------



                         Commission file number 0-11973


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
             Organized pursuant to the Laws of the State of Maryland


                               ------------------



        Internal Revenue Service - Employer Identification No. 52-1321492

                 11200 Rockville Pike, Rockville, Maryland 20852

                                 (301) 468-9200


                               ------------------





Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No o




--------------------------------------------------------------------------------
<PAGE>



                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2001



                                                                         Page
                                                                         ----
Part I - FINANCIAL INFORMATION

Item 1.    Financial Statements

           Balance Sheets
               - March 31, 2001 and December 31, 2000....................   1

           Statements of Operations and Accumulated Losses
               - for the three months ended March 31, 2001 and 2000......   2

           Statements of Cash Flows
               - for the three months ended March 31, 2001 and 2000......   3

           Notes to Financial Statements
               - March 31, 2001 and 2000.................................   4

Item 2.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations.................................  13


Part II - OTHER INFORMATION

Item 3.    Defaults Upon Senior Securities...............................  16

Item 5.    Other Information.............................................  16

Item 6.    Exhibits and Reports on Form 8-K..............................  17

Signature................................................................  18




<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                                 BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>


                                                                                        March 31,      December 31,
                                                                                          2001            2000
                                                                                      ------------    ------------
                                                                                       Unaudited)
<S>                                                                                   <C>             <C>
Investments in and advances to partnerships .......................................   $    712,385    $    729,191
Investment in partnerships held for sale or transfer ..............................         79,579          79,579
Cash and cash equivalents .........................................................      6,892,805       6,292,654
Acquisition fees, principally paid to related parties,
  net of accumulated amortization of $249,210 and $245,626, respectively ..........        180,778         184,362
Property purchase costs,
  net of accumulated amortization of $232,905 and $229,486, respectively ..........        177,381         180,800
Other assets ......................................................................          1,804           2,538
                                                                                      ------------    ------------

     Total assets .................................................................   $  8,044,732    $  7,469,124
                                                                                      ============    ============




                        LIABILITIES AND PARTNERS' DEFICIT



Due on investments in partnerships ................................................   $  5,050,000    $  5,050,000
Accrued interest payable ..........................................................      9,300,765       9,156,205
Accounts payable and accrued expenses .............................................         66,897         176,350
                                                                                      ------------    ------------

     Total liabilities ............................................................     14,417,662      14,382,555
                                                                                      ------------    ------------

Commitments and contingencies

Partners' capital (deficit):

  Capital paid in:
    General Partners ..............................................................          2,000           2,000
    Limited Partners ..............................................................     50,015,000      50,015,000
                                                                                      ------------    ------------

                                                                                        50,017,000      50,017,000

  Less:
    Accumulated distributions to partners .........................................     (7,569,859)     (7,569,859)
    Offering costs ................................................................     (5,278,980)     (5,278,980)
    Accumulated losses ............................................................    (43,541,091)    (44,081,592)
                                                                                      ------------    ------------

      Total partners' deficit .....................................................     (6,372,930)     (6,913,431)
                                                                                      ------------    ------------

      Total liabilities and partners' deficit .....................................   $  8,044,732    $  7,469,124
                                                                                      ============    ============
</TABLE>


                          The accompanying notes are an
                             integral part of these
                              financial statements.

                                       -1-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

                             AND ACCUMULATED LOSSES

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                        For the three months ended
                                                                                 March 31,
                                                                       ----------------------------
                                                                           2001            2000
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
Share of income from partnerships ..................................   $    752,413    $    652,260
                                                                       ------------    ------------

Other revenue and expenses:

  Revenue:
    Interest .......................................................         79,206         107,533
                                                                       ------------    ------------

  Expenses:
    Interest .......................................................        144,560         275,065
    Management fee .................................................         62,499          62,499
    General and administrative .....................................         55,919          53,162
    Professional fees ..............................................         21,138          25,281
    Amortization of deferred costs .................................          7,002          10,750
                                                                       ------------    ------------

                                                                            291,118         426,757
                                                                       ------------    ------------

      Total other revenue and expenses .............................       (211,912)       (319,224)
                                                                       ------------    ------------

Net income .........................................................        540,501         333,036

Accumulated losses, beginning of period ............................    (44,081,592)    (59,635,188)
                                                                       ------------    ------------

Accumulated losses, end of period ..................................   $(43,541,091)   $(59,302,152)
                                                                       ============    ============


Net income allocated to General Partners (1.51%) ...................   $      8,162    $      5,029
                                                                       ============    ============


Net income allocated to Initial and Special Limited Partners (1.49%)   $      8,053    $      4,962
                                                                       ============    ============


Net income allocated to Additional Limited Partners (97%) ..........   $    524,286    $    323,045
                                                                       ============    ============


Net income per unit of Additional Limited Partner Interest
  based on 50,000 units outstanding ................................   $      10.49    $       6.46
                                                                       ============    ============
</TABLE>

                          The accompanying notes are an
                             integral part of these
                              financial statements.

