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

                                   Form 10-QSB

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

                    For the quarterly period ended June 30, 2003


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

              For the transition period from __________ to __________

                         Commission file number 0-10673


                       REAL ESTATE ASSOCIATES LIMITED III
             (Exact Name of Registrant as Specified in Its Charter)


          California                                             95-3547611
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization                               Identification No.)

                          55 Beattie Place, PO Box 1089
                        Greenville, South Carolina 29602
                    (Address of principal executive offices)

                                 (864) 239-1000
                           (Issuer's telephone number)




                         PART I - FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS



                       REAL ESTATE ASSOCIATES LIMITED III
                                  BALANCE SHEET
                                   (Unaudited)
                                 (in thousands)

                                  June 30, 2003

                              ASSETS

Investment in limited partnerships (Note 2)                            $   102
Cash and cash equivalents                                                  639

            Total assets                                               $   741

          LIABILITIES AND PARTNERS' (DEFICIENCY) EQUITY

Liabilities:
   Accounts payable and accrued expenses                                $   45

Commitments and Contingencies (Note 4)

Partners' (Deficiency) Equity:
   General partners                                                       (149)
   Limited partners                                                        845
                                                                             696
            Total liabilities and partners' (deficiency) equity        $   741

                   See Accompanying Notes to Financial Statements


                       REAL ESTATE ASSOCIATES LIMITED III

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)
                    (in thousands, except per interest data)

<TABLE>
<CAPTION>

                                              Three Months Ended            Six Months Ended
                                                   June 30,                     June 30,
                                              2003          2002           2003          2002

<S>                                       <C>           <C>           <C>            <C>
Interest and other income                 $     4       $     9       $     11       $     16

Operating Expenses:
  Management fees - partners (Note 3)          30            33             62             65
  General and administrative (Note 3)          12            10             20             50
  Legal and accounting                         54            35             86             68
        Total operating expenses               96            78            168            183

Loss from Partnership operations              (92)          (69)          (157)          (167)
Distributions from limited partnerships
  recognized as income (Note 2)                10            --             29             34
Equity in (loss) income of limited
  partnerships and amortization of
  acquisition costs (Note 2)                   --          (153)            41           (308)

Net loss                                  $   (82)      $  (222)       $   (87)       $  (441)

Net loss allocated to general partners
 (1%)                                     $    (1)      $    (2)       $    (1)       $    (4)
Net loss allocated to limited partners
 (99%)                                        (81)         (220)           (86)          (437)

                                          $   (82)      $  (222)       $   (87)       $  (441)
Net loss per limited partnership
  interest (Note 1)                       $ (7.08)      $(19.20)       $ (7.52)       $(38.15)
Distributions per limited partnership
  interest                                $113.61       $    --        $113.61        $    --


                   See Accompanying Notes to Financial Statements
</TABLE>


                       REAL ESTATE ASSOCIATES LIMITED III

               STATEMENT OF CHANGES IN PARTNERS' (DEFICIENCY) EQUITY

                                   (Unaudited)
                      (in thousands, except interest data)


<TABLE>
<CAPTION>

                                         General         Limited
                                        Partners         Partners          Total

<S>                                                       <C>
Partnership interests                                     11,442

Partners' (deficiency) equity,
  December 31, 2002                      $ (148)         $ 2,231           $2,083

Distributions for the six months
  ended June 30, 2003                        --           (1,300)          (1,300)

Net loss for the six months
  ended June 30, 2003                        (1)             (86)             (87)

Partners' (deficiency) equity,
  June 30, 2003                          $ (149)          $ 845            $ 696

Percentage interest at
 June 30, 2003                                1%              99%             100%
                                                           (A)


(A)   Consists  of 5,718  limited  partnership  units (the  "Units")  (or 11,436
      limited  partnership  interests)  at  June  30,  2003  and  5,721  limited
      partnership  units (or 11,442 limited  partnership  interests) at December
      31, 2002. A Unit consists of two limited partnership  interests (see "Note
      4 - Abandonment of Units").


