SECOND AMENDMENT TO CREDIT AGREEMENT


               This Second Amendment to Credit Agreement (the "Second
          Amendment") is made as of August 31, 1998 by and among ASSOCIATED
          ESTATES REALTY CORPORATION ("Borrower"); NATIONAL CITY BANK, as
          Managing Agent (the "Managing Agent"), for itself and on behalf
          of the Existing Banks (defined below); NATIONAL CITY BANK
          ("National City"); BANK OF AMERICA NATIONAL TRUST AND SAVINGS
          ASSOCIATION ("Bank of America"); and COMMERZBANK
          AKTIENGESELLSCHAFT ("Commerzbank").

                                       RECITALS

               A.   Pursuant to a Credit Agreement (the "Credit
          Agreement"), dated as of June 30, 1998, by and among Borrower,
          the Managing Agent, Bank of America National Trust and Savings
          Association as Documentation Agent and the Banks identified on
          Schedule 1 thereof, such Banks agreed to provide Borrower with a
          credit facility in the aggregate principal amount not to exceed
          Two Hundred Million Dollars ($200,000,000).

               B.   Pursuant to a First Amendment to Credit Agreement,
          dated as of August 7, 1998 (the "First Amendment"), the maximum
          principal amount of the credit facility available pursuant to the
          Credit Agreement was increased to an amount not to exceed Two
          Hundred Thirty-Five Million Dollars ($235,000,000), and
          FirstMerit Bank, N.A., and SouthTrust Bank, N.A. became "Banks"
          for all purposes relevant to the aforementioned Credit Agreement;
          such Credit Agreement, as so amended, is referred to herein as
          the "Amended Credit Agreement".  FirstMerit Bank, N.A.,
          SouthTrust Bank, N.A. and all of the Banks identified on Schedule
          1 to the Credit Agreement are sometimes referred to as the
          "Existing Banks".

               C.   Section 2.1(c) of the Amended Credit Agreement provides
          that Borrower may request that the maximum principal amount of
          the credit facility provided thereby be increased to a principal
          amount not to exceed Two Hundred Fifty Million Dollars
          ($250,000,000) on the terms and subject to the conditions set
          forth therein.

               D.   Section 8.17(a) of the Credit Agreement provides, among
          other things, that each Bank may assign all or a portion of its
          interests, rights and obligations under the Credit Agreement to
          any bank or other financial institution, provided that the amount
          of the interests so assigned shall equal or exceed Five Million
          Dollars ($5,000,000) of the assigning Bank's Credit Commitment,
          and subject to the other terms and conditions set forth therein.

               E.   Borrower has requested an increase in the maximum
          principal amount of the credit facility provided by the Amended
          Credit Agreement in accordance with the applicable requirements
          set forth therein, and Commerzbank has (1) agreed to become an
          additional Bank under the Credit Agreement as contemplated by
          Section 2.1(c) thereof; and (2) requested that each of National
          City and Bank of America assign to it portions, each in the
          amount of Five Million Dollars ($5,000,000), of their respective

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          Credit Commitments under this Amended Credit Agreement
          concurrently with its becoming a Bank as aforesaid.

               F.   National City and Bank of America have agreed, with
          Borrower's approval, to effect such assignments, and the parties
          hereto have agreed to execute and deliver this Second Amendment
          for the purposes of setting forth the terms of such assignments
          and of the amendment to the Amended Credit Agreement with respect
          to the inclusion of Commerzbank as a Bank and the increase in the
          amount of the Maximum Commitment.

               NOW, THEREFORE, for Ten Dollars ($10.00) and other valuable
          consideration, the receipt and sufficiency of which are hereby
          acknowledged, the parties to this Second Amendment agree as
          follows:

               1.   Incorporation of Recitals; Capitalized Terms.  The
          foregoing recitals are incorporated herein by this reference. 
          Capitalized terms which are used but not defined herein shall
          have the respective meanings ascribed to such terms in the
          Amended Credit Agreement.

               2.   Assignments.  

               (a)  Effective on and as of August 31, 1998 (the "Effective
          Date"), National City hereby assigns to Commerzbank a portion, in
          the amount of Five Million Dollars ($5,000,000), of National
          City's Credit Commitment under the Amended Credit Agreement.

               (b)  Effective on and as of the Effective Date, Bank of
          America hereby assigns to Commerzbank a portion, in the amount of
          Five Million Dollars ($5,000,000), of Bank of America's Credit
          Commitment under the Amended Credit Agreement.

