UNITED STATES
               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, 2004

                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.)


    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
             (Address of Principal Executive Offices)

                       (651) 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, 2004 and December 31, 2003

          Statements for the Periods ended September 30, 2004 and 2003:

           Income

           Cash Flows

           Changes in Partners' Capital

          Notes to Financial Statements

 Item 2. Management's Discussion and Analysis

 Item 3. Controls and Procedures

PART II. Other Information

 Item 1. Legal Proceedings

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

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

 Item 5. Other Information

 Item 6. Exhibits

         Signatures


<PAGE>
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                          BALANCE SHEET
            SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

                           (Unaudited)

                             ASSETS

                                                  2004           2003
CURRENT ASSETS:
  Cash and Cash Equivalents                   $ 1,115,315    $ 5,776,605
  Receivables                                      44,454              0
                                               -----------    -----------
      Total Current Assets                      1,159,769      5,776,605
                                               -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                          4,686,698      2,330,739
  Buildings and Equipment                      10,194,735      6,683,264
  Accumulated Depreciation                     (1,942,484)    (1,722,648)
                                               -----------    -----------
                                               12,938,949      7,291,355
  Real Estate Held for Sale                     1,757,654      2,665,310
                                               -----------    -----------
      Net Investments in Real Estate           14,696,603      9,956,665
                                               -----------    -----------
           Total  Assets                      $15,856,372    $15,733,270
                                               ===========    ===========


                         LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.        $    42,664    $    18,384
  Distributions Payable                           342,795      1,197,541
  Unearned Rent                                    47,796              0
                                               -----------    -----------
      Total Current Liabilities                   433,255      1,215,925
                                               -----------    -----------
PARTNERS' CAPITAL:
  General Partners                                 37,308         28,251
  Limited Partners, $1,000 per Unit;
   30,000 Units authorized; 22,783 Units Issued;
   19,369 and 19,523 Units outstanding in
   2004 and 2003, respectively                 15,385,809     14,489,094
                                               -----------    -----------
    Total Partners' Capital                    15,423,117     14,517,345
                                               -----------    -----------
     Total Liabilities and Partners' Capital  $15,856,372    $15,733,270
                                               ===========    ===========
 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
                             9/30/04       9/30/03     9/30/04       9/30/03

RENTAL INCOME               $ 390,164     $ 224,304   $1,031,681  $  609,219

EXPENSES:
   Partnership Administration -
    Affiliates                 50,447        58,715      154,825     164,582
   Partnership Administration
    and Property Management -
     Unrelated Parties          7,505         3,860       26,782      19,884
   Depreciation                84,134        45,158      219,836     120,275
                             ---------     ---------   ----------  ----------
        Total Expenses        142,086       107,733      401,443     304,741
                             ---------     ---------   ----------  ----------

OPERATING INCOME              248,078       116,571      630,238     304,478

OTHER INCOME:
   Interest Income              2,900        27,099       23,150      61,818
   Gain on Sale of Real Estate      0             0            0     286,861
                             ---------     ---------   ----------  ----------
        Total Other Income      2,900        27,099       23,150     348,679
                             ---------     ---------   ----------  ----------
INCOME FROM CONTINUING
   OPERATIONS                 250,978       143,670      653,388     653,157

Income from
  Discontinued Operations      76,443       586,773    1,451,317   3,049,923
                             ---------     ---------   ----------  ----------
NET INCOME                  $ 327,421     $ 730,443   $2,104,705  $3,703,080
                             =========     =========   ==========  ==========
NET INCOME ALLOCATED:
   General Partners         $   3,274     $   7,305   $   21,047  $   37,031
   Limited Partners           324,147       723,138    2,083,658   3,666,049
                             ---------     ---------   ----------  ----------
                            $ 327,421     $ 730,443$   2,104,705  $3,703,080
                             =========     =========   ==========  ==========
INCOME PER LIMITED PARTNERSHIP UNIT:
   Continuing Operations    $   12.83     $    7.26   $    33.32  $    32.97
   Discontinued Operations       3.91         29.67        74.00      153.93
                             ---------     ---------   ----------  ----------
        Total               $   16.74     $   36.93   $   107.32  $   186.90
                             =========     =========   ==========  ==========
Weighted Average
  Units Outstanding            19,369        19,580       19,416      19,615
                             =========     =========   ==========  ==========
 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 NINE-MONTH PERIODS ENDED SEPTEMBER 30

                           (Unaudited)

                                                    2004           2003
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net  Income                                 $ 2,104,705    $ 3,703,080

   Adjustments to Reconcile Net Income to Net Cash
   Provided by Operating Activities:
      Depreciation                                  219,836        198,860
      Gain on Sale of Real Estate                (1,223,369)    (2,839,379)
     (Increase) Decrease in Receivables             (44,454)         6,740
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                    24,280        (22,434)
     Increase in Unearned Rent                       47,796         33,248
                                                 -----------    -----------
        Total Adjustments                          (975,911)    (2,622,965)
                                                 -----------    -----------
        Net Cash Provided By
           Operating Activities                   1,128,794      1,080,115
                                                 -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Investments in Real Estate                    (5,867,430)    (3,002,399)
   Proceeds from Sale of Real Estate              2,131,025      6,794,299
                                                 -----------    -----------
        Net Cash Provided By (Used For)
          Investing  Activities                  (3,736,405)     3,791,900
                                                 -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Decrease in Distributions Payable               (854,746)        (3,467)
   Distributions to Partners                     (1,062,409)    (1,318,416)
   Redemption Payments                             (136,524)       (69,212)
                                                 -----------    -----------
        Net Cash Used For
          Financing Activities                   (2,053,679)    (1,391,095)
                                                 -----------    -----------
NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS                         (4,661,290)     3,480,920