                                       -2-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                  For the three months ended
                                                                                           March 31,
                                                                                  --------------------------
                                                                                     2001           2000
                                                                                  -----------    -----------
<S>                                                                               <C>            <C>
Cash flows from operating activities:
  Net income ..................................................................   $   540,501    $   333,036

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships .........................................      (752,413)      (652,260)
    Amortization of deferred costs ............................................         7,002         10,750

    Changes in assets and liabilities:
      Decrease (increase) in other assets .....................................           734         (1,272)
      Increase in accrued interest payable ....................................       144,560        275,065
      Decrease in accounts payable and accrued expenses .......................      (109,453)       (52,082)
                                                                                  -----------    -----------

        Net cash used in operating activities .................................      (169,069)       (86,763)
                                                                                  -----------    -----------

Cash flows from investing activities:
  Receipt of distributions from partnerships ..................................       769,220        722,629
                                                                                  -----------    -----------

Cash flows from financing activities:
  Distribution to Additional Limited Partners .................................          --       (1,622,237)
                                                                                  -----------    -----------

Net increase (decrease) in cash and cash equivalents ..........................       600,151       (986,371)

Cash and cash equivalents, beginning of period ................................     6,292,654      8,936,520
                                                                                  -----------    -----------

Cash and cash equivalents, end of period ......................................   $ 6,892,805    $ 7,950,149
                                                                                  ===========    ===========
</TABLE>

                          The accompanying notes are an
                             integral part of these
                              financial statements.

                                       -3-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I.,  Inc. (CRI), the Managing  General  Partner,  the
accompanying unaudited financial statements reflect all adjustments,  consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-II Limited Partnership (the Partnership) as
of March 31, 2001,  and the results of its operations and its cash flows for the
three months ended March 31, 2001 and 2000.  The results of  operations  for the
interim  period  ended March 31, 2001,  are not  necessarily  indicative  of the
results to be expected for the full year.

     The  accompanying  unaudited  financial  statements  have been  prepared in
conformity with accounting  principles  generally  accepted in the United States
and with the  instructions  to Form 10-QSB.  Certain  information and accounting
policies  and footnote  disclosures  normally  included in financial  statements
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States have been  condensed  or omitted  pursuant to such  instructions.
These  condensed  financial  statements  should be read in conjunction  with the
financial  statements  and notes thereto  included in the  Partnership's  annual
report on Form 10-KSB at December 31, 2000.


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.   Due on investments in partnerships and accrued interest payable
     ---------------------------------------------------------------

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the form of purchase money notes having an aggregate principal
balance of $5,050,000 plus aggregate  accrued interest of $9,300,765 as of March
31, 2001,  are payable in full upon the earliest of: (i) sale or  refinancing of
the respective Local Partnership's rental property;  (ii) payment in full of the
respective Local Partnership's permanent loan; or (iii) maturity.

     The maturity  date of the  purchase  money notes  related to the  following
properties  were extended  during 2000.

                                               Original         Extended
         Property        Principal             Maturity         Maturity
         ---------       ----------            --------         --------
         Princeton       $  500,000            01/01/99         01/01/04
         Westgate        $1,400,000 (1)        09/01/98         09/01/03

     (1)  Remaining principal after a partial payment.

     The purchase money notes related to the following  properties were paid off
at a discount during 2000.

         Property                            Principal          Date
         --------                           -----------       --------

         Rolling Green at Amherst           $1,927,500        May 2000
         Rolling Green at Fall River        $4,600,000        May 2000

     The purchase  money note related to  Frenchman's  Wharf II in the principal
amount  of  $3,150,000,  matured  on June 1,  1998,  and  has not  been  paid or
extended.

                                       -4-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the  respective  Local  Partnership.  In the event  that a  purchase  money note
remains unpaid upon maturity,  the noteholder may have the right to foreclose on
the Partnership's  interest in the related Local Partnership.  In the event of a
foreclosure, the excess of the nonrecourse indebtedness over the carrying amount
of the Partnership's investment in the related Local Partnership would be deemed
cancellation of indebtedness  income, which would be taxable to Limited Partners
at a  federal  tax  rate  of  up to  39.6%.  Additionally,  in  the  event  of a
foreclosure,  the Partnership would lose its investment in the Local Partnership
and,  likewise,  its  share of any  future  cash flow  distributed  by the Local
Partnership from rental operations,  mortgage debt refinancings,  or the sale of
the real  estate.  Of the 15 Local  Partnerships  in which  the  Partnership  is
invested as of March 31, 2001, the one Local Partnership  (Frenchman's Wharf II)
with an  associated  purchase  money note which has  matured  and which  remains
unpaid or unextended as of May 7, 2001,  represented  none of the  Partnership's
total  distributions  received from Local  Partnerships and none of the share of
income from Local Partnerships for the immediately preceding two calendar years.

     The  Partnership's  inability  to pay  certain of the  purchase  money note
principal and accrued interest balances when due, and the resulting  uncertainty
regarding the Partnership's  continued  ownership  interest in the related Local
Partnerships,  does not adversely impact the Partnership's  financial  condition
because the  purchase  money  notes are  nonrecourse  and secured  solely by the
Partnership's interest in the related Local Partnerships.  Therefore, should the
investment in any of the Local  Partnerships  with maturing purchase money notes
not produce  sufficient  value to satisfy the related  purchase money notes, the
Partnership's  exposure to loss is limited because the amount of the nonrecourse
indebtedness  of each of the maturing  purchase money notes exceeds the carrying
amount  of the  investment  in,  and  advances  to,  each of the  related  Local
Partnerships. Thus, even a complete loss of the Partnership's interest in one of
these  Local  Partnerships  would  not have a  material  adverse  impact  on the
financial condition of the Partnership.

