SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                           FORM 10-QSB
                                
           Quarterly Report Under Section 13 or 15(d)
             of The Securities Exchange Act of 1934
                                
           For the Quarter Ended:  September 30, 1996
                                
                Commission file number:  0-18289
                                
                                
            AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)


      State of Minnesota                   41-1622463
(State or other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)        Identification No.)


  1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
            (Address of Principal Executive Offices)
                                
                         (612) 227-7333
                   (Issuer's telephone number)
                                
                                
                         Not Applicable
 (Former name, former address and former fiscal year, if changed
                       since last report)
                                
Check  whether  the issuer (1) filed all reports required  to  be
filed  by Section 13 or 15(d) of the Securities Exchange  Act  of
1934  during the preceding 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
                                
         Transitional Small Business Disclosure Format:
                                
                        Yes           No   [X]
                                
                                
                                
                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                                
                              INDEX
                                
                                
                                                     

PART I. Financial Information

 Item 1. Balance Sheet as of September 30, 1996 and December 31, 1995

         Statements for the Periods ended September 30, 1996 and 1995:

            Income                                     

            Cash Flows                                 

            Changes in Partners' Capital               

         Notes to Financial Statements                

 Item 2. Management's Discussion and Analysis     

PART II. Other Information

 Item 1. Legal Proceedings                          

 Item 2. Changes in Securities                      

 Item 3. Defaults Upon Senior Securities            

 Item 4. Submission of Matters to a Vote of Security  Holders

 Item 5. Other Information                          

 Item 6. Exhibits and Reports on Form 8-K         


<PAGE>                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP

                          BALANCE SHEET
                                
            SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
                                
                           (Unaudited)
                                
                             ASSETS
                                
                                                        1996         1995

CURRENT ASSETS:
   Cash and Cash Equivalents                        $  1,693,243  $  2,332,974
   Receivables                                            22,325        43,389
                                                      -----------   -----------
        Total Current Assets                           1,715,568     2,376,363
                                                      -----------   -----------
INVESTMENTS IN REAL ESTATE:
   Land                                                5,823,496     5,370,160
   Buildings and Equipment                            11,939,200    11,065,109
   Property Acquisition Costs                                  0         8,798
   Accumulated Depreciation                           (2,163,523)   (1,932,655)
                                                      -----------   -----------
         Net Investments in Real Estate               15,599,173    14,511,412
                                                      -----------   -----------
               Total  Assets                         $17,314,741   $16,887,775
                                                      ===========   ===========

                        LIABILITIES AND PARTNERS' CAPITAL
                                
CURRENT LIABILITIES:
   Payable to AEI Fund Management, Inc.              $    42,960   $    49,968
   Distributions Payable                                 323,827       406,381
   Security Deposit                                       31,010             0
   Unearned Rent                                          50,160         5,000
                                                      -----------   -----------
        Total Current Liabilities                        447,957       461,349
                                                      -----------   -----------

MINORITY INTEREST                                        525,472        76,319

PARTNERS' CAPITAL (DEFICIT):
   General Partners                                      (30,059)      (29,971)
   Limited Partners, $1,000 Unit value;
    30,000 Units authorized; 22,783 issued;
    22,078 Units outstanding                          16,371,371    16,380,078
                                                      -----------   -----------
        Total Partners' Capital                       16,341,312    16,350,107
                                                      -----------   -----------
          Total Liabilities and Partners' Capital    $17,314,741   $16,887,775
                                                      ===========   ===========
                                
 The accompanying Notes to Financial Statements are an integral
                     part of this statement.

</PAGE>

<PAGE>                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                       STATEMENT OF INCOME
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)
                                

                             Three Months Ended       Nine Months Ended
                             9/30/96     9/30/95      9/30/96     9/30/95

INCOME:
 Rent                      $ 419,358   $ 407,631    $1,233,721  $1,381,664
 Investment Income            25,781      21,072        79,671      22,567
                            ---------   ---------    ----------  ---------
        Total Income         445,139     428,703     1,313,392   1,404,231
                            ---------   ---------    ----------  ---------

EXPENSES:
 Partnership Administration -
  Affiliates                  63,639      61,155       184,882     189,630
 Partnership Administration
  and Property Management -
  Unrelated Parties           40,749      25,254       140,096      69,123
 Interest                          0           0             0       6,115
 Depreciation                108,398     107,670       319,797     342,051
                            ---------   ---------     ---------  ---------
        Total Expenses       212,786     194,079       644,775     606,919
                            ---------   ---------     ---------  ---------

OPERATING INCOME             232,353     234,624       668,617     797,312

GAIN ON SALE OF REAL ESTATE   90,156     570,853       344,461     570,853

MINORITY INTEREST IN NET
  INCOME                     (13,081)     (2,007)      (20,795)     (6,020)
                            ---------   ---------     ---------  ---------