CASH AND CASH EQUIVALENTS, beginning of period    5,776,605      2,454,858
                                                 -----------    -----------
CASH AND CASH EQUIVALENTS, end of period        $ 1,115,315    $ 5,935,778
                                                 ===========    ===========

 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, 2002  $  5,466   $13,395,325   $13,400,791    19,655.68

  Distributions              (13,184)   (1,305,232)   (1,318,416)

  Redemption Payments           (692)      (68,520)      (69,212)      (75.60)

  Net Income                  37,031     3,666,049     3,703,080
                             --------   -----------   -----------  -----------
BALANCE, September 30, 2003 $ 28,621   $15,687,622   $15,716,243    19,580.08
                             ========   ===========   ===========  ===========


BALANCE, December 31, 2003  $ 28,251   $14,489,094   $14,517,345    19,522.58

  Distributions              (10,624)   (1,051,785)   (1,062,409)

  Redemption Payments         (1,366)     (135,158)     (136,524)     (153.70)

  Net Income                  21,047     2,083,658     2,104,705
                             --------   -----------   -----------  -----------
BALANCE, September 30, 2004 $ 37,308   $15,385,809   $15,423,117    19,368.88
                             ========   ===========   ===========  ===========




 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                       SEPTEMBER 30, 2004

                           (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.  Robert P. Johnson, the President and  sole
     director  of AFM, serves as the Individual General  Partner.
     AFM  is a wholly owned subsidiary of AEI Capital Corporation
     of  which Mr. Johnson is the majority shareholder.  AEI Fund
     Management,  Inc. (AEI), an affiliate of AFM,  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  offering   terminated
     December  4, 1990 when the extended offering period expired.
     The Partnership received subscriptions for 22,783.05 Limited
     Partnership   Units.   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 operations, 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 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 l% 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  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 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 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)  Reclassification -

     Certain items in the prior year's financial statements  have
     been  reclassified  to conform to 2004 presentation.   These
     reclassifications  had no effect on Partners'  capital,  net
     income or cash flows.

(4)  Investments in Real Estate -

     On  January 1, 2003, the Partnership owned 35.6811%  of  the
     Fuddruckers restaurant.  During the first quarter  of  2003,
     the  Partnership  sold  34.9205% of  the  property,  in  two
     separate  transactions,  to unrelated  third  parties.   The
     Partnership  received total net sale proceeds  of  $714,327,
     which  resulted in a net gain of $286,861.  The  total  cost
     and  related accumulated depreciation of the interests  sold
     was $490,902 and $63,436, respectively.

     On  April  3, 2003, the Partnership purchased a 50% interest
     in  a parcel of land in Mansfield, Texas for $383,000.   The
     Partnership  obtained title to the land in the  form  of  an
     undivided fee simple interest in the 50% interest purchased.
     The  land  is  leased to Kona Restaurant Group,  Inc.  (KRG)
     under a Lease Agreement with a primary term of 17 years  and
     annual rental payments of $38,300.  Simultaneously with  the
     purchase  of  the  land,  the  Partnership  entered  into  a
     Development  Financing Agreement under which the Partnership
     advanced  funds  to  KRG for the construction  of  a  Johnny
     Carino's restaurant on the site.  Pursuant to the Lease, any
     improvements to the land during the term of the Lease become
     the   property  of  the  lessor.   The  Partnership  charged
     interest on the advances at a rate of 10%.  On September  3,
     2003,   after  the  development  was  completed,  the  Lease
     Agreement  was amended to require annual rental payments  of
     $103,250.   The Partnership's share of the total acquisition
     costs, including the cost of the land, was $1,028,886.   The
     remaining interest in the property was purchased by AEI Real
     Estate  Fund XVII Limited Partnership, an affiliate  of  the
     Partnership.

     On August 27, 2003, the Partnership purchased a 24% interest
     in  a  Garden  Ridge  retail store in Woodlands,  Texas  for
     $1,995,850.   The property is leased to Garden  Ridge,  L.P.
     under a Lease Agreement with a primary term of 20 years  and
     annual rental payments of $226,209.  The remaining interests
     in  the property were purchased by AEI Income & Growth  Fund
     XXII  Limited Partnership, AEI Income & Growth Fund  24  LLC
     and  AEI Real Estate Fund XV Limited Partnership, affiliates
     of the Partnership.