                   See Accompanying Notes to Financial Statements
</TABLE>


                       REAL ESTATE ASSOCIATES LIMITED III

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                        Six Months Ended
                                                                            June 30,
                                                                       2003            2002
Cash flows from operating activities:
<S>                                                                  <C>             <C>
  Net loss                                                           $ (87)          $ (441)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
     Equity in (income) loss of limited partnerships and
      amortization of acquisition costs                                   (41)            308
     (Decrease) increase in advances due to affiliates                     (5)              1
     (Decrease) increase in accounts payable and accrued
expenses
       expenses                                                           (45)              7
         Net cash used in operating activities                           (178)           (125)

Cash flow from investing activities:
     Distributions from limited partnership recognized as
       reduction of investment balance                                     41              --

Cash flow used in financing activities:
     Distributions to partners                                         (1,300)             --

NET DECREASE IN CASH AND CASH EQUIVALENTS                              (1,437)           (125)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                          2,076           2,178

CASH AND CASH EQUIVALENTS, END OF PERIOD                             $ 639          $ 2,053


                   See Accompanying Notes to Financial Statements
</TABLE>


                       REAL ESTATE ASSOCIATES LIMITED III

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)
                                  JUNE 30, 2003

Note 1 - Organization and Summary of Significant Accounting Policies

General

The  information  contained in the following  notes to the  unaudited  financial
statements  is  condensed  from that which  would  appear in the annual  audited
financial  statements;  accordingly,  the financial  statements  included herein
should be reviewed in  conjunction  with the  financial  statements  and related
notes  thereto  contained  in  the  Real  Estate  Associates  Limited  III  (the
"Partnership" or "Registrant")  annual report for the fiscal year ended December
31, 2002.  Accounting  measurements at interim dates inherently  involve greater
reliance  on  estimates  than at year end.  The  results of  operations  for the
interim periods presented are not necessarily indicative of the results expected
for the entire year.

In  the  opinion  of  the  Partnership,  the  accompanying  unaudited  financial
statements  contain all adjustments  (consisting  primarily of normal  recurring
accruals) necessary to present fairly the financial position as of June 30, 2003
and the  results of  operations  and changes in cash flows for the three and six
months ended June 30, 2003 and 2002, respectively.

The general  partners  collectively  have a one percent  interest in profits and
losses of the  Partnership.  The limited  partners have the remaining 99 percent
interest  which  is  allocated  in  proportion  to their  respective  individual
investments.  The general  partners of the Partnership are National  Partnership
Investments  Corporation  ("NAPICO"  or the  "Corporate  General  Partner")  and
National Partnership Investment Associates.

 On December 3, 2001,  Casden  Properties Inc.,  entered into a merger agreement
and certain other transaction documents with Apartment Investment and Management
Company,  ("AIMCO"), a publicly traded real estate investment trust, and certain
of its subsidiaries, pursuant to which, on March 11, 2002, AIMCO acquired Casden
Properties Inc. and its subsidiaries,  including 100% of the outstanding capital
stock of NAPICO.
Prior to March 11, 2002, Casden Properties Inc. owned a 95.25% economic interest
in NAPICO, with the balance owned by Casden Investment Corporation ("CIC"). CIC,
which is wholly owned by Alan I. Casden, owned 95% of the voting common stock of
NAPICO prior to March 11, 2002.

Basis of Presentation

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States.

Method of Accounting for Investment in Limited Partnerships

The  investment in limited  partnerships  is accounted for on the equity method.
Acquisition,  selection  and  other  costs  related  to the  acquisition  of the
projects  are  capitalized  as  part of the  investment  account  and are  being
amortized by the straight line method over the estimated lives of the underlying
assets, which is generally 30 years.

Net Loss Per Limited Partnership Interest

Net loss per limited  partnership  interest was computed by dividing the limited
partners'  share of net loss by the  number  of  limited  partnership  interests
outstanding  at the beginning of the period.  The number of limited  partnership
interests was 11,442 and 11,456 at the years ended December 31, 2002 and 2001.