NET INCOME                 $ 309,428   $ 803,470     $ 992,283  $1,362,145
                            =========   =========     =========  =========

NET INCOME ALLOCATED:
   General Partners        $   3,094   $   8,035     $   9,923  $   13,621
   Limited Partners          306,334     795,435       982,360   1,348,524
                            ---------   ---------     ---------  ---------
                           $ 309,428   $ 803,470     $ 992,283  $1,362,145
                            =========   =========     =========  =========

NET INCOME PER
  LIMITED PARTNERSHIP UNIT
  (22,078 and 22,234 weighted average
  Units outstanding in 1996 
  and 1995 respectively)   $   13.87   $   35.77     $   44.49   $   60.65
                            =========   =========     =========   =========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                     STATEMENT OF CASH FLOWS
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)
                                
                                                        1996         1995
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net  Income                                      $   992,283   $ 1,362,145

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
     Depreciation                                       319,797       342,051
     Gain on Sale of Real Estate                       (344,461)     (570,853)
     Decrease in Receivables                             21,064        19,949
     Decrease in Payable to
        AEI Fund Management, Inc.                        (7,008)      (18,931)
     Increase (Decrease) in Security Deposit             31,010       (50,000)
     Increase in Unearned Rent                           45,160        44,233
     Minority Interest                                   (5,795)       (1,293)
                                                     -----------   -----------
        Total Adjustments                                59,767      (234,844)
                                                     -----------   -----------
        Net Cash Provided By
        Operating Activities                          1,052,050     1,127,301
                                                     -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                        (1,911,639)            0
   Proceeds from Sale of Real Estate - Net of
      Minority Interest                               1,303,490     2,704,142
                                                     -----------   -----------
        Net Cash Provided By (Used For)
        Investing Activities                           (608,149)    2,704,142
                                                     -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase (Decrease) in Distributions Payable        (82,554)       59,272
    Distributions to Partners                        (1,001,078)   (1,380,780)
                                                     -----------   -----------
        Net Cash Used For
        Financing Activities                         (1,083,632)   (1,321,508)
                                                     -----------   -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS                                   (639,731)    2,509,935

CASH AND CASH EQUIVALENTS, beginning of period        2,332,974       103,469
                                                     -----------   -----------

CASH AND CASH EQUIVALENTS, end of period            $ 1,693,243   $ 2,613,404
                                                     ===========   ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest Paid During the Period                   $         0   $     6,115
                                                     ===========  ============

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
            STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                                
               FOR THE PERIODS ENDED SEPTEMBER 30
                                
                           (Unaudited)
                                
                                
                                
                                                                    Limited
                                                                  Partnership
                              General      Limited                   Units
                              Partners     Partners     Total     Outstanding


BALANCE, December 31, 1994   $ (27,119)  $16,662,415  $16,635,296    22,233.80

  Distributions                (13,808)   (1,366,972)  (1,380,780)

  Net Income                    13,621     1,348,524    1,362,145
                              ---------   -----------  -----------  -----------
BALANCE, September 30, 1995  $ (27,306)  $16,643,967  $16,616,661    22,233.80
                              =========   ===========  ===========  ===========


BALANCE, December 31, 1995   $ (29,971)  $16,380,078  $16,350,107    22,077.80

  Distributions                (10,011)     (991,067)  (1,001,078)

  Net Income                     9,923       982,360      992,283
                              ---------   -----------  -----------  -----------
BALANCE, September 30, 1996  $ (30,059)  $16,371,371  $16,341,312    22,077.80
                              =========   ===========  ===========  ===========





 The accompanying Notes to Financial Statements are an integral
                     part of this statement.

</PAGE>
                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                       SEPTEMBER 30, 1996
                                
                           (Unaudited)
                                

(1)  The  condensed  statements included herein have been  prepared
     by  the Partnership, without audit, pursuant to the rules  and
     regulations  of  the Securities and Exchange  Commission,  and
     reflect   all  adjustments  which  are,  in  the  opinion   of
     management,  necessary to a fair statement of the  results  of
     operations for the interim period, on a basis consistent  with
     the  annual audited statements.  The adjustments made to these
     condensed   statements  consist  only  of   normal   recurring
     adjustments.   Certain information, accounting  policies,  and
     footnote    disclosures   normally   included   in   financial
     statements  prepared  in  accordance with  generally  accepted
     accounting principles have been condensed or omitted  pursuant
     to  such  rules  and  regulations,  although  the  Partnership
     believes  that  the  disclosures  are  adequate  to  make  the
     information  presented not misleading.  It is  suggested  that
     these  condensed financial statements be read  in  conjunction
     with  the  financial statements and the summary of significant
     accounting  policies  and  notes  thereto  included   in   the
     Partnership's latest annual report on Form 10-KSB.
 