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of its debt  obligations and to seek  strategies  which will
provide the most favorable outcome to the limited partners.  However,  there can
be no assurance that these strategies will be successful.

     Interest  expense on the  Partnership's  purchase money notes for the three
month  periods  ended  March  31,  2001 and 2000,  was  $144,560  and  $275,065,
respectively.  The  accrued  interest  payable on the  purchase  money  notes of
$9,300,765  and  $9,156,205  as  of  March  31,  2001  and  December  31,  2000,
respectively,  is due on the  respective  maturity  dates of the purchase  money
notes or earlier, in some instances, if (and to the extent of a portion thereof)
the related Local Partnership has distributable net cash flow, as defined in the
relevant Local Partnership agreements.

                                       -5-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                              Frenchman's Wharf II
                              --------------------

     The Partnership defaulted on its purchase money note related to Frenchman's
Wharf Associates II Limited  Partnership  (Frenchman's Wharf II) on June 1, 1998
when the note matured and was not paid.  The default amount  included  principal
and accrued  interest of $3,150,000 and $5,071,731,  respectively.  As of May 7,
2001,  principal  and  accrued  interest  totaling  $3,150,000  and  $6,087,497,
respectively,  were due. The purchase  money note was initially due to mature on
June 1, 1988,  but was  extended  to mature on June 1, 1998.  The holders of the
purchase  money note  initiated  foreclosure  proceedings  in May 2000, but have
indicated  they will not pursue the lawsuit  while  efforts to sell the property
are underway.

     In 1996, the U. S. Department of Housing and Urban  Development  (HUD) sold
the mortgage loan to a third party lender. The previously agreed-to  Provisional
Workout  Agreement  with HUD  expired in May 2000.  On May 31,  2000,  the local
managing general partner obtained a forbearance  agreement from the lender which
was to expire initially on March 31, 2001 but has been extended to May 10, 2001.
The forbearance agreement allows for the discounted payoff of the mortgage loan.
In January  2001,  the Local  Partnership  entered  into a contract to sell this
property  with  the  adjacent  property  (not a  Partnership  investment)  for a
combined price of $15.2 million.  It appears that the purchaser will not be able
to consummate  the purchase.  However,  the local  managing  general  partner is
exploring other sale and refinancing  scenarios.  Unless the necessary funds can
be raised within the extended  forbearance  period,  it appears  likely that the
first mortgage lender will obtain the  Frenchman's  Wharf II real estate through
confessed judgement or deed-in-lieu of foreclosure, on or after May 10, 2001.

     In the event of a foreclosure,  the Partnership would lose its share of any
future cash flow distributed by the Local  Partnership  from rental  operations,
mortgage  debt  refinancings,  or  the  sale  of the  real  estate.  Should  the
Partnership  lose  its  ownership  interest  in  Frenchman's  Wharf  II  through
foreclosure of the purchase money note,  there would be no adverse impact on the
Partnership's financial condition, as discussed above. However, should the Local
Partnership lose its real estate through  foreclosure by its mortgage lender, it
is anticipated that there will be a severe adverse tax impact on the partners in
the  Partnership.  The total  federal  tax gain from  cancellation  of  mortgage
indebtedness  and purchase money note  indebtedness for the year 2001 related to
Frenchman's Wharf II is estimated to be approximately $16.3 million.

     Due to the  impending  sale or  transfer  of the  property  related  to the
Partnership's investment in Frenchman's Wharf II, the net unamortized amounts of
acquisition fees and property  purchase costs,  which totaled $56,217 as of both
March 31, 2001 and December 31, 2000,  have been  reclassified  to investment in
partnerships held for sale or transfer in the accompanying balance sheets.

                                       -6-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                    Princeton
                                    ---------

     The  Partnership  defaulted on its purchase money note related to Princeton
Community  Village  Associates  (Princeton)  on  January  1,  1999 when the note
matured and was not paid.  The default  amount  included  principal  and accrued
interest  of  $500,000  and  $1,422,064,  respectively.  On August 9, 1999,  the
noteholder filed a complaint seeking  declaratory  judgment that the Partnership
had forfeited its interest in Princeton to the  noteholders.  The litigation was
settled  effective  January 1, 2000,  when the Managing  General Partner entered
into an agreement with the noteholder  which granted the noteholder four options
to purchase the Partnership's  98.99% limited partnership  interest in Princeton
over a three and one-half  year  period,  in exchange  for the  cancellation  of
pro-rata  portions of the then outstanding  balance of the purchase money notes.
As part of the  agreement,  the  noteholder  extended the  maturity  date of the
purchase  money note to January 1, 2004, and the  Partnership  made a payment to
the noteholder on April 21, 2000,  which was applied  against  accrued  interest
payable on the purchase money note.

     On May 31, 2000, pursuant to the option agreement, the noteholder purchased
a 26% interest in Princeton from the Partnership,  the  consideration  for which
was the cancellation of a like percentage of the outstanding purchase money note
accrued  interest  of  $493,027,   resulting  in  net  extraordinary  gain  from
extinguishment of debt of $484,862 for financial  statement purposes in 2000 and
in cancellation of indebtedness income of $1,960,030 for federal tax purposes in
2000.