         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(4)  Investments in Real Estate - (Continued)

     In  February 2004, Garden Ridge, L.P. (GR) filed for Chapter
     11   bankruptcy  reorganization.   In  press  releases,   GR
     reported rejecting the leases of nine of 44 stores and it is
     attempting to renegotiate lease terms for its other  stores.
     The Woodlands store was not identified as one of the nine to
     be  closed  and  GR has been negotiating with  the  property
     owners to arrive at an agreement to modify rental terms that
     would  induce GR to affirm the Lease for this property.   GR
     and  the property owners are in the process of finalizing  a
     lease amendment to reduce the annual rent by 23%, with a 10%
     rent  increase  on January 1, 2008.  The proposed  amendment
     provides for additional rental payments if the store's sales
     exceed certain stated amounts.  The amendment also calls for
     the  owners  to waive rental payments for two months  during
     the  first  six  months following GR's confirmation  of  the
     Lease with the court.

     With  the  exception  of February, GR has  made  all  rental
     payments due through November 2004 under its current  lease.
     The   rent   for   February  is  considered  a  pre-petition
     obligation which may be paid from the bankruptcy court, on a
     prorata  basis  with other claims, to the extent  available.
     As  part  of the proposed lease amendment, GR would pay  the
     rent  for February.  The Partnership expects to continue  to
     receive  all  scheduled rents in future  months  unless  the
     Lease is rejected by GR.  If the Lease is affirmed, GR  will
     be  obligated to comply with all Lease terms as amended.  If
     the  Lease  is  rejected, GR would  be  required  to  return
     possession  of  the  property to  the  Partnership  and  the
     Partnership would be responsible for real estate  taxes  and
     other costs associated with maintaining the property.

     On  February  5,  2004,  the  Partnership  purchased  a  50%
     interest in a Jared Jewelry store in Lakewood, Colorado  for
     $2,013,508.   The  property is leased to  Sterling  Jewelers
     Inc. under a Lease Agreement with a primary term of 20 years
     and  annual  rental  payments of  $155,219.   The  remaining
     interest  in  the property was purchased by  AEI  Net  Lease
     Income  &  Growth Fund XIX Limited Partnership, an affiliate
     of the Partnership.

     On  April 30, 2004, the Partnership purchased a 50% interest
     in  an  Applebee's restaurant in Stow, Ohio for  $1,572,358.
     The  property  is  leased to Apple Ohio LLC  under  a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments  of  $120,043.   The  remaining  interest  in   the
     property was purchased by AEI Net Lease Income & Growth Fund
     XIX Limited Partnership.

     On May 10, 2004, the Partnership purchased a 50% interest in
     an  Eckerd  drug  store in Auburn, New York for  $2,281,564.
     The  property is leased to Eckerd Corporation under a  Lease
     Agreement with a primary term of 20 years and annual  rental
     payments  of  $184,753.   The  remaining  interest  in   the
     property was purchased by AEI Net Lease Income & Growth Fund
     XIX Limited Partnership.


         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(5) 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.

(6)  Discontinued Operations -

     During  the first quarter of 2003, the Partnership sold  the
     Children's World daycare center in Phoenix, Arizona, in four
     separate  transactions,  to unrelated  third  parties.   The
     Partnership  received total net sale proceeds of $1,592,169,
     which resulted in a net gain of $1,016,152.  The total  cost
     and  related accumulated depreciation of the interests  sold
     was $883,486 and $307,469, respectively.

     During the second quarter of 2003, the Partnership sold  its
     23.95% interest in the Champps Americana restaurant in Troy,
     Michigan,  in six separate transactions, to unrelated  third
     parties.   The Partnership received total net sale  proceeds
     of  $1,657,062,  which resulted in a net gain  of  $594,177.
     The  total cost and related accumulated depreciation of  the
     interests sold was $1,192,496 and $129,611, respectively.

     On  May  15, 2003, the Partnership sold its 40% interest  in
     the  Tumbleweed restaurant in Columbus, Ohio to an unrelated
     third party.  The Partnership received net sale proceeds  of
     $704,001, which resulted in a net gain of $201,568.  At  the
     time  of sale, the cost and related accumulated depreciation
     was $554,269 and $51,836, respectively.

     During  the first nine months of 2003, the Partnership  sold
     its  38%  interest  in the Champps Americana  restaurant  in
     Centerville,   Ohio,  in  nine  separate  transactions,   to
     unrelated third parties.  The Partnership received total net
     sale proceeds of $2,126,740, which resulted in a net gain of
     $740,621.    The   total   cost  and   related   accumulated
     depreciation  of  the  interests  sold  was  $1,502,252  and
     $116,133, respectively.

     In  October 2003, the Partnership entered into an  agreement
     to  sell  the  Cheddar's restaurant in  Clive,  Iowa  to  an
     unrelated third party.  On January 6, 2004, the sale  closed
     with   the  Partnership  receiving  net  sale  proceeds   of
     $2,131,025, which resulted in a net gain of $1,223,369.   At
     December  31,  2003,  the property was  classified  as  Real
     Estate Held for Sale with a book value of $907,656.

         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(6)  Discontinued Operations - (Continued)

     In  May  2003, the Partnership entered into an agreement  to
     sell  a Taco Cabana restaurant in San Antonio, Texas to  the
     lessee.   The agreement has been extended several  times  to
     enable  the  lessee  to  complete their  due  diligence  and
     certain negotiations with adjacent land owners.  The sale is
     subject to contingencies and may not be completed.   If  the
     sale  is  completed, the Partnership expects to receive  net
     proceeds of approximately $1,637,000, which will result in a
     net  gain  of approximately $479,000.  If this sale  is  not
     completed,  it is likely the Partnership will  seek  another
     buyer  for  the property and may not be able to negotiate  a
     similar  purchase  agreement.  At  September  30,  2004  and
     December  31,  2003,  the property was  classified  as  Real
     Estate  Held  for  Sale  with a book  value  of  $1,157,654.
     During  this time, the lessee is continuing to pay rent  and
     is complying with the lease obligations.