Recent Accounting Pronouncements

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46 ("FIN 46"),  Consolidation of Variable Interest Entities.
FIN 46 requires the  consolidation of entities in which an enterprise  absorbs a
majority of the entity's  expected  losses,  receives a majority of the entity's
expected  residual  returns,  or both, as a result of ownership,  contractual or
other  financial  interests  in the  entity.  Prior to the  issuance  of FIN 46,
entities were generally  consolidated by an enterprise when it had a controlling
financial  interest  through  ownership  of a majority  voting  interest  in the
entity.  FIN 46 applied  immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003, FIN 46 will apply beginning July 1, 2003.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities  under the  provisions of FIN 46. At June 30, 2003,  the  Partnership's
maximum  exposure to loss with  regard to  unconsolidated  partnerships  was its
recorded investment in these partnerships totaling  approximately  $102,000. The
Partnership has not yet determined the anticipated impact of adopting FIN 46 for
its partnership  agreements that existed as of January 31, 2003. However, FIN 46
may require the  consolidation  of the assets,  liabilities  and  operations  of
certain of the Partnership's  unconsolidated  partnership investments.  Although
the Partnership does not believe the full adoption of FIN 46 will have an impact
on net earnings,  the Partnership cannot make any definitive conclusion until it
completes its evaluation.

Note 2 - Investments in Limited Partnerships

As of June 30, 2003, the Partnership holds limited  partnership  interests in 11
limited partnerships (the "Local  Partnerships").  In addition,  the Partnership
holds a general partner interest in Real Estate  Associates  ("REA").  NAPICO is
also a general  partner  in REA . The Local  Partnerships  own  residential  low
income rental projects  consisting of 1,160 apartment  units. The mortgage loans
of these projects are payable to or insured by various governmental agencies.

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local Partnerships. Accordingly, the Partnership accounts for its investments in
the Local  Partnerships  using the equity method.  The  Partnership is allocated
profits and losses of the Local Partnerships based upon its respective ownership
percentage  (between 94.9% and 99%). The  Partnership is also entitled to 99% of
the profits and losses of REA.

Distributions   of  surplus  cash  from   operations  from  most  of  the  Local
Partnerships  are restricted by the Local  Partnerships'  Regulatory  Agreements
with the United  States  Department  of Housing and Urban  Development  ("HUD").
These restrictions limit the distribution to a portion, generally less than 10%,
of the initial  invested  capital.  The excess  surplus cash is deposited into a
residual receipts reserve, of which the ultimate  realization by the Partnership
is uncertain as HUD frequently  retains it upon sale or dissolution of the Local
Partnership.  The  Partnership  is  allocated  profits  and losses and  receives
distributions   from  refinancings  and  sales  in  accordance  with  the  Local
Partnerships'  partnership  agreements.   These  agreements  usually  limit  the
Partnership's  distributions to an amount  substantially less than its ownership
percentage in the Local Partnership.

The individual  investments are carried at cost plus the Partnership's  share of
the  Local  Partnership's  profits  less the  Partnership's  share of the  Local
Partnership's  losses,  distributions and impairment charges. The Partnership is
not legally  liable for the  obligations  of the Local  Partnerships  and is not
otherwise  committed to provide additional support to them.  Therefore,  it does
not  recognize  losses  once its  investment  in each of the Local  Partnerships
reaches zero.  Distributions  from the Local Partnerships are accounted for as a
reduction of the investment  balance until the investment  balance is reduced to
zero.  When  the  investment  balance  has  been  reduced  to  zero,  subsequent
distributions  received are recognized as income in the accompanying  statements
of operations.

For those  investments  where the  Partnership  has determined that the carrying
value  of its  investments  approximates  the  estimated  fair  value  of  those
investments,  the  Partnership's  policy is to recognize equity in income of the
Local Partnerships only to the extent of distributions received and amortization
of acquisition costs from those Local Partnerships.  Therefore,  the Partnership
limits its recognition of equity earnings to the amount it expects to ultimately
realize.