     Due to the  impending  and  likely  transfer  of the  remaining  74% of the
Partnership's  investment in Princeton over the next three years, the investment
in and advances to partnerships plus net unamortized amounts of acquisition fees
and property  purchase costs related to Princeton,  which totaled  $23,362 as of
both March 31, 2001 and December 31, 2000, have been  reclassified to investment
in partnerships held for sale or transfer in the accompanying balance sheets.

b.   Advances to Local Partnerships
     ------------------------------

     As of both March 31,  2001 and  December  31,  2000,  the  Partnership  had
advanced funds to Local  Partnerships  totaling  $474,410.  Interest  accrued on
these advances was $187,372 as of both March 31, 2001 and December 31, 2000. For
financial  reporting  purposes,  these  loans  have been  reduced to zero by the
Partnership  as a result of losses from the related  Local  Partnerships  during
prior years.

                              Frenchman's Wharf II
                              --------------------

     To cover operating  deficits  incurred in prior years for Frenchman's Wharf
II, the Partnership  advanced funds totaling  $324,410 as of both March 31, 2001
and December 31, 2000. No advances have been made to Frenchman's  Wharf II since
March 1987, and the Partnership  does not expect to advance any additional funds
to the Local  Partnership.  These  loans,  together  with  accrued  interest  of
$187,372 as of both March 31, 2001 and December 31, 2000,  are payable from cash
flow of  Frenchman's  Wharf II after payment of first  mortgage debt service and
after  satisfaction by the Partnership of certain other interest  obligations on
the purchase money notes

                                       -7-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

relating to the Local  Partnership.  No interest has been accrued since 1992 due
to the  uncertainty of future  collection.  There is no assurance that the Local
Partnership,  upon  expiration of the  forbearance  agreement  with its mortgage
lender on May 10, 2001,  will be able to repay the loans in accordance  with the
terms thereof.  For financial reporting purposes,  these loans have been reduced
to zero by the  Partnership  as a  result  of  losses  from  the  related  Local
Partnership  during prior years. See Note 2.a., above,  concerning the potential
foreclosure on the real estate in 2001.

                           Posada Vallarta Apartments
                           --------------------------

     The Managing  General  Partner and the local  managing  general  partner of
Posada Associates Limited  Partnership (Posada Vallarta  Apartments)  refinanced
the  property's  mortgage  loan  on  May  26,  1998.  In  connection  with  such
refinancing,  the  Partnership  advanced  the  Local  Partnership  $450,000  for
application and rate lock fees. As of both March 31, 2001 and December 31, 2000,
$300,000 of the  advances  had been  repaid to the  Partnership.  For  financial
reporting  purposes,  the  remaining  advance  has been  reduced  to zero by the
Partnership  as a result of losses from the  related  Local  Partnership  during
prior years.

c.   Property matters
     ----------------

                                   Chevy Chase
                                   -----------

     The Managing  General Partner and the local managing general partner (CRHC,
an affiliate of the Managing  General  Partner)  considered  various  options to
refinance the HUD Section 236 interest rate subsidized  mortgage loan related to
Chevy  Chase,  or to enter the  Mark-up-to-Market  program.  The local  managing
general  partner  agreed to HUD's  analysis of the  property  and  proposal  for
Mark-up-to-Market,  and the  property  has  entered  into the  Mark-up-to-Market
program,  effective  September 2000, for a five year term, subject to the annual
availability of funding by Congress.  HUD's analysis  indicated that gross rents
should increase by approximately $475,000 per year.

                              Frenchman's Wharf II
                              --------------------

     The report of the auditors on the financial statements of Frenchman's Wharf
II for the year ended December 31, 2000 indicated that substantial  doubt exists
about the ability of the Local Partnership to continue as a going concern due to
the Local  Partnership's  default on its mortgage loan and the expiration of its
Section 8 Rental  Housing  Assistance  Payments  (HAP)  contract  with HUD.  The
Section 8 HAP contract  subsequently  was extended  for another  year.  See Note
2.a., above, concerning the potential foreclosure on the real estate in 2001.

                                Orangewood Plaza
                                ----------------

     The 1983 construction loan related to Orangewood Plaza, a 40-unit apartment
building in Orange Cove, California, was never formally converted to a permanent
loan. It is now  anticipated  that this loan will be  restructured  in 2001 as a
permanent  loan,  with no tax  impact to either  the  Local  Partnership  or the
Partnership. There is no assurance that the restructuring will be

                                       -8-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

consummated.  Accordingly,  there is no assurance that the  Partnership  will be
able to retain its  interest in  Orangewood  Plaza.  This  uncertainty  does not
adversely impact the Partnership's financial condition, as discussed above.

     In 1983, the Partnership  pledged its interest in the local  partnership as
security on an  acquisition  note, in the amount of $170,000,  made by the local
partnership. With the closing of the new permanent loan in 2001, on May 7, 2001,
the  Partnership   made  a  capital   contribution  of  $198,241  to  the  local
partnership,  which amount will be used to pay in full the principal and accrued
interest on the acquisition note.