     During  the  first  nine  months  of  2004  and  2003,   the
     Partnership  distributed $102,244 and $287,767 of  net  sale
     proceeds  to  the Limited and General Partners  as  part  of
     their quarterly distributions, which represented a return of
     capital  of  $5.20 and $14.52 per Limited Partnership  Unit,
     respectively.  The Partnership anticipates the remaining net
     sale  proceeds  will  either  be  reinvested  in  additional
     property or distributed to the Partners in the future.

     In  July  2003,  the  lessee of the Razzoo's  restaurant  in
     Alpharetta, Georgia notified the Partnership that they  were
     experiencing financial difficulty stemming from  lower  than
     expected  sales and might not be able to pay  future  rents.
     In late 2003, the lessee closed the restaurant and said that
     they no longer intended to operate a restaurant at the site.
     Subsequent to September 30, 2004, the Partnership and lessee
     entered into an agreement to terminate the lease and  return
     possession  of the property to the Partnership.  Rents  were
     current  through the date of termination.  As  part  of  the
     agreement,  the  Partnership  was  reimbursed  for   certain
     expenses  related to legal action it pursued  in  connection
     with  this  situation, which expenses will be recognized  in
     the  fourth quarter of 2004.  The Partnership has listed the
     property  for  sale  with  a  real  estate  broker  in   the
     Alpharetta   area.   While  the  property  is  vacant,   the
     Partnership is responsible for real estate taxes  and  other
     costs required to maintain the property.

     Based  on an analysis of market conditions in the area,  the
     Partnership   determined  the  property  was   impaired   in
     accordance  with the requirements of Statement of  Financial
     Accounting  Standards No. 144, Accounting for the Impairment
     or  Disposal  of  Long-Lived Assets.  As a  result,  in  the
     fourth  quarter of 2003, a charge to discontinued operations
     for real estate impairment of $252,399 was recognized, which
     was  the  difference between the book value at December  31,
     2003  of  $852,399 and the estimated fair value of $600,000.
     The  charge  was  recorded against the  cost  of  the  land,
     building  and equipment.  At September 30, 2004 and December
     31,  2003,  the property was classified as Real Estate  Held
     for Sale.


         AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
                  NOTES TO FINANCIAL STATEMENTS
                           (Continued)

(6)  Discontinued Operations - (Continued)

     The financial results for these properties are reflected  as
     Discontinued   Operations  in  the  accompanying   financial
     statements.   The following are the results of  discontinued
     operations for the periods ended September 30:

                                  Three Months Ended      Nine Months Ended
                                9/30/04       9/30/03    9/30/04     9/30/03

Rental Income                   $ 83,684   $ 142,906   $  253,796  $  581,161
Property Management Expenses      (7,241)     (2,542)     (25,848)     (5,171)
Depreciation                           0     (16,990)           0     (78,585)
Gain on Disposal of Real Estate        0     463,399    1,223,369   2,552,518
                                 --------   ---------   ----------  ----------
   Income from
    Discontinued Operations     $ 76,443   $ 586,773   $1,451,317  $3,049,923
                                 ========   =========   ==========  ==========

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  which  represent management's  expectations  or
beliefs  concerning future events, including statements regarding
anticipated  application of cash, expected  returns  from  rental
income,  growth  in revenue, taxation levels, the sufficiency  of
cash to meet operating expenses, rates of distribution, and other
matters.  These, and other forward looking statements made by the
Partnership,  must be evaluated in the context  of  a  number  of
factors that may affect the Partnership's financial condition and
results of operations, including the following:

     Market  and  economic conditions which affect the  value
     of  the  properties the Partnership owns and  the  cash
     from rental income such properties generate;

     the  federal  income tax consequences of rental  income,
     deductions,  gain  on  sales and other  items  and  the
     affects of these consequences for the Partners;

     resolution  by  the General Partners of  conflicts  with
     which they may be confronted;

     the   success   of  the  General  Partners   of   locating
     properties with favorable risk return characteristics;

     the effect of tenant defaults; and

     the  condition of the industries in which the  tenants  of
     properties owned by the Partnership operate.


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

The Application of Critical Accounting Policies

        The preparation of the Partnership's financial statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses  to  the  Partnership as opposed  to  other  funds  they
manage.

        The Partnership purchases properties and records them  in
the  financial  statements  at the lower  of  cost  or  estimated
realizable   value.   The  Partnership  initially   records   the
properties  at cost (including capitalized acquisition expenses).
The Partnership is required to periodically evaluate the carrying
value  of properties to determine whether their realizable  value
has  declined.   For  properties the Partnership  will  hold  and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows  to  its
current carrying value.  For properties held for sale, management
determines  whether  impairment has  occurred  by  comparing  the
property's estimated fair value less cost to sell to its  current
carrying  value.   If  the carrying value  is  greater  than  the
realizable  value, an impairment loss is recorded to  reduce  the
carrying value of the property to its realizable value.  A change
in  these assumptions or analysis could cause material changes in
the carrying value of the properties.