               (c)  Each of the foregoing assignments is made upon and
          subject to the terms of Section 8.17(a) of the Amended Credit
          Agreement.  The Managing Agent and the Borrower hereby approve
          the inclusion of Commerzbank as a "Bank" under the Amended Credit
          Agreement.  From and after the Effective Date, neither National
          City nor Bank of America shall have any rights or obligations
          under the Amended Credit Commitment in respect of that portion of
          its respective Credit Commitment assigned to Commerzbank as
          aforesaid (other than any rights relative to such assigned
          interests under Section 9.5 of the Amended Credit Agreement which
          are to survive such assignment pursuant to the express terms of
          Section 9.5 of the Amended Credit Agreement.  On the Effective
          Date, National City and Bank of America shall each pay to
          Commerzbank, in connection with the foregoing assignments:  (i)
          an apportioned share of the Closing Fee heretofore paid to it in
          connection with the Amended Credit Agreement, in the amount of
          Seventeen Thousand Six Hundred Seventy-Three and 63/100's Dollars
          ($17,673.63), and (ii) a prorated portion of the Facility Fee
          previously received by it in respect of the initial year of the
          credit facility contemplated by the Amended Credit Agreement, in
          the amount of Six Thousand Two Hundred Eight and 23/100's Dollars
          ($6,208.23).



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               3.   Assumption of the Assigned Interests; Inclusion of
          Commerzbank as a Bank.

               (a)  Commerzbank warrants and represents to the Managing
          Agent, for its benefit and for the benefit of each of the
          Existing Banks, that (i) Commerzbank has the requisite right,
          power and authority to perform all of the duties and obligations
          of a Bank under the Amended Credit Agreement (including but not
          limited to the obligations to make the Loans and to participate
          in the issuance of the Letters of Credit to be made or issued as
          contemplated thereby); (ii) Commerzbank has the right to receive
          all payments to be made to it under the Amended Credit Agreement
          and the other Loan Documents without deduction or withholding of
          United States Federal income taxes; and (iii) Commerzbank has
          received a true and complete copy of the Credit Agreement and of
          the First Amendment, and has reviewed and approved the same.

               (b)  Effective on and as of the Effective Date, Commerzbank
          shall become a Bank under the Amended Credit Agreement.  Borrower
          and the Managing Agent each acknowledges that it approves the
          inclusion of Commerzbank as a Bank under the Amended Credit
          Agreement, and further acknowledges that this Second Amendment
          shall constitute an assignment and assumption agreement in
          accordance with the terms of Section 8.17(a) of the Amended
          Credit Agreement.  Commerzbank agrees (i) to accept the
          assignments described in the preceding paragraph; (ii) that
          giving effect to such assignments and to the other transactions
          contemplated hereby, Commerzbank's Credit Commitment shall be in
          the amount of Twenty-Five Million Dollars ($25,000,000); and
          (iii) that from and after the Effective Date it shall observe and
          perform all of the duties and obligations of a Bank in accordance
          with all of the requirements of the Amended Credit Agreement
          (including but not limited to those which pertain to the
          interests assigned to it as aforesaid).  Without limiting the
          generality of the foregoing, Commerzbank hereby appoints National
          City Bank to serve as its Managing Agent under the Amended Credit
          Agreement and the other Loan Documents, and to administer the
          Amended Credit Agreement and the other Loan Documents as provided
          therein.  

               (c) Commerzbank's address and facsimile number for the
          delivery of notices under the Credit Agreement are as follows:

                    Commerzbank Aktiengesellschaft
                    Two World Financial Center
                    New York, New York 10281-1050
                    Attn:  Mr. Douglas Traynor
                    Telephone:  (212) 266-7569
                    Facsimile:  (212) 266-7565


               (d)  Giving effect to the inclusion of Commerzbank as a Bank
          as provided in this Second Amendment, the term "Maximum
          Commitment", as used in the Amended Credit Agreement, shall from
          and after the Effective Date mean the lesser of (i) Two Hundred
          Fifty Million Dollars ($250,000,000), or (ii) the sum of the
          Credit Commitments.  From and after the Effective Date, Schedule
          1 of the Amended Credit Agreement shall be deleted in its

                                          3<PAGE>


          entirety and shall be replaced with Schedule 1, attached to this
          Second Amendment and made a part hereof by this reference.