                                    Princeton
                                    ---------

     Princeton  defaulted on its project  subsidy  loan.  The maturity  date was
extended five years to January 1, 2004, as part of litigation  settled effective
January 1, 2000, when the Managing  General  Partner and the noteholder  entered
into an agreement  extending  the maturity  date of the purchase  money note, as
discussed above.

d.   Summarized financial information
     --------------------------------

     Combined  statements of operations for the 15 and 17 Local  Partnerships in
which the Partnership was invested as of March 31, 2001 and 2000,  respectively,
follow. The combined statements have been compiled from information  supplied by
the management agents of the projects and are unaudited.

                        COMBINED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                   For the three months ended
                                                            March 31,
                                                 -------------------------------
                                                    2001                2000
                                                 -----------        ------------

Revenue:
  Rental .................................       $ 4,861,740        $ 5,931,454
  Other ..................................           211,391            213,510
                                                 -----------        -----------

    Total revenue ........................         5,073,131          6,144,964
                                                 -----------        -----------

Expenses:
  Operating ..............................         2,990,201          3,709,072
  Interest ...............................         1,428,191          1,680,011
  Depreciation and amortization ..........           910,645          1,112,016
                                                 -----------        -----------

    Total expenses .......................         5,329,037          6,501,099
                                                 -----------        -----------

Net loss .................................       $  (255,906)       $  (356,135)
                                                 ===========        ===========

                                       -9-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     As of March 31, 2001 and 2000, the Partnership's share of cumulative losses
to date for 11 of the 15 and 17 Local Partnerships,  respectively,  exceeded the
amount  of  the  Partnership's  investments  in  and  advances  to  those  Local
Partnerships by $26,154,823 and  $25,410,195,  respectively.  As the Partnership
has no further  obligation to advance funds or provide  financing to these Local
Partnerships,  the excess  losses have not been  reflected  in the  accompanying
financial statements.


3.   AFFORDABLE HOUSING LEGISLATION

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of  project-based  Section 8 Rental Housing  Assistance  Payments
(HAP)  provided by the U.S.  Department of Housing and Urban  Development  (HUD)
pursuant  to Section 8 HAP  contracts.  Current  legislation  allows all expired
Section 8 HAP contracts  with rents at less than 100% of fair market rents to be
renewed for one year.  Expiring  Section 8 HAP contracts  with rents that exceed
100% of fair market rents could be renewed for one year, but at rents reduced to
100% of fair market rents (Mark-to-Market). All expiring Section 8 HAP contracts
with rents exceeding comparable market rents, and properties with mortgage loans
insured by the  Federal  Housing  Administration  (FHA),  became  subject to the
Mark-to-Market legislation.

     Mark-to-Market  implementation will reduce rental income at properties that
are currently subsidized at higher-than-market  rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     The Section 8 HAP contracts for the following  properties have expired,  or
will expire in 2001, and have been renewed as indicated.

<TABLE>
<CAPTION>

                                                    Units Authorized         Original            Renewed
                                       Number         for Rental           Expiration of       Expiration of
                                     of Rental      Assistance Under         Section 8           Section 8
         Property                      Units            Section 8          HAP Contract        HAP Contract
         --------                    ---------      ----------------       -------------       ------------
         <S>                         <C>            <C>                    <C>                 <C>
         Arrowhead Apartments           200                40                 05/31/01             (1)
         Country Place II               120                24                 08/29/00         09/30/01 (2)
                                        ---               ---

             Total                      320                64
                                        ===               ===
</TABLE>

          (1)  The  Managing  General  Partner  expects  that this Section 8 HAP
               contract will be renewed for a five year period.

          (2)  The  Managing  General  Partner  expects  that this Section 8 HAP
               contract will be renewed at six month intervals.


                                      -10-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


3.   AFFORDABLE HOUSING LEGISLATION - Continued

     With the  uncertainty  of continued  project-based  Section 8 subsidies for
properties  with  expiring  HAP  contracts,  there is no  assurance  that rental
properties  with HAP contract  rents in excess of fair market rents will be able
to maintain the rental  income and occupancy  levels  necessary to pay operating
costs and debt  service.  However,  for the year 2001,  the number of  apartment
units with expiring  Section 8 subsidies is nominal and should have little to no
impact on the Partnership's  investments in Local  Partnerships at this time. As
of March 31, 2001, the carrying amount of the  Partnership's  investments in and
advances to Local Partnerships with Section 8 HAP contracts expiring in 2001 was
$0.

     Under  HUD's  more  recent  "Mark-up-to-Market"  program,  properties  with
expiring  Section 8 HAP contracts that are located in high-rent areas as defined
by HUD are eligible for rent increases which would be necessary to bring Section
8 rents in line with market rate rents.  For  properties  that enter the program
and have interest rate subsidized FHA loans, the rents are adjusted to take into
account the  benefits the property is already  receiving  from the  below-market
interest rate by means of a HUD-determined  Interest Subsidy  Adjustment Factor.
The purpose of this  program is to provide  incentives  to owners of  properties
with expiring  Section 8 HAP contracts not to convert these properties to market
rate housing.

     In return for  receiving  market  rate rents under  Mark-up-to-Market,  the
property  owner must enter into a five year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter into the  Mark-up-to-  Market program will
receive  increased  cash flow,  as the limited  dividend will be increased in an
amount equal to the increase in gross revenues.