       AEI Fund Management Inc. allocates expenses to each of the
funds  they manage primarily on the basis of the number of  hours
devoted  by  their employees to each fund's affairs.   They  also
allocate  expenses at the end of each month that are not directly
related to a fund's operations based upon the number of investors
in the fund and the fund's capitalization relative to other funds
they  manage.  The Partnership reimburses these expenses  subject
to detailed limitations contained in the Partnership Agreement.

         Management   of  the  Partnership  has   discussed   the
development  and selection of the above accounting estimates  and
the management discussion and analysis disclosures regarding them
with the managing partner of the Partnership.

Results of Operations

       For the nine months ended September 30, 2004 and 2003, the
Partnership  recognized rental income from continuing  operations
of $1,031,681 and $609,219, respectively.  In 2004, rental income
increased  due  to  additional rent received from  five  property
acquisitions  in  2003  and  2004  and  rent  increases  on  five
properties.  These increases were partially offset by a  decrease
in rental income due to the sale of the Fuddruckers restaurant.

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

       For the nine months ended September 30, 2004 and 2003, the
Partnership  incurred  Partnership administration  expenses  from
affiliated parties of $154,825 and $164,582, 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  $26,782 and $19,884, 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.

        In February 2004, Garden Ridge, L.P. (GR), the lessee  of
the  Garden  Ridge  retail store in Woodlands, Texas,  filed  for
Chapter  11  bankruptcy reorganization.  In  press  releases,  GR
reported  rejecting the leases of nine of 44  stores  and  it  is
attempting to renegotiate lease terms for its other stores.   The
Woodlands  store  was not identified as one of  the  nine  to  be
closed  and GR has been negotiating with the property  owners  to
arrive  at an agreement to modify rental terms that would  induce
GR  to  affirm the Lease for this property.  GR and the  property
owners  are  in  the process of finalizing a lease  amendment  to
reduce  the  annual  rent by 23%, with a  10%  rent  increase  on
January  1, 2008.  The proposed amendment provides for additional
rental  payments  if  the  store's sales  exceed  certain  stated
amounts.  The amendment also calls for the owners to waive rental
payments  for  two  months during the first six months  following
GR's confirmation of the Lease with the court.

        With  the  exception of February, GR has made all  rental
payments due through November 2004 under its current lease.   The
rent  for February is considered a pre-petition obligation  which
may  be  paid from the bankruptcy court, on a prorata basis  with
other  claims, to the extent available.  As part of the  proposed
lease  amendment,  GR  would  pay the  rent  for  February.   The
Partnership expects to continue to receive all scheduled rents in
future  months unless the Lease is rejected by GR.  If the  Lease
is  affirmed, GR will be obligated to comply with all Lease terms
as  amended.   If the Lease is rejected, GR would be required  to
return  possession  of the property to the  Partnership  and  the
Partnership would be responsible for real estate taxes and  other
costs associated with maintaining the property.

       For the nine months ended September 30, 2004 and 2003, the
Partnership  recognized interest income of $23,150  and  $61,818,
respectively.  In 2004, interest income decreased mainly  due  to
the Partnership receiving interest from construction advances  in
2003 and having less money invested in a money market account due
to property acquisitions.

        For  the  nine  months  ended  September  30,  2003,  the
Partnership   recognized  gain  on  sale  of  real  estate   from
continuing   operations  of  $286,861  from  the  sale   of   the
Fuddruckers  restaurant.   Since  the  Partnership   retains   an
ownership  interest  in the property, the operating  results  and
gain  on sale of the property were not classified as discontinued
operations.

        On January 1, 2003, the Partnership owned 35.6811% of the
Fuddruckers  restaurant.  During the first quarter of  2003,  the
Partnership  sold  34.9205%  of the  property,  in  two  separate
transactions,  to  unrelated  third  parties.   The   Partnership
received total net sale proceeds of $714,327, which resulted in a
net  gain  of  $286,861.  The total cost and related  accumulated
depreciation  of  the  interests sold was $490,902  and  $63,436,
respectively.


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

        In  accordance  with  Statement of  Financial  Accounting
Standards  No. 144, Accounting for the Impairment or Disposal  of
Long-Lived  Assets,  upon  complete disposal  of  a  property  or
classification of a property as Real Estate Held  for  Sale,  the
Partnership  includes  the operating  results  and  sale  of  the
property   in   discontinued  operations.    In   addition,   the
Partnership reclassifies the prior periods operating results  and
any  partial  sales  of the property to discontinued  operations.
For  the  nine  months ended September 30, 2004, the  Partnership
recognized  income  from discontinued operations  of  $1,451,317,
representing rental income less property management  expenses  of
$227,948 and gain on disposal of real estate of $1,223,369.   For
the  nine  months  ended  September  30,  2003,  the  Partnership
recognized  income  from discontinued operations  of  $3,049,923,
representing rental income less property management expenses  and
depreciation of $497,405 and gain on disposal of real  estate  of
$2,552,518.

       During the first quarter of 2003, the Partnership sold the
Children's  World  daycare center in Phoenix,  Arizona,  in  four
separate   transactions,  to  unrelated   third   parties.    The
Partnership received total net sale proceeds of $1,592,169, which
resulted in a net gain of $1,016,152.  The total cost and related
accumulated  depreciation of the interests sold was $883,486  and
$307,469, respectively.