(2)  Organization -

     AEI Real Estate Fund XVIII Limited Partnership (Partnership)
     was  formed  to  acquire and lease commercial properties  to
     operating tenants.  The Partnership's operations are managed
     by  AEI  Fund  Management XVIII, Inc.  (AFM),  the  Managing
     General Partner of the Partnership.  Robert P. Johnson,  the
     President  and  sole  shareholder  of  AFM,  serves  as  the
     Individual General Partner of the Partnership.  An affiliate
     of   AFM,   AEI   Fund   Management,  Inc.,   performs   the
     administrative and operating functions for the Partnership.
     
     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced  operations  on February  15,  1989  when  minimum
     subscriptions    of   1,500   Limited   Partnership    Units
     ($1,500,000)  were  accepted.   The  Partnership's  offering
     terminated  December  4,  1990 when  the  extended  offering
     period expired.  The Partnership received subscriptions  for
     22,783.05 Limited Partnership Units ($22,783,050).
     
     Under  the  terms of the Limited Partnership Agreement,  the
     Limited  Partners and General Partners contributed funds  of
     $22,783,050, and $1,000, respectively.  During the operation
     of the Partnership, any Net Cash Flow, as defined, which the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum.  Distributions to Limited Partners will be  made
     pro rata by Units.
     
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(2)  Organization - (Continued)

     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's properties which the  General
     Partners determine to distribute will, after provisions  for
     debts  and  reserves, be paid in the following  manner:  (i)
     first,  99%  to the Limited Partners and 1% to  the  General
     Partners until the Limited Partners receive an amount  equal
     to:  (a)  their Adjusted Capital Contribution  plus  (b)  an
     amount  equal  to 6% of their Adjusted Capital  Contribution
     per  annum, cumulative but not compounded, to the extent not
     previously distributed from Net Cash Flow; (ii) next, 99% to
     the  Limited  Partners and 1% to the General Partners  until
     the Limited Partners receive an amount equal to 14% of their
     Adjusted Capital Contribution per annum, cumulative but  not
     compounded, to the extent not previously distributed;  (iii)
     next, to the General Partners until cumulative distributions
     to the General Partners under Items (ii) and (iii) equal 15%
     of cumulative distributions to all Partners under Items (ii)
     and (iii).  Any remaining balance will be distributed 85% to
     the  Limited  Partners  and  15% to  the  General  Partners.
     Distributions to the Limited Partners will be made pro  rata
     by Units.
     
     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing   or  other  disposition  of  the  Partnership's
     property,  will  be  allocated first in the  same  ratio  in
     which,  and  to the extent, Net Cash Flow is distributed  to
     the Partners for such year.  Any additional profits will  be
     allocated 90% to the Limited Partners and 10% to the General
     Partners.   In the event no Net Cash Flow is distributed  to
     the  Limited  Partners,  90% of  each  item  of  Partnership
     income,  gain  or credit for each respective year  shall  be
     allocated to the Limited Partners, and 10% of each such item
     shall be allocated to the General Partners.  Net losses from
     operations will be allocated 98% to the Limited Partners and
     2% to the General Partners.
     
     For  tax purposes, profits arising from the sale, financing,
     or  other disposition of the Partnership's property will  be
     allocated  in  accordance with the Partnership Agreement  as
     follows:  (i) first, to those Partners with deficit balances
     in  their capital accounts in an amount equal to the sum  of
     such  deficit  balances; (ii) second,  99%  to  the  Limited
     Partners  and 1% to the General Partners until the aggregate
     balance in the Limited Partners' capital accounts equals the
     sum  of the Limited Partners' Adjusted Capital Contributions
     plus  an  amount  equal  to 14% of  their  Adjusted  Capital
     Contributions  per annum, cumulative but not compounded,  to
     the  extent  not previously allocated; (iii) third,  to  the
     General Partners until cumulative allocations to the General
     Partners equal 15% of cumulative allocations.  Any remaining
     balance  will  be allocated 85% to the Limited Partners  and
     15%  to the General Partners.  Losses will be allocated  98%
     to the Limited Partners and 2% to the General Partners.
     
     The  General Partners are not required to currently  fund  a
     deficit   capital   balance.   Upon   liquidation   of   the
     Partnership or withdrawal by a General Partner, the  General
     Partners will contribute to the Partnership an amount  equal
     to  the  lesser  of  the deficit balances in  their  capital
     accounts  or  1%  of  total Limited  Partners'  and  General
     Partners' capital contributions.
     
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate -

     In  1995,  the  Partnership elected early  adoption  of  the
     Statement  of  Financial  Accounting  Standards   No.   121,
     "Accounting for Impairment of Long-Lived Assets and for Long-
     Lived Assets to be Disposed Of."  This standard requires the
     Partnership to compare the carrying amount of its properties
     to  the estimated future cash flows expected to result  from
     the  property and its eventual disposition.  If the  sum  of
     the  expected  future cash flows is less than  the  carrying
     amount   of   the  property,  the  Statement  requires   the
     Partnership to recognize an impairment loss by the amount by
     which  the carrying amount of the property exceeds the  fair
     value  of the property.  Adoption of this Statement  is  not
     expected  to  have  a material effect on  the  Partnership's
     financial statements.
     