4.   RELATED PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to reimburse the Managing  General  Partner for its direct expenses
in connection with managing the  Partnership.  The Partnership  paid $41,971 and
$49,857 for the three month periods ended March 31, 2001 and 2000, respectively,
to the Managing General Partner as direct  reimbursement of expenses incurred on
behalf of the  Partnership.  Such  expenses  are  included  in the  accompanying
statements of operations as general and administrative expenses.

     In accordance with the terms of the Partnership Agreement,  the Partnership
is obligated to pay the Managing General Partner an annual incentive  management
fee (Management  Fee), after all other expenses of the Partnership are paid. The
Partnership  paid the Managing  General  Partner a Management Fee of $62,499 for
each of the three month periods ended March 31, 2001 and 2000.

                                      -11-

<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                             March 31, 2001 and 2000

                                   (Unaudited)


4.   RELATED PARTY TRANSACTIONS

     The Managing General Partner and/or its affiliates may receive a fee of not
more than two percent of the sales price of an investment in a Local Partnership
or the property it owns,  payable under certain  conditions  upon the sale of an
investment in a Local  Partnership  or the property it owns.  The payment of the
fee is subject to certain  restrictions,  including the achievement of a certain
level of sales  proceeds and making  certain  minimum  distributions  to limited
partners.  No such  fees were  earned by the  Managing  General  Partner  or its
affiliates for the three month periods ended March 31, 2001 or 2000.


5.   SUBSEQUENT EVENT

     On May 2, 2001, the Partnership made a cash distribution of $3,244,150 ($65
per Unit) to Additional  Limited  Partners,  to holders of record as of April 1,
2001.

                                      -12-
<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations


     Capital  Realty  Investors-II   Limited   Partnership's  (the  Partnership)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations section contains  information that may be considered forward looking,
including  statements regarding the effect of governmental  regulations.  Actual
results  may differ  materially  from those  described  in the  forward  looking
statements and will be affected by a variety of factors  including  national and
local economic  conditions,  the general level of interest  rates,  governmental
regulations  affecting the Partnership and interpretations of those regulations,
the  competitive   environment  in  which  the  Partnership  operates,  and  the
availability of working capital.

                                     General
                                     -------

     Some of the rental properties owned by the Local  Partnerships are financed
by state housing agencies.  The Managing General Partner has sold or refinanced,
and will continue to sell or refinance,  certain properties pursuant to programs
developed by these agencies.  These programs may include opportunities to sell a
property to a qualifying  purchaser  who would agree to maintain the property as
low to  moderate  income  housing,  or to  refinance  a  property,  or to obtain
supplemental  financing.  The  Managing  General  Partner  continues  to monitor
certain state  housing  agency  programs,  and/or  programs  provided by certain
lenders, to ascertain whether the properties would qualify within the parameters
of a given  program and whether  these  programs  would  provide an  appropriate
economic benefit to the limited partners of the Partnership.

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of  project-based  Section 8 Rental Housing  Assistance  Payments
(HAP)  provided by the U.S.  Department of Housing and Urban  Development  (HUD)
pursuant  to Section 8 HAP  contracts.  Current  legislation  allows all expired
Section 8 HAP contracts  with rents at less than 100% of fair market rents to be
renewed for one year.  Expiring  Section 8 HAP contracts  with rents that exceed
100% of fair market rents could be renewed for one year, but at rents reduced to
100% of fair market rents (Mark-to-Market). All expiring Section 8 HAP contracts
with rents exceeding comparable market rents, and properties with mortgage loans
insured by the  Federal  Housing  Administration  (FHA),  became  subject to the
Mark-to-Market legislation.

     Mark-to-Market  implementation will reduce rental income at properties that
are currently subsidized at higher-than-market  rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses. Each
affected property may undergo debt  restructuring  according to terms determined
by an individual property and operations  evaluation.  This may involve reducing
the first mortgage loan balance to an amount supportable by the property, taking
into account the property's  operating  expenses and reduced income. The balance
of the amount  written down from the first  mortgage loan will be converted to a
non-performing but accruing (soft) second mortgage loan.

     In many instances, the Mark-to-Market rental rate restructuring may require
the write down of an FHA-insured mortgage loan, which would trigger cancellation
of indebtedness  income to the partners,  a taxable event, even though no actual
cash  is  received.  Additionally,  if  the  existing  first  mortgage  loan  is
bifurcated  into a first and second  mortgage  loan,  the newly  created  second
mortgage loan will accrue interest at a below-market rate; however, the Internal
Revenue   Service  issued  a  ruling  in  July  1998  that  concluded  that  the
below-market rate of interest will not generate additional ordinary income. Each
property subject to Mark-to-Market  will be affected in a different manner,  and
it is very  difficult to predict the exact form of  restructuring,  or potential
tax liabilities to the limited partners, at this time.

                                      -13-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued

     Under  HUD's  more  recent  "Mark-up-to-Market"  program,  properties  with
expiring  Section 8 HAP contracts that are located in high-rent areas as defined
by HUD are eligible for rent increases which would be necessary to bring Section
8 rents in line with market rate rents.  For  properties  that enter the program
and have interest rate subsidized FHA loans, the rents are adjusted to take into
account the  benefits the property is already  receiving  from the  below-market
interest rate by means of a HUD-determined  Interest Subsidy  Adjustment Factor.
The purpose of this  program is to provide  incentives  to owners of  properties
with expiring  Section 8 HAP contracts not to convert these properties to market
rate housing.