        During  the second quarter of 2003, the Partnership  sold
its  23.95% interest in the Champps Americana restaurant in Troy,
Michigan,  in  six  separate  transactions,  to  unrelated  third
parties.   The  Partnership received total net sale  proceeds  of
$1,657,062, which resulted in a net gain of $594,177.  The  total
cost  and related accumulated depreciation of the interests  sold
was $1,192,496 and $129,611, respectively.

        On May 15, 2003, the Partnership sold its 40% interest in
the Tumbleweed restaurant in Columbus, Ohio to an unrelated third
party.   The Partnership received net sale proceeds of  $704,001,
which  resulted in a net gain of $201,568.  At the time of  sale,
the  cost  and related accumulated depreciation was $554,269  and
$51,836, respectively.

       During the first nine months of 2003, the Partnership sold
its   38%  interest  in  the  Champps  Americana  restaurant   in
Centerville,  Ohio, in nine separate transactions,  to  unrelated
third  parties.  The Partnership received total net sale proceeds
of  $2,126,740,  which resulted in a net gain of  $740,621.   The
total  cost and related accumulated depreciation of the interests
sold was $1,502,252 and $116,133, respectively.

       In October 2003, the Partnership entered into an agreement
to  sell  the Cheddar's restaurant in Clive, Iowa to an unrelated
third  party.   On  January 6, 2004, the  sale  closed  with  the
Partnership  receiving  net sale proceeds  of  $2,131,025,  which
resulted in a net gain of $1,223,369.  At December 31, 2003,  the
property was classified as Real Estate Held for Sale with a  book
value of $907,656.

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

        In May 2003, the Partnership entered into an agreement to
sell  a  Taco  Cabana  restaurant in San Antonio,  Texas  to  the
lessee.  The agreement has been extended several times to  enable
the   lessee   to  complete  their  due  diligence  and   certain
negotiations with adjacent land owners.  The sale is  subject  to
contingencies  and  may  not  be  completed.   If  the  sale   is
completed,  the  Partnership expects to receive net  proceeds  of
approximately  $1,637,000, which will result in  a  net  gain  of
approximately  $479,000.  If this sale is not  completed,  it  is
likely  the Partnership will seek another buyer for the  property
and  may  not be able to negotiate a similar purchase  agreement.
At  September  30, 2004 and December 31, 2003, the  property  was
classified  as  Real Estate Held for Sale with a  book  value  of
$1,157,654.   During this time, the lessee is continuing  to  pay
rent and is complying with the lease obligations.

        In  July  2003, the lessee of the Razzoo's restaurant  in
Alpharetta,  Georgia  notified the  Partnership  that  they  were
experiencing  financial  difficulty  stemming  from  lower   than
expected  sales  and might not be able to pay future  rents.   In
late 2003, the lessee closed the restaurant and said that they no
longer  intended to operate a restaurant at the site.  Subsequent
to September 30, 2004, the Partnership and lessee entered into an
agreement  to  terminate the lease and return possession  of  the
property to the Partnership.  Rents were current through the date
of  termination.   As part of the agreement, the Partnership  was
reimbursed  for  certain  expenses related  to  legal  action  it
pursued in connection with this situation, which expenses will be
recognized in the fourth quarter of 2004.  Following an  analysis
of  the  lessee's  business at this location  and  its  financial
condition, and its intent to no longer operate at this site,  the
Partnership  determined that the best course  of  action  was  to
negotiate a settlement with the lessee and take possession of the
property.   With possession of the property, the Partnership  can
now  move  forward with selling the property and reinvesting  the
proceeds  from the sale in replacement income-producing property.
The  Partnership  has listed the property for sale  with  a  real
estate  broker  in the Alpharetta area.  While  the  property  is
vacant, the Partnership is responsible for real estate taxes  and
other costs required to maintain the property.

       Based on an analysis of market conditions in the area, the
Partnership  determined the property was impaired  in  accordance
with  the  requirements  of  Statement  of  Financial  Accounting
Standards  No. 144, Accounting for the Impairment or Disposal  of
Long-Lived Assets.  As a result, in the fourth quarter of 2003, a
charge  to discontinued operations for real estate impairment  of
$252,399  was  recognized, which was the difference  between  the
book  value  at  December 31, 2003 of $852,399 and the  estimated
fair value of $600,000.  The charge was recorded against the cost
of  the land, building and equipment.  At September 30, 2004  and
December  31,  2003, the property was classified as  Real  Estate
Held for Sale.

        In  2003  and the first quarter of 2004, the  Partnership
realized significant gains from the sale of property.  While  the
real  estate market is expected to remain attractive for  sellers
of  property, there can be no assurance the Partnership  will  be
able  to  achieve  a  similar level of sales  activity  or  sales
profitability  during  the remainder of 2004  due  to  unforeseen
changes  in the real estate market.   In addition, it  is  likely
the  Partnership  will  curtail its selling  activity  as  it  is
becoming  more difficult to find attractive property in which  to
reinvest the proceeds from property sales.