     The  Partnership  owns  a  4.1022%  interest  in  a  Sizzler
     restaurant  in  Cincinnati, Ohio, a 93.2478% interest  in  a
     Sizzler  restaurant in Springboro, Ohio, and a 100% interest
     in  a  Sizzler restaurant in Fairfield, Ohio.   In  January,
     1994  and June, 1994, the Partnership closed the restaurants
     in  Cincinnati and Springboro, respectively, and listed them
     for sale or lease.  While the properties are being re-leased
     or  sold, the Partnership is responsible for the real estate
     taxes and other costs required to maintain the properties.
     
     On  July 15, 1994, the Partnership re-leased the Sizzler  in
     Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
     Agreement with a primary term of 20 years and annual  rental
     payments based on a percentage of sales.  Fairfield was  not
     able  to  profitably operate the restaurant and  closed  the
     restaurant.   The  Partnership is  reviewing  the  available
     options, which include selling or re-leasing the property.
     
     No  rents were collected from the Sizzler restaurants in the
     first  nine  months of 1996 and 1995.  The total  amount  of
     rent  not  collected  in  1996 and  1995  was  $296,145  and
     $287,519,  respectively,  for the three  properties.   These
     amounts were not accrued for financial reporting purposes.
     
     In  August,  1995, the lessee of the two Rally's  properties
     filed  for  reorganization.  After reviewing  the  operating
     results  of the lessee, the Partnership agreed to amend  the
     Leases  of the two properties.  Effective December 1,  1995,
     the  Partnership amended the Leases to reduce the base  rent
     from  the  current  annual rent of $47,498  and  $48,392  to
     $15,000  for  each property.  The Partnership could  receive
     additional rent in the future equal to 6.5% of the amount by
     which gross receipts exceed $275,000.  The lessee has agreed
     to  pay  all  post-petition rents due and the  Partnership's
     related  administrative and legal expenses.  The Partnership
     is  owed $29,128 of pre-petition rent, which was not accrued
     for  financial reporting purposes due to the uncertainty  of
     collection.
     
     On   July  6,  1995,  the  Partnership  sold  the  Cheddar's
     restaurant   in   Columbus,  Ohio,  to  the   lessee.    The
     Partnership received net sale proceeds of $1,259,320,  which
     resulted  in a net gain of $105,291.  At the time  of  sale,
     the cost and related accumulated depreciation was $1,306,191
     and $152,162, respectively.
     
     On  September  1, 1995, the Partnership sold the  Applebee's
     restaurant  in  Memphis,  Tennessee,  to  the  lessee.   The
     Partnership received net sale proceeds of $1,444,822,  which
     resulted  in a net gain of $465,562.  At the time  of  sale,
     the cost and related accumulated depreciation was $1,126,919
     and $147,659, respectively.
     

         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     During the first nine months of 1996 and the year 1995,  the
     Partnership  distributed $123,465 and $691,021  of  the  net
     sale proceeds to the Limited and General Partners as part of
     their  regular quarterly distributions, which represented  a
     return   of   capital  of  $5.53  and  $30.90  per   Limited
     Partnership  Unit,  respectively.   The  majority   of   the
     remaining   net  proceeds  were  reinvested  in   additional
     properties.
     
     On  April  10,  1996,  the Partnership  purchased  an  85.0%
     interest  in  a  Tractor Supply Company  store  in  Bristol,
     Virginia for $1,094,367.  The property is leased to  Tractor
     Supply  Company under a Lease Agreement with a primary  term
     of  14  years  and annual rental payments of $116,686.   The
     remaining  interest  in the property was  purchased  by  the
     Individual General Partner of the Partnership.
     
     On  August  29,  1996,  the Partnership  purchased  a  32.2%
     interest  in  a Champp's Americana restaurant  in  Columbus,
     Ohio  for  $826,070.   The property is leased  to  Americana
     Dining  Corporation under a Lease Agreement with  a  primary
     term of 20 years and annual rental payments of $90,834.  The
     remaining  interest  in the property was  purchased  by  AEI
     Income  &  Growth Fund XXI Limited Partnership, an affiliate
     of the Partnership.
     
     On  May  10,  1996,  the Partnership sold  the  Taco  Cabana
     restaurant  in  New Braunfels, Texas to an  unrelated  third
     party.   The  Partnership  received  net  sale  proceeds  of
     $962,297, which resulted in a net gain of $254,305.  At  the
     time  of sale, the cost and related accumulated depreciation
     of the property was $784,044 and $76,052, respectively.
     