At June 30, 2003, the investment balance in ten of the eleven Local Partnerships
had been reduced to zero.

The following is a summary of the investments in Local  Partnerships for the six
months ended June 30, 2003 (in thousands):

           Balance, beginning of period                   $ 102
           Amortization of acquisition costs                 (1)
           Equity in income of limited partnerships          42
           Distributions from limited partnerships
            recognized as a reduction of investment
             balance                                        (41)
           Balance, end of period                         $ 102

The  following  are  unaudited   condensed  combined  estimated   statements  of
operations  for the three and six months  ended  June 30,  2003 and 2002 for the
Local Partnerships in which the Partnership has investments (in thousands):

<TABLE>
<CAPTION>

                                    Three Months Ended           Six Months Ended
                                         June 30,                    June 30,
                                    2003          2002          2003          2002
Revenues                                       (restated)                  (restated)

<S>                                <C>           <C>           <C>           <C>
  Rental and other                 $ 1,565       $ 1,638       $ 3,216       $ 3,276

Expenses
  Depreciation                         135           272           440           544
  Interest                             339           384           785           768
  Operating                          1,116         1,332         2,174         2,664
                                     1,590         1,988         3,399         3,976
Loss from continuing
 operations                            (25)         (350)         (183)         (700)
Income from
 discontinued operations                --             7            --            14
Net loss                            $ (25)       $ (343)       $ (183)       $ (686)
</TABLE>

Under recently adopted law and policy,  the United States  Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment  ("HAP")  Contracts  on a  long-term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in  payments  under HAP  Contracts  as a result of this new  policy,  the Multi-
family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides
for the  restructuring  of  mortgage  loans  insured by the FHA with  respect to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the local limited  partnerships  in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

Note 3 - Transactions with Affiliated Parties

Under  the  terms  of  the  Restated   Certificate   and  Agreement  of  Limited
Partnership, the Partnership is obligated to NAPICO for an annual management fee
approximately  equal to 0.4 percent of the original  invested  assets.  Invested
assets are defined as the costs of acquiring  project  interests,  including the
proportionate  amount  of  the  mortgage  loans  related  to  the  Partnership's
interests  in the capital  accounts of the  respective  Local  Partnership.  The
management  fee  incurred  for the six months  ended June 30,  2003 and 2002 was
approximately $62,000 and $65,000, respectively.

The Partnership  reimburses NAPICO for certain expenses.  The reimbursement paid
to NAPICO was approximately  $7,000 for both of the six month periods ended June
30, 2003 and 2002, and is included in general and administrative expenses.

Note 4 - Abandonment of Interests

During the six months  ended June 30,  2003,  the number of limited  partnership
interests  decreased by 6 interests due to the limited partners abandoning their
units.  In  abandoning  his or her limited  partnership  interest(s),  a limited
partner  relinquishes all right, title and interest in the Partnership as of the
date of abandonment.  However, the limited partner is allocated his or her share
of net income or loss for that year. The income or loss per limited  partnership
unit is calculated based on the number of outstanding  units at the beginning of
the year.

Note 5 - Contingencies

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests in the Partnership and two investors holding an aggregate
of five units of limited partnership interests in Real Estate Associates Limited
VI (an affiliated  partnership in which NAPICO is the corporate general partner)
commenced an action in the United States District Court for the Central District
of California against the Partnership,  NAPICO and certain other defendants. The
complaint  alleged that the  defendants  breached  their  fiduciary  duty to the
limited partners of certain NAPICO managed  partnerships and violated securities
laws by  making  materially  false  and  misleading  statements  in the  consent
solicitation  statements  sent to the  limited  partners  of  such  partnerships
relating  to  approval  of the  transfer  of  partnership  interests  in limited
partnerships,  owning  certain  of  the  properties,  to  affiliates  of  Casden
Properties  Inc.,  organized by an affiliate of NAPICO.  The  plaintiffs  sought
equitable relief, as well as compensatory  damages and litigation related costs.
On August 4, 1999, one investor holding one unit of limited partnership interest
in Housing Programs Limited (another  affiliated  partnership in which NAPICO is
the corporate  general  partner)  commenced a virtually  identical action in the
United States District Court for the Central District of California  against the
Partnership,  NAPICO and certain other entities.  The second action was subsumed
in the first action,  and was  certified as a class action.  On August 21, 2001,
plaintiffs filed a supplemental complaint,  which added new claims,  including a
rescission of the transfer of partnership interests and an accounting.