     In return for  receiving  market  rate rents under  Mark-up-to-Market,  the
property  owner must enter into a five year  conditional  Section 8 HAP contract
with HUD,  subject  to the  annual  availability  of  funding  by  Congress.  In
addition,  property  owners who enter into the  Mark-up-to-  Market program will
receive  increased  cash flow,  as the limited  dividend will be increased in an
amount equal to the increase in gross revenues.

     The Managing General Partner is considering new strategies to deal with the
ever changing  environment  of affordable  housing  policy.  The Section 236 and
Section  221(d)(3)  mortgage loans may be eligible for pre-payment in their 18th
year or later.  Properties  with  expiring  Section 8 HAP  contracts  may become
convertible to market rate  apartment  properties.  Currently,  few lenders will
provide  financing  either to prepay  existing  mortgage loans of these types or
provide  additional  funds to allow a property  to convert to market rate units.
Where  opportunities  exist,  the Managing General Partner will continue to work
with the Local  Partnerships to develop  strategies that make economic sense for
all parties involved.

                          Financial Condition/Liquidity
                          -----------------------------

     The Partnership's liquidity, with unrestricted cash resources of $6,892,805
as of March 31, 2001, along with anticipated  future cash distributions from the
Local  Partnerships,  is  expected  to be  adequate  to  meet  its  current  and
anticipated  operating cash needs. On May 2, 2001, the  Partnership  made a cash
distribution of $3,244,150  ($65 per Unit) to Additional  Limited  Partners,  to
holders of record as of April 1, 2001. As of May 7, 2001, there were no material
commitments for capital expenditures.

     The  Partnership's  obligations  with respect to its  investments  in Local
Partnerships,  in the form of purchase money notes having an aggregate principal
balance of $5,050,000 plus aggregate  accrued interest of $9,300,765 as of March
31, 2001,  are payable in full upon the earliest of: (i) sale or  refinancing of
the respective Local Partnership's rental property;  (ii) payment in full of the
respective Local Partnership's permanent loan; or (iii) maturity.

     The maturity  date of the  purchase  money notes  related to the  following
properties were extended during 2000.

                                                 Original         Extended
         Property        Principal               Maturity         Maturity
         --------        ----------              --------         --------
         Princeton       $  500,000              01/01/99         01/01/04
         Westgate        $1,400,000 (1)          09/01/98         09/01/03

        (1)  Remaining principal after a partial payment.


                                      -14-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued

     The purchase money notes related to the following  properties were paid off
at a discount during 2000.

         Property                             Principal            Date
         --------                            -----------         --------
         Rolling Green at Amherst            $1,927,500          May 2000
         Rolling Green at Fall River         $4,600,000          May 2000

     The purchase  money note related to  Frenchman's  Wharf II in the principal
amount  of  $3,150,000,  matured  on June 1,  1998,  and  has not  been  paid or
extended.

     See the notes to financial  statements contained in Part I, Item 1, hereof,
for additional information concerning these purchase money notes.

     The purchase money notes,  which are  nonrecourse to the  Partnership,  are
generally  secured  by  the  Partnership's  interest  in  the  respective  Local
Partnerships.  There is no assurance  that the underlying  properties  will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes'  principal and accrued  interest when due. If a purchase money note
is not paid in accordance with its terms,  the  Partnership  will either have to
renegotiate  the terms of repayment or risk losing its  partnership  interest in
the  respective  Local  Partnership.  In the event  that a  purchase  money note
remains unpaid upon maturity,  the noteholder may have the right to foreclose on
the Partnership's interest in the related Local Partnerships.  In the event of a
foreclosure, the excess of the nonrecourse indebtedness over the carrying amount
of the Partnership's investment in the related Local Partnership would be deemed
cancellation of indebtedness  income, which would be taxable to Limited Partners
at a  federal  tax  rate  of  up to  39.6%.  Additionally,  in  the  event  of a
foreclosure,  the Partnership would lose its investment in the Local Partnership
and,  likewise,  its  share of any  future  cash flow  distributed  by the Local
Partnership from rental operations,  mortgage debt refinancings,  or the sale of
the real  estate.  Of the 15 Local  Partnerships  in which  the  Partnership  is
invested as of March 31, 2001, the one Local Partnership  (Frenchman's Wharf II)
with an  associated  purchase  money note which has  matured  and which  remains
unpaid or unextended as of May 7, 2001,  represented  none of the  Partnership's
total  distributions  received from Local  Partnerships and none of the share of
income from Local Partnerships for the immediately preceding two calendar years.

     The  Partnership's  inability  to pay  certain of the  purchase  money note
principal and accrued interest balances when due, and the resulting  uncertainty
regarding the Partnership's  continued  ownership  interest in the related Local
Partnerships,  does not adversely impact the Partnership's  financial  condition
because the  purchase  money  notes are  nonrecourse  and secured  solely by the
Partnership's interest in the related Local Partnerships.  Therefore, should the
investment in any of the Local  Partnerships  with maturing purchase money notes
not produce  sufficient  value to satisfy the related  purchase money notes, the
Partnership's  exposure to loss is limited because the amount of the nonrecourse
indebtedness  of each of the maturing  purchase money notes exceeds the carrying
amount  of the  investment  in,  and  advances  to,  each of the  related  Local
Partnerships. Thus, even a complete loss of the Partnership's interest in one of
these  Local  Partnerships  would  not have a  material  adverse  impact  on the
financial condition of the Partnership.