     On  August 5, 1996, the Partnership sold a 13.7546% interest
     in  a  Taco  Cabana restaurant in San Antonio, Texas  to  an
     unrelated  third party.  The Partnership received  net  sale
     proceeds  of  $217,260  which resulted  in  a  net  gain  of
     $70,396.   The cost and related accumulated depreciation  of
     the interest sold was $158,441 and $11,577, respectively.
     
     On  September  12,  1996, the Partnership  sold  an  8.4209%
     interest in the Tractor Supply store in Bristol, Virginia to
     an unrelated third party.  The Partnership received net sale
     proceeds  of  $123,933  which resulted  in  a  net  gain  of
     $16,621.   The cost and related accumulated depreciation  of
     the interest sold was $108,418 and $1,106, respectively.
     
     On  October  15,  1996, the Partnership sold  an  additional
     10.6316%  interest  in  the Taco Cabana  restaurant  in  San
     Antonio, Texas to an unrelated third party.  The Partnership
     received  net sale proceeds of approximately $177,000  which
     resulted in a net gain of approximately $64,000.
     
     On  October  15,  1996, the Partnership sold  an  additional
     9.9069%  interest  in the Tractor Supply store  in  Bristol,
     Virginia  to  an  unrelated third  party.   The  Partnership
     received  net sale proceeds of approximately $151,000  which
     resulted in a net gain of approximately $25,000.
     
                                
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)
                                
(3)  Investments in Real Estate - (Continued)

     The Partnership owns the above properties and the Applebee's
     restaurant  in  Destin,  Florida, as tenants-in-common  with
     unrelated  third parties.  The management of the  properties
     is governed by co-tenancy agreements between the Partnership
     and the unrelated third parties, which grant the Partnership
     the  authority to control the management of the  properties.
     For   properties  owned  as  tenants-in-common  with   third
     parties, other than affiliated partnerships, the Partnership
     accounts  for  its  interest under  the  full  consolidation
     method whereby the unrelated third parties' interests in the
     properties  are  reflected  in the  Partnership's  financial
     statements as a minority interest.
     
     Pursuant to the Partnership Agreement, net sale proceeds may
     be  reinvested in additional properties until  a  date  five
     years after the date on which the offer and sale of Units is
     terminated.  This period expired on December 4, 1995.  As  a
     result,  the Managing General Partner is in the  process  of
     preparing a proxy statement to propose an amendment  to  the
     Limited   Partnership  Agreement  that   would   allow   the
     Partnership  to reinvest the majority of the  sale  proceeds
     from  the  sales of the Taco Cabana restaurants and  Tractor
     Supply Store in additional properties.
     
(4)  Payable to AEI Fund Management  -

     AEI  Fund  Management, Inc. performs the administrative  and
     operating functions for the Partnership.  The payable to AEI
     Fund   Management  represents  the  balance  due  for  those
     services.    This  balance  is  non-interest   bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.
     
(5)  Security Deposit -

     In February, 1996, the Partnership called a letter of credit
     for  $109,393  related  to  the Taco  Cabana  restaurant  in
     Brownsville,  Texas.  The Partnership applied a  portion  of
     the funds to satisfy rents and real estate taxes due.  As of
     September 30, 1996, the Partnership was holding $31,010 as a
     security  deposit  until the lessee  renews  the  letter  of
     credit.
     
(6)  Line of Credit -

     In  September, 1994, the Partnership established a  $150,000
     unsecured  line  of  credit  at  Fidelity  Bank  of   Edina,
     Minnesota.   On  January 5, 1995, the  line  of  credit  was
     increased to $300,000.  The line of credit bears interest at
     the  prime rate plus one percent on the outstanding balance,
     which  is  due  on demand, but in any event  no  later  than
     January  5,  1996.   The line of credit was  established  to
     provide  short-term  financing to cover any  temporary  cash
     deficits.  In January, 1996, the line of credit expired.  In
     the  first nine months of 1995, interest expense related  to
     the line of credit was $6,115.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

       For the nine months ended September 30, 1996 and 1995, the
Partnership   recognized   rental  income   of   $1,233,721   and
$1,381,664,   respectively.   During  the   same   periods,   the
Partnership  earned  investment income of  $79,671  and  $22,567,
respectively.   In  1996, rental income  decreased  mainly  as  a
result  of  the  property sales and Rally's  situation  discussed
below.   The  decrease in rental income was partially  offset  by
rental income received from two subsequent property acquisitions,
rent  increases on fourteen properties and additional  investment
income earned on the net proceeds from the property sales.

        The  Partnership  owns a 4.1022% interest  in  a  Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a  Sizzler
restaurant in Springboro, Ohio, and a 100% interest in a  Sizzler
restaurant in Fairfield, Ohio.  In January, 1994 and June,  1994,
the   Partnership  closed  the  restaurants  in  Cincinnati   and
Springboro,  respectively, and listed them  for  sale  or  lease.
While the properties are being re-leased or sold, the Partnership
is responsible for the real estate taxes and other costs required
to maintain the properties.