               4.   Certain Documents to be Executed by Borrower.  Borrower
          shall, not later than the Effective Date, execute and deliver (a)
          to Commerzbank, a Ratable Promissory Note in the form attached
          hereto as Exhibit A and made a part hereof by this reference and
          a Competitive Bid Note in the form attached hereto as Exhibit B
          and made a part hereof by this reference; (b) to National City
          Bank, a Substitute Ratable Note in the form attached hereto as
          Exhibit C and made a part hereof by this reference; (c) to Bank
          of America National Trust and Savings Association, a Substitute
          Ratable Note in the form attached hereto as Exhibit D and made a
          part hereof by this reference; and (d) to each Existing Bank, a
          Substitute Competitive Bid Note in the  respective forms attached
          hereto as Exhibits E-1 through E-9.  Promptly after its receipt
          of such Substitute Competitive Bid Note, each Existing Bank shall
          legend the Competitive Bid Note presently held by it to reflect
          the replacement thereof by the Substitute Competitive Bid Note
          delivered to it as provided by this Second Amendment. 
          Additionally, each of National City and Bank of America shall,
          promptly after its receipt of the Substitute Ratable Note
          provided to it hereunder, legend the Ratable Note presently held
          by it to reflect the replacement of such Ratable Note with the
          respective Substitute Ratable Note.

               5.   Ratification of the Amended Credit Agreement.  (a) 
          Borrower warrants and represents to the Commerzbank, the Managing
          Agent and each Existing Bank that as of the Effective Date:  (i)
          the Amended Credit Agreement and each Loan Document is in full
          force and effect, and no such instrument has been modified or
          amended except as contemplated hereby or by the First Amendment;
          (ii) there is no Default or Event of Default under the Credit
          Agreement; (iii) all of Borrower's representations and warranties
          under the Credit Agreement are true and correct; and (iv)
          Borrower has no offsets or claims against the Managing Agent or
          any Existing Bank under, in respect of, or in any way related to
          the Credit Agreement or any Loan Document.

               (b)  Borrower hereby ratifies and affirms the Amended Credit
          Agreement, as further amended hereby, and agrees that as so
          amended the Amended Credit Agreement shall continue in full force
          and effect.

               6.   Execution by the Managing Agent.  The Managing Agent
          has executed this Second Amendment in its capacity as Managing
          Agent and for and on behalf each of the Existing Banks in
          accordance with the authority granted to it for such purpose
          under Section 2.1(c) of the Credit Agreement.

               7.   Payment of Certain Costs and Fees.  Borrower shall, on
          the Effective Date, pay to the Managing Agent for the benefit of
          Commerzbank (a) a Closing Fee in an amount equal to Fifty-Six
          Thousand Two Hundred Fifty Dollars ($56,250), and (b) a Facility
          Fee in respect of the initial year of the term of the Amended
          Credit Agreement in the amount of Twenty-Two Thousand Five
          Hundred Dollars ($22,500).  Borrower shall, in addition, pay the
          costs and fees reasonably incurred by the Managing Agent in

                                          4<PAGE>


          connection with this Second Amendment, including but not limited
          to reasonable attorneys' fees.

               8.   Counterparts.  This Second Amendment may be executed in
          any number of counterparts, all of which taken together shall
          constitute one agreement, and any of the parties hereto may
          execute this Second Amendment by signing any such counterpart.

               IN WITNESS WHEREOF, the parties have executed and delivered
          this Amendment as of the date first written above.


          ASSOCIATED ESTATES REALTY     NATIONAL CITY BANK,
          CORPORATION                     Managing Agent


          By:/s/ Jeffrey I. Friedman    By:/s/ Gary L. Wimer               
                                        
          Print Name:Jeffrey I. Friedman     Print Name:  Gary L. Wimer    

          Title:  President                  Title:  Vice President


                                        BANK OF AMERICA NATIONAL TRUST 
                                             AND SAVINGS ASSOCIATION

                                        By:/s/ D.G. Walsh                  

                                             Print Name: D.G. Walsh        

                                             Title:  Vice President        



                                        COMMERZBANK AKTIENGESELLSCHAFT

                                        By:/s/ Douglas P. Traynor          

                                             Print Name: Douglas P. Traynor

                                             Title:Vice President          

                                        By:/s/ Christian Berry             

                                             Print Name: Christian Berry   

                                             Title: Assistant Treasurer    
                    
                                        Two World Financial Center
                                        New York, New York 10281-1050
                                        Attn:  Mr. Douglas Traynor
                                        Telephone:  (212) 266-7569
                                        Facsimile:  (212) 266-7565

          AERC.4\2ND-AMEN.AGR




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