     The  Managing  General  Partner  continues  to  address  the  maturity  and
impending  maturity of its debt  obligations and to seek  strategies  which will
provide the most favorable outcome to the limited partners.  However,  there can
be no assurance that these strategies will be successful.

                                      -15-

<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion Analysis of Financial Condition
          and Results of Operations - Continued

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient  cash is available for operating  requirements.
For the three  month  periods  ended  March 31,  2001 and 2000,  the  receipt of
distributions  from Local  Partnerships  was adequate to support  operating cash
requirements.  Cash and cash equivalents increased during the three months ended
March 31, 2001, as the receipt of distributions  from partnerships  exceeded net
cash used in operating activities.

                              Results of Operations
                              ---------------------

     The  Partnership's  net income for the three month  period  ended March 31,
2001,  increased  from  the  corresponding  period  in 2000  primarily  due to a
decrease in interest  expense  related to lower  purchase  money note  balances.
Contributing  to  the  increase  were  an  increase  in  share  of  income  from
partnerships  as a result of higher cash  distributions  received from two Local
Partnerships  in which the  Partnership  had reduced its investment to zero as a
result  of  previous  losses  from  the  related  Local  Partnerships,  and  the
recognition  of share of income  from one Local  Partnership  in which  share of
income had previously been offset by excluded losses.  Partially  offsetting the
increase in share of income from  partnerships  was the exclusion of income from
one property  sold in 2000.  Offsetting  the increase in the  Partnership's  net
income was lower interest revenue received due to lower cash and cash equivalent
balances and lower interest rates in 2001.

     For financial reporting purposes, the Partnership,  as a limited partner in
the Local  Partnerships,  does not record losses from the Local  Partnerships in
excess of its  investment  to the  extent  that the  Partnership  has no further
obligation to advance funds or provide financing to the Local Partnerships. As a
result, the Partnership's  share of income from partnerships for the three month
periods  ended March 31, 2001 and 2000 did not  include  losses of $370,039  and
$470,980, respectively.

     No other  significant  changes in the  Partnership's  operations have taken
place during this period.


Part II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities

     See Note 2.a. of the notes to  financial  statements  contained  in Part I,
Item 1, hereof, for information concerning the Partnership's defaults on certain
purchase money notes.


Item 5. Other Information

     There  is no  established  market  for the  purchase  and  sale of units of
additional  limited  partnership  interest (Units) in the Partnership,  although
various  informal  secondary  market services exist. Due to the limited markets,
however, investors may be unable to sell or otherwise dispose of their Units.

     On March 13, 2001, Bond Purchase,  L.L.C.  (Bond) initiated an unregistered
tender offer to purchase  approximately  2,475 of the  outstanding  Units in the
Partnership at a price of $53 per Unit;  the offer expired April 30, 2001.  Bond
is unaffiliated with the Partnership or the Managing General Partner.  The price
offered was determined solely at the discretion of Bond and does not necessarily
represent the fair market value of each Unit.

     The Managing General Partner has not expressed,  and does not express,  any
opinion and remains  neutral  toward any offer for the purchase of Units such as
that described above.

                                      -16-

<PAGE>
Part II. OTHER INFORMATION
Item 5. Other Information - Continued

     If more than five percent of the total outstanding Units in the Partnership
are  transferred  due to sale in any one  calendar  year (not  counting  certain
exempt  transfers),  the  Partnership  could  be  taxed  as a  "publicly  traded
partnership,"  with potentially  severe tax implications for the Partnership and
its investors. Specifically, the Partnership could be taxed as a corporation and
the income and  losses  from the  Partnership  would no longer be  considered  a
passive  activity.  For the calendar year 2001 to May 7, 2001, Units transferred
have  not  exceeded  4.9%  of  the  total  outstanding  Units,  therefore,   the
Partnership has not halted recognition of transfers.

     On May 2, 2001, the Partnership made a cash distribution of $3,244,150 ($65
per Unit) to Additional  Limited  Partners,  to holders of record as of April 1,
2001.


Item 6. Exhibits and Reports on Form 8-K

     a.   None

     b.   A Report on Form 8-K was  dated  March 13,  2001,  and filed  April 3,
          2001; the report  discussed a tender offer initiated by Bond Purchase,
          L.L.C. on March 13, 2001. See Part II, Item 5, hereof, for information
          concerning the tender offer.

     All other items are not applicable.

                                      -17-

<PAGE>
                                    SIGNATURE


     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.


                                  CAPITAL REALTY INVESTORS-II LIMITED
                                    PARTNERSHIP
                                  ----------------------------------------------
                                  (Registrant)

                                  by: C.R.I., Inc.
                                      ------------------------------------------
                                      Managing General Partner




May 7, 2001                           by:  /s/ Michael J. Tuszka
-----------                                -------------------------------------
DATE                                       Michael J. Tuszka
                                             Vice President
                                             and Chief Accounting Officer
                                             (Principal Financial Officer
                                             and Principal Accounting Officer)

                                      -18-