       On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield  to  Fairfield Foods, Inc. (Fairfield)  under  a  Lease
Agreement  with  a  primary term of 20 years  and  annual  rental
payments based on a percentage of sales.  Fairfield was not  able
to  profitably operate the restaurant and closed the  restaurant.
The Partnership is reviewing the available options, which include
selling or re-leasing the property.

        No  rents were collected from the Sizzler restaurants  in
the first nine months of 1996 and 1995.  The total amount of rent
not  collected  in  1996  and  1995 was  $296,145  and  $287,519,
respectively, for the three properties.  These amounts  were  not
accrued for financial reporting purposes.

        In August, 1995, the lessee of the two Rally's properties
filed  for reorganization.  After reviewing the operating results
of  the lessee, the Partnership agreed to amend the Leases of the
two  properties.   Effective December 1,  1995,  the  Partnership
amended  the  Leases  to reduce the base rent  from  the  current
annual  rent of $47,498 and $48,392 to $15,000 for each property.
The Partnership could receive additional rent in the future equal
to  6.5%  of the amount by which gross receipts exceed  $275,000.
The  lessee has agreed to pay all post-petition rents due and the
Partnership's  related  administrative and  legal  expenses.  The
Partnership is owed $29,128 of pre-petition rent, which  was  not
accrued  for  financial reporting purposes due to the uncertainty
of collection.

        In  February, 1996, the Partnership called  a  letter  of
credit  for  $109,393  related to the Taco Cabana  restaurant  in
Brownsville,  Texas.  The Partnership applied a  portion  of  the
funds  to  satisfy  rents  and real  estate  taxes  due.   As  of
September  30,  1996, the Partnership was holding  $31,010  as  a
security deposit until the lessee renews the letter of credit.

        During the nine months ended September 30, 1996 and 1995,
the  Partnership  paid  Partnership  administration  expenses  to
affiliated parties of $184,882 and $189,630, respectively.  These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements  and correspondence to the Limited Partners.  During
the   same   periods,   the  Partnership   incurred   Partnership
administration  and property management expenses  from  unrelated
parties  of  $140,096 and $69,123, respectively.  These  expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs,  taxes, insurance and other property costs.  The  increase
in  these  expenses in 1996, when compared to the same period  in
1995,  is the result of expenses incurred in 1996 related to  the
Sizzler situation discussed above.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

        As  of  September 30, 1996, the Partnership's  annualized
cash  distribution rate was 6.0%, based on the  Adjusted  Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement.  As a result, 99% of distributions and
income  were allocated to Limited Partners and 1% to the  General
Partners.

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   It is expected that increases in sales  volumes  of
the  tenants due to inflation and real sales growth, will  result
in  an  increase  in rental income over the term of  the  Leases.
Inflation  also  may  cause  the  Partnership's  real  estate  to
appreciate in value.  However, inflation and changing prices  may
also  have  an  adverse impact on the operating  margins  of  the
properties' tenants which could impair their ability to pay  rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.

Liquidity and Capital Resources

        During  the  nine months ended September  30,  1996,  the
Partnership's  cash  balances decreased $639,731  mainly  as  the
result  of  investing activities.  Net income before depreciation
and  gain  on  sale decreased by approximately $166,000   in  the
first  nine months of 1996, when compared to the same  period  in
1995.  This was due to a decrease in revenues as a result of  the
property  sales  discussed below and an increase in  expenses  in
1996.    This  decrease  was  partially  offset  by  net   timing
differences  in the collection of payments from the  lessees  and
the  payment  of expenses so that net cash provided by  operating
activities decreased by only $75,251 from 1995 to 1996.

        The  major components of the Partnership's cash flow from
investing activities are investments in real estate and  proceeds
from the sale of real estate.  In the nine months ended September
30,  1996, the Partnership generated cash flow from the  sale  of
real  estate, as discussed below, of $1,303,490.  During the same
period,  the  Partnership expended $1,911,639 to invest  in  real
properties (inclusive of acquisition expenses) as the Partnership
reinvested the cash generated from the property sales.

        On  July  6,  1995,  the Partnership sold  the  Cheddar's
restaurant  in  Columbus, Ohio, to the lessee.   The  Partnership
received net sale proceeds of $1,259,320, which resulted in a net
gain  of  $105,291.  At the time of sale, the  cost  and  related
accumulated    depreciation   was   $1,306,191   and    $152,162,
respectively.

        On September 1, 1995, the Partnership sold the Applebee's
restaurant in Memphis, Tennessee, to the lessee.  The Partnership
received net sale proceeds of $1,444,822, which resulted in a net
gain  of  $465,562.  At the time of sale, the  cost  and  related
accumulated    depreciation   was   $1,126,919   and    $147,659,
respectively.