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

        Inflation  has  had  a  minimal  effect  on  income  from
operations.   Leases  may contain rent increases,  based  on  the
increase  in  the  Consumer Price Index over a specified  period,
which  will result in an increase in rental income over the  term
of  the  leases.   In addition, leases may contain  rent  clauses
which  entitle  the  Partnership to receive  additional  rent  in
future  years  if gross receipts for the property exceed  certain
specified  amounts.  Increases in sales volumes of  the  tenants,
due to inflation and real sales growth, may result in an increase
in rental income over the term of the leases.  Inflation also may
cause the real estate to appreciate in value.  However, inflation
and  changing prices may have an adverse impact on the  operating
margins  of  the  properties' tenants, which could  impair  their
ability  to  pay rent and subsequently reduce the Net  Cash  Flow
available for distributions.

Liquidity and Capital Resources

        During  the  nine months ended September  30,  2004,  the
Partnership's cash balances decreased $4,661,290 as a  result  of
cash  used  to purchase property and distributions  paid  to  the
Partners  in  excess of cash generated from operating activities,
which  were partially offset by cash generated from the  sale  of
property.   During the nine months ended September 30, 2003,  the
Partnership's cash balances increased $3,480,920 as a  result  of
cash  generated  from the sale of property, which  was  partially
offset  by cash used to purchase property and distributions  paid
to  the  Partners  in  excess of cash  generated  from  operating
activities.

        Net  cash provided by operating activities increased from
$1,080,115  in  2003 to $1,128,794 in 2004  as  a  result  of  an
increase  in  total  rental and interest income  in  2004  and  a
decrease  in  Partnership administration and property  management
expenses  in  2004,  which were partially offset  by  net  timing
differences  in the collection of payments from the  lessees  and
the payment of expenses.

        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.  During the nine  months  ended
September 30, 2004 and 2003, the Partnership generated cash  flow
from  the  sale  of  real  estate of $2,131,025  and  $6,794,299,
respectively.   During the same period, the Partnership  expended
$5,867,430  and  $3,002,399,  respectively,  to  invest  in  real
properties (inclusive of acquisition expenses) as the Partnership
reinvested cash generated from property sales.

       On April 3, 2003, the Partnership purchased a 50% interest
in  a  parcel  of  land in Mansfield, Texas  for  $383,000.   The
Partnership  obtained  title  to the  land  in  the  form  of  an
undivided fee simple interest in the 50% interest purchased.  The
land is leased to Kona Restaurant Group, Inc. (KRG) under a Lease
Agreement  with  a  primary term of 17 years  and  annual  rental
payments  of  $38,300.  Simultaneously with the purchase  of  the
land,  the  Partnership  entered  into  a  Development  Financing
Agreement under which the Partnership advanced funds to  KRG  for
the  construction of a Johnny Carino's restaurant  on  the  site.
Pursuant  to the Lease, any improvements to the land  during  the
term  of  the  Lease  become the property  of  the  lessor.   The
Partnership  charged interest on the advances at a rate  of  10%.
On  September  3, 2003, after the development was completed,  the
Lease Agreement was amended to require annual rental payments  of
$103,250.   The  Partnership's share  of  the  total  acquisition
costs,  including  the  cost of the land,  was  $1,028,886.   The
remaining  interest  in the property was purchased  by  AEI  Real
Estate  Fund  XVII  Limited  Partnership,  an  affiliate  of  the
Partnership.


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

        On  August  27,  2003, the Partnership  purchased  a  24%
interest  in a Garden Ridge retail store in Woodlands, Texas  for
$1,995,850.  The property is leased to Garden Ridge, L.P. under a
Lease Agreement with a primary term of 20 years and annual rental
payments  of  $226,209.  The remaining interests in the  property
were   purchased  by  AEI  Income  &  Growth  Fund  XXII  Limited
Partnership, AEI Income & Growth Fund 24 LLC and AEI Real  Estate
Fund XV Limited Partnership, affiliates of the Partnership.

        On  February  5,  2004, the Partnership purchased  a  50%
interest  in  a  Jared  Jewelry store in Lakewood,  Colorado  for
$2,013,508.   The  property is leased to Sterling  Jewelers  Inc.
under  a  Lease  Agreement with a primary term of  20  years  and
annual  rental payments of $155,219.  The remaining  interest  in
the  property was purchased by AEI Net Lease Income & Growth Fund
XIX Limited Partnership, an affiliate of the Partnership.

        On  April  30,  2004,  the Partnership  purchased  a  50%
interest   in  an  Applebee's  restaurant  in  Stow,   Ohio   for
$1,572,358.   The property is leased to Apple Ohio  LLC  under  a
Lease Agreement with a primary term of 20 years and annual rental
payments of $120,043.  The remaining interest in the property was
purchased  by  AEI  Net Lease Income & Growth  Fund  XIX  Limited
Partnership.

        On May 10, 2004, the Partnership purchased a 50% interest
in  an Eckerd drug store in Auburn, New York for $2,281,564.  The
property  is leased to Eckerd Corporation under a Lease Agreement
with  a  primary term of 20 years and annual rental  payments  of
$184,753.   The remaining interest in the property was  purchased
by AEI Net Lease Income & Growth Fund XIX Limited Partnership.

        The  Partnership's primary use of cash flow,  other  than
investment   in  real  estate,  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 on a quarterly basis.