In November 2002, the jury returned  special verdicts against NAPICO and certain
other defendants in the amount of approximately  $25.2 million for violations of
securities laws and against NAPICO for approximately  $67.3 million for breaches
of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages
against  NAPICO of  approximately  $92.5  million.  On April 29, 2003, the Court
entered  judgment  against NAPICO and certain other  defendants in the amount of
$25.2 million for  violations of  securities  laws and against  NAPICO for $67.3
million for breaches of  fiduciary  duty,  both  amounts plus  interest of $25.6
million, and for punitive damages against NAPICO in the amount of $2.6 million.

On May 30, 2003,  NAPICO and certain other defendants  entered into a memorandum
of  understanding  with the plaintiff  class and their  counsel  relating to the
settlement of the litigation.

On August 11,  2003,  NAPICO  entered  into a  Stipulation  of  Settlement  (the
"Stipulation of Settlement")  with the plaintiff  class (the  "Plaintiffs")  and
their counsel  relating to the settlement of the litigation.  The Stipulation of
Settlement remains subject to the preliminary and final approval of the court as
well  as the  approval  of  the  Plaintiffs.  Pursuant  to  the  Stipulation  of
Settlement,  within two days after receiving the court's preliminary approval of
the proposed settlement,  Alan I. Casden, on behalf of himself, NAPICO and other
defendants in the litigation,  is responsible for depositing $29 million into an
escrow  account for the benefit of the  Plaintiffs.  Upon final court  approval,
approval  by the  Plaintiffs  and the  lapse of any  time to  appeal  the  court
approval of the settlement, the following shall occur:

      1.    Alan I. Casden, on behalf of himself, NAPICO and other defendants in
            the litigation,  will transfer to an agent for the Plaintiffs shares
            of common stock  ("Class A Common  Stock") of AIMCO owned by certain
            affiliates  of Alan I. Casden with an aggregate  market value of $19
            million,  subject to certain  transfer  restrictions,  or at Alan I.
            Casden's option, $19 million in cash.

      2.    NAPICO will issue an  aggregate of $35 million in  promissory  notes
            for the benefit of the  Plaintiffs.  An  aggregate  of $7 million of
            notes are to be repaid each year. The notes will bear interest based
            on applicable rates of U.S. Treasury bills with similar  maturities.
            The notes will be guaranteed by AIMCO Properties, L.P., an affiliate
            of AIMCO.

      3.    The parties to the Stipulation of Settlement will release each other
            and  related  parties  from any and all claims  associated  with the
            litigation and the Plaintiffs' investment in the Partnership and the
            other affiliated partnerships.

      4.    The $29 million in the escrow account  established by Alan I. Casden
            will be released to the Plaintiffs.

Pursuant to the Stipulation of Settlement, upon final approval of the settlement
by the court,  the parties shall jointly  request that a new judgment be entered
in the litigation that will, among other things, expunge the judgment originally
entered against NAPICO and the other defendants on April 29, 2003.

On August 12, 2003, in connection with the proposed  settlement  pursuant to the
Stipulation of Settlement, NAPICO and AIMCO executed a Settlement Agreement (the
"Settlement  Agreement") with the prior  shareholders of Casden  Properties Inc.
The principal terms of the Settlement Agreement include:

     1.   That NAPICO will  voluntarily  discontinue  the action it commenced on
          May 13, 2003 against the former shareholders of Casden Properties Inc.
          and other  indemnitors  in AIMCO's  March 2002  acquisition  of Casden
          Properties Inc. (the "Casden Merger").

     2.   That Alan I. Casden and certain related  entities will resolve certain
          pending  claims for  indemnification  made by NAPICO,  AIMCO and their
          affiliates.  These  claims  include  indemnification  related  to  the
          litigation  and certain other  matters in  connection  with the Casden
          Merger.

     3.   AIMCO,  or an  affiliate,  will deposit $25 million of the $29 million
          that Alan I.  Casden is  responsible  for  depositing  into the escrow
          account for the benefit of the Plaintiffs pursuant to the terms of the
          Stipulation of Settlement.  In connection  with this deposit by AIMCO,
          The Casden  Company  will  transfer to AIMCO  531,915  shares of AIMCO
          Class A Common Stock owned by The Casden Company,  which shares are to
          be held in escrow by AIMCO until final approval of the  Stipulation of
          Settlement by the court and the Plaintiffs.  Upon such approval, AIMCO
          will become the owner of the 531,915 shares.  If final approval by the
          court and the Plaintiffs is not obtained, the $25 million deposited by
          AIMCO into the escrow account will be returned to AIMCO and AIMCO will
          return to The Casden Company the 531,915 shares.

     4.   The Casden  Company  will  promise to pay an  aggregate  amount of $35
          million on a secured,  nonrecourse basis to NAPICO. The Casden Company
          will  be  obligated  to  repay  an  aggregate  of $7  million  of  the
          obligation  each year.  The  obligation  to repay the $35 million will
          bear  the  same  interest  and  mature  on the  same  schedule  as the
          promissory  notes issued by NAPICO to the  plaintiffs  pursuant to the
          Stipulation  of  Settlement.  Payment  of  these  obligations  will be
          secured  by (i) a pledge of  744,681  shares  of AIMCO  Class A Common
          Stock  owned by Alan I.  Casden or an  affiliated  entity,  plus up to
          60,000 additional shares for accrued interest,  and (ii) cash proceeds
          of  recoveries  or  settlements  that  Alan  I.  Casden  or any of his
          affiliates,  or any of the former  shareholders  of Casden  Properties
          Inc.,  receive  in  connection  with  or  related  to  the  litigation
          (collectively,  "Recoveries").  The payment obligations to NAPICO will
          be required to be prepaid with any Recoveries received. Payment may be
          made in cash or in  shares  of  AIMCO  Class A  Common  Stock,  except
          payments with respect to Recoveries must be made in cash.

Millenium   Management,   LLC  ("Millenium")  and  Everest  Properties  II,  LLC
("Everest") have filed with the SEC a preliminary Consent Solicitation Statement
requesting the consent of the limited partners of Real Estate Associates Limited
III  (the   "Partnership")  to  remove  the  current  general  partners  of  the
Partnership and to elect Millenium as the new general  partner.  The Partnership
has filed  with the SEC a  preliminary  Consent  Revocation  Statement  opposing
Millenium's and Everest's efforts to remove the general  partners.  An affiliate
of  the  general  partner  has  purchased  Everest's  partnership  interest  and
Everest's consent solicitation has been terminated.

In addition to the litigation  discussed above, the Corporate General Partner is
involved in various other  lawsuits  arising from  transactions  in the ordinary
course of  business.  In the opinion of  management  and the  Corporate  General
Partner,   the  claims  will  not  result  in  any  material  liability  to  the
Partnership.

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government  regulations.  Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including,  without limitation:  national and local
economic  conditions;  the terms of  governmental  regulations  that  affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates;  financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest;  real estate risks, including variations of real estate values and
the general  economic  climate in local markets and  competition  for tenants in
such markets;  litigation,  including  costs  associated  with  prosecuting  and
defending  claims  and  any  adverse   outcomes,   and  possible   environmental
liabilities.   Readers  should  carefully  review  the  Registrant's   financial
statements and the notes thereto,  as well as the risk factors  described in the
documents  the  Registrant  files  from  time to time  with the  Securities  and
Exchange Commission.