        During  the first nine months of 1996 and the year  1995,
the Partnership distributed $123,465 and $691,021 of the net sale
proceeds  to  the Limited and General Partners as part  of  their
regular  quarterly distributions, which represented a  return  of
capital  of  $5.53  and  $30.90  per  Limited  Partnership  Unit,
respectively.   The majority of the remaining net  proceeds  were
reinvested in additional properties.

        On  April  10, 1996, the Partnership purchased  an  85.0%
interest  in a Tractor Supply Company store in Bristol,  Virginia
for $1,094,367.  The property is leased to Tractor Supply Company
under  a  Lease  Agreement with a primary term of  14  years  and
annual  rental payments of $116,686.  The remaining  interest  in
the  property was purchased by the Individual General Partner  of
the Partnership.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

        On  August  29, 1996, the Partnership purchased  a  32.2%
interest in a Champp's Americana restaurant in Columbus, Ohio for
$826,070.  The property is leased to Americana Dining Corporation
under  a  Lease  Agreement with a primary term of  20  years  and
annual rental payments of $90,834.  The remaining interest in the
property  was purchased by AEI Income & Growth Fund  XXI  Limited
Partnership, an affiliate of the Partnership.

        On  May  10,  1996, the Partnership sold the Taco  Cabana
restaurant  in New Braunfels, Texas to an unrelated third  party.
The  Partnership  received net sale proceeds of  $962,297,  which
resulted  in  a net gain of $254,305.  At the time of  sale,  the
cost  and  related accumulated depreciation of the  property  was
$784,044 and $76,052, respectively.

        On  August  5,  1996,  the Partnership  sold  a  13.7546%
interest in a Taco Cabana restaurant in San Antonio, Texas to  an
unrelated  third  party.   The  Partnership  received  net   sale
proceeds  of  $217,260 which resulted in a net gain  of  $70,396.
The  cost  and  related accumulated depreciation of the  interest
sold was $158,441 and $11,577, respectively.

        On  September 12, 1996, the Partnership sold  an  8.4209%
interest in the Tractor Supply store in Bristol, Virginia  to  an
unrelated  third  party.   The  Partnership  received  net   sale
proceeds  of  $123,933 which resulted in a net gain  of  $16,621.
The  cost  and  related accumulated depreciation of the  interest
sold was $108,418 and $1,106, respectively.

        On  October 15, 1996, the Partnership sold an  additional
10.6316%  interest in the Taco Cabana restaurant in San  Antonio,
Texas to an unrelated third party.  The Partnership received  net
sale  proceeds of approximately $177,000 which resulted in a  net
gain of approximately $64,000.

        On  October 15, 1996, the Partnership sold an  additional
9.9069% interest in the Tractor Supply store in Bristol, Virginia
to  an unrelated third party.  The Partnership received net  sale
proceeds  of approximately $151,000 which resulted in a net  gain
of approximately $25,000.

         The  Partnership  owns  the  above  properties  and  the
Applebee's  restaurant in Destin, Florida,  as  tenants-in-common
with  unrelated third parties.  The management of the  properties
is  governed by co-tenancy agreements between the Partnership and
the  unrelated  third  parties, which grant the  Partnership  the
authority  to  control  the management of  the  properties.   For
properties  owned as tenants-in-common with third parties,  other
than  affiliated partnerships, the Partnership accounts  for  its
interest   under  the  full  consolidation  method  whereby   the
unrelated   third  parties'  interests  in  the  properties   are
reflected in the Partnership's financial statements as a minority
interest.

        Pursuant to the Partnership Agreement, net sale  proceeds
may  be  reinvested in additional properties until  a  date  five
years  after  the date on which the offer and sale  of  Units  is
terminated.   This  period expired on December  4,  1995.   As  a
result,  the  Managing  General Partner  is  in  the  process  of
preparing  a  proxy  statement to propose  an  amendment  to  the
Limited Partnership Agreement that would allow the Partnership to
reinvest the majority of the sale proceeds from the sales of  the
Taco  Cabana  restaurants and Tractor Supply Store in  additional
properties.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS  (Continued)

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution  rate from quarter to quarter.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.   The  redemption payments generally are funded  with  cash
that  would  normally  be paid as part of the  regular  quarterly
distributions.    As   a   result,   total   distributions    and
distributions payable have fluctuated from year to  year  due  to
cash  used to fund redemption payments.  In the first nine months
of 1995, the Partnership made distributions at an 8.0% rate which
resulted   in   distributions  to  the  Partners  of  $1,380,780.
Effective  January 1, 1996, the distribution rate was reduced  to
6.0%  which  resulted  in  distributions  of  $1,001,078  to  the
Partners for the first nine months of 1996.