       For the nine months ended September 30, 2004 and 2003, the
Partnership  declared distributions of $1,062,409 and $1,318,416,
respectively, which were distributed 99% to the Limited  Partners
and  1%  to the General Partners.  The Limited Partners  received
distributions  of  $1,051,785  and  $1,305,232  and  the  General
Partners  received distributions of $10,624 and $13,184  for  the
periods,   respectively.   In  March  and  December   2003,   the
Partnership   declared  bonus  distributions  of   $202,020   and
$838,384,  respectively, of net sale proceeds, which resulted  in
higher  distributions in 2003 and a higher distributions  payable
at December 31, 2003.

        During  the  first  nine months of  2004  and  2003,  the
Partnership  distributed  $102,244  and  $287,767  of  net   sale
proceeds  to  the Limited and General Partners as part  of  their
quarterly distributions, which represented a return of capital of
$5.20 and $14.52 per Limited Partnership Unit, respectively.  The
Partnership  anticipates the remaining  net  sale  proceeds  will
either be reinvested in additional property or distributed to the
Partners in the future.

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

        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.

        During the first nine months of 2004, 17 Limited Partners
redeemed  a  total  of 153.7 Partnership Units  for  $135,158  in
accordance with the Partnership Agreement.  During the first nine
months  of  2003,  nine Limited Partners redeemed  a  total  75.6
Partnership  Units for $68,520.  The Partnership  acquired  these
Units  using  Net Cash Flow from operations.  In prior  years,  a
total of 227 Limited Partners redeemed 3,127.37 Partnership Units
for  $2,580,435.  The redemptions increase the remaining  Limited
Partners' ownership interest in the Partnership.  As a result  of
these   redemption  payments  and  pursuant  to  the  Partnership
Agreement, the General Partners received distributions of  $1,366
and $692 in 2004 and 2003, respectively.

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

ITEM 3.   CONTROLS AND PROCEDURES.

       (a) Evaluation of disclosure controls and procedures

        Under  the  supervision  and with  the  participation  of
management, including its President and Chief Financial  Officer,
the  Managing  General Partner of the Partnership  evaluated  the
effectiveness  of  the  design and operation  of  its  disclosure
controls  and procedures (as defined in Rule 13a-14(c) under  the
Exchange  Act).   Based upon that evaluation, the  President  and
Chief Financial Officer of the Managing General Partner concluded
that,  as  of  the end of the period covered by this report,  the
disclosure  controls  and  procedures  of  the  Partnership   are
adequately  designed to ensure that information  required  to  be
disclosed  by  us  in  the reports we file or  submit  under  the
Exchange  Act  is recorded, processed, summarized  and  reported,
within the time periods specified in applicable rules and forms.

       (b)  Changes in internal controls

         There   were   no  significant  changes  made   in   the
Partnership's  internal controls during the  most  recent  period
covered  by  this  report that have materially affected,  or  are
reasonably   likely  to  materially  affect,  the   Partnership's
internal control over financial reporting.


                   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.UNREGISTERED  SALES  OF  EQUITY  SECURITIES  AND  USE  OF
  PROCEEDS

        (a)  During  the  period  covered  by  this  report,  the
Partnership  did  not  sell any equity securities  that  are  not
registered under the Securities Act of 1933.

       (b) Not applicable.

        (c) Pursuant to Section 7.7 of the Partnership Agreement,
as  amended, each Limited Partner has the right to present  Units
to  the  Partnership  for purchase by submitting  notice  to  the
Managing  General Partner.  The purchase price of  the  Units  is
equal to 90% of the net asset value of the Units as determined by
the Managing General Partner in accordance with the provisions of
the Partnership Agreement.  Units tendered to the Partnership are
redeemed  at  the purchase price established for the  quarter  in
which the Partnership received a notice at least 60 days prior to
the  repurchase  dates of January 1st, April 1st,  July  1st  and
October   1st   subject  to  the  following   limitations.    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.

      Small Business Issuer Purchases of Equity Securities

                                      Total Number of Units Maximum Number of
              Total Number   Average  Purchased as Part of  Units that May Yet
               of Units    Price Paid Publicly Announced    Be Purchased Under
Period         Purchased    per Unit  Plans or Programs     the   Plans     or
                                                            Programs

7/1/04 to 7/31/04   61.0     $895.87     3,414.17(1)                (2)

8/1/04 to 8/31/04    --        --            --                     --

9/1/04 to 9/30/04    --        --            --                     --


  (1)  The  Partnership's  repurchase plan is  mandated  by  the
       Partnership Agreement as included in the prospectus related to
       the original offering of the Units.
  (2)  The Partnership Agreement contains annual limitations  on
       repurchases  described in the paragraph  above  and  has  no
       expiration date.

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

    31.1  Certification  of Chief Executive  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    31.2  Certification  of Chief Financial  Officer  of  General
    Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a))  and
    Section 302 of the Sarbanes-Oxley Act of 2002.

    32    Certification  of  Chief Executive  Officer  and  Chief
    Financial Officer of General Partner pursuant to Section  906
    of the Sarbanes-Oxley Act of 2002.



                           SIGNATURES

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


Dated:  November 10, 2004     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/ Patrick W Keene
                                      Patrick W. Keene
                                      Chief Financial Officer
                                      (Principal Accounting Officer)