The Corporate  General  Partner  monitors  developments in the area of legal and
regulatory   compliance  and  is  studying  new  federal  laws,   including  the
Sarbanes-Oxley  Act of 2002. The Sarbanes-Oxley Act of 2002 mandates or suggests
additional compliance measures with regard to governance,  disclosure, audit and
other areas.  In light of these changes,  the  Partnership  expects that it will
incur higher expenses related to compliance, including increased legal and audit
fees.

Liquidity and Capital Resources

The Properties in which the Partnership has invested, through its investments in
the Local Partnerships, receive one or more forms of assistance from the Federal
Government.  As a result,  the Local  Partnerships'  ability to  transfer  funds
either to the Partnership or among themselves in the form of cash distributions,
loans  or  advances  is  generally  restricted  by these  government  assistance
programs.   These  restrictions,   however,  are  not  expected  to  impact  the
Partnership's ability to meet its cash obligations.

The  Partnership's  primary sources of funds include interest income earned from
investing  available cash and distributions from Local Partnerships in which the
Partnership has invested.

The Partnership  distributed  the following  amounts during the six months ended
June 30, 2003 and 2002 (in thousands, except per unit data):

<TABLE>
<CAPTION>

                      Six Months                        Six Months
                        Ended         Per Limited         Ended         Per Limited
                       June 30,       Partnership        June 30,       Partnership
                         2003             Unit             2002             Unit

<S>                    <C>              <C>              <C>               <C>
Operations             $1,090           $ 95.26          $   --            $    --
Sale (1)                  210             18.35              --                 --
                       $1,300           $113.61          $   --            $    --
</TABLE>

(1) Proceeds from the sale of Sunset Grove in 2002.

Except for money  market  funds,  the  Partnership's  investments  are  entirely
interests in other Local Partnerships owning government assisted projects. Funds
temporarily not required for such  investments in projects are invested in money
market funds which  provide  interest  income as reflected in the  statements of
operations.  These  investments  can  be  readily  converted  to  cash  to  meet
obligations as they arise.

Results of Operations

Partnership  revenues  consist  primarily of interest income earned on temporary
investment of funds not required for investment in Local Partnerships.  Interest
income for the three and six months ended June 30, 2003 was comparable  with the
corresponding period for the three and six months ended June 30, 2002.

An annual  management  fee is payable to the  Corporate  General  Partner of the
Partnership  and is  calculated  at 0.4  percent of the  Partnership's  invested
assets.  The  management  fee is paid to the Corporate  General  Partner for its
continuing management of the Partnership's affairs. The fee is payable beginning
with  the  month  following  the  Partnership's  initial  investment  in a Local
Partnership.  Management fees were approximately $62,000 and $65,000 for the six
months ended June 30, 2003 and 2002, respectively.

Operating  expenses,  exclusive  of the  management  fee,  consist  of legal and
accounting  fees for  services  rendered  to the  Partnership  and  general  and
administrative  expenses.  Legal and accounting fees were approximately  $54,000
and  $86,000  for the three and six months  ended June 30,  2003 as  compared to
approximately  $35,000 and  $68,000 for the three and six months  ended June 30,
2002,  respectively.  General and  administrative  expenses  were  approximately
$12,000 and $20,000 for the three and six months ended June 30, 2003 as compared
to approximately $10,000 and $50,000 for the three and six months ended June 30,
2002, respectively.  The decrease in general and administrative expenses for the
six  months  ended June 30,  2003 is  attributable  to a  decrease  in the costs
associated with the preparation  and filing of the  Partnership's  quarterly and
annual financial  statements and a decrease in costs associated with the consent
solicitation lawsuit that originated in April 2001 and was dismissed in November
2002. Legal and accounting fees for the three and six months ended June 30, 2003
increased due to an increase in professional services.

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and  operations,  including  refinancing or selling  decisions of the
Local Partnerships.  Accordingly, the Partnership accounts for its investment in
the Local Partnerships using the equity method. Thus the individual  investments
are  carried  at cost plus the  Partnership's  share