        The  Partnership may acquire Units from Limited  Partners
who have tendered their Units to the Partnership.  Such Units may
be  acquired at a discount.  The Partnership is not obligated  to
purchase  in  any  year  more than 5%  of  the  number  of  Units
outstanding at the beginning of the year.  In no event shall  the
Partnership  be  obligated to purchase  Units  if,  in  the  sole
discretion  of the Managing General Partner, such purchase  would
impair the capital or operation of the Partnership.

        On  October 1, 1996, fifteen Limited Partners redeemed  a
total of 313.42 Partnership Units for $233,227 in accordance with
the  Partnership Agreement.  The Partnership acquired these Units
using Net Cash Flow from operations.  In prior years, a total  of
forty-six  Limited  Partners redeemed 705 Partnership  Units  for
$602,632.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

       In September, 1994, the Partnership established a $150,000
unsecured  line  of credit at Fidelity Bank of Edina,  Minnesota.
On January 5, 1995, the line of credit was increased to $300,000.
The  line  of  credit bears interest at the prime rate  plus  one
percent  on the outstanding balance, which is due on demand,  but
in  any  event no later than January 5, 1996.  The line of credit
was  established  to provide short-term financing  to  cover  any
temporary  cash deficits.  In January, 1996, the line  of  credit
expired.   In  the  first nine months of 1995,  interest  expense
related to the line of credit was $6,115.

       The continuing rent payments from the properties, together
with  cash generated from the property sales, should be  adequate
to  fund  continuing  distributions and  meet  other  Partnership
obligations on both a short-term and long-term basis.
                                
                                
                   PART II - OTHER INFORMATION
                                
ITEM 1. LEGAL PROCEEDINGS

       There  are no material pending legal proceedings to  which
  the  Partnership  is  a  party or of  which  the  Partnership's
  property is subject.

ITEM 2. CHANGES IN SECURITIES

        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.

                   PART II - OTHER INFORMATION
                           (Continued)
                                
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

ITEM 5. OTHER INFORMATION

        None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        a. Exhibits -
                     Description

                 10.1  Purchase Agreement  dated
                       July 23, 1996 between the Partnership  and
                       Carolyn  W.  Davidson  relating   to   the
                       property  at  6867 Highway  90  West,  San
                       Antonio, Texas.

                 10.2  Property   Co-tenancy
                       Ownership Agreement dated August  5,  1996
                       between  the  Partnership and  Carolyn  W.
                       Davidson relating to the property at  6867
                       Highway 90 West, San Antonio, Texas.

                 10.3  Purchase Agreement  dated
                       August  23,  1996 between the Partnership,
                       Robert  P.  Johnson, and  Joyce  R.  Scott
                       relating  to  the property at Old  Airport
                       Road and I-81, Bristol, Virginia.

                 10.4  Property   Co-tenancy
                       Ownership  Agreement dated  September  12,
                       1996  between the Partnership,  Robert  P.
                       Johnson,  and Joyce R. Scott  relating  to
                       the  property at Old Airport Road  and  I-
                       81, Bristol, Virginia.

                 10.5  Purchase Agreement  dated
                       October  9,  1996 between the Partnership,
                       Robert  P. Johnson, and Arel D. and Louise
                       B.  Middleton relating to the property  at
                       Old   Airport  Road  and  I-81,   Bristol,
                       Virginia.

                 10.6  Purchase Agreement  dated
                       October  9,  1996 between the  Partnership
                       and   Arel  D.  and  Louise  B.  Middleton
                       relating  to the property at 6867  Highway
                       90 West, San Antonio, Texas.

                 10.7  Property   Co-tenancy
                       Ownership  Agreement  dated  October   15,
                       1996  between the Partnership,  Robert  P.
                       Johnson,   and  Arel  D.  and  Louise   B.
                       Middleton relating to the property at  Old
                       Airport Road and I-81, Bristol, Virginia.

                 10.8  Property   Co-tenancy
                       Ownership  Agreement  dated  October   15,
                       1996  between the Partnership and Arel  D.
                       and  Louise B. Middleton relating  to  the
                       property  at  6867 Highway  90  West,  San
                       Antonio, Texas.

                 27    Financial  Data  Schedule
                       for period ended September 30, 1996.



                   PART II - OTHER INFORMATION
                           (Continued)
                                
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (Continued)

        b.    Reports  filed on Form  8-K  -
                         During  the quarter ended  September
                         30,  1996, the Partnership  filed  a
                         Form  8-K, dated September 12, 1996,
                         reporting  the  acquisition  of  the
                         Champp's   restaurant  in  Columbus,
                         Ohio.


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


Dated:  November 14, 1996     AEI Real Estate Fund XVIII
                              Limited Partnership
                              By: AEI Fund Management XVIII, Inc.
                              Its: Managing General Partner



                              By: /s/ Robert P. Johnson
                                      Robert P. Johnson
                                      President
                                      (Principal Executive Officer)



                              By: /s/ Mark E. Larson
                                      Mark E. Larson
                                      Chief Financial Officer
                                      (Principal Accounting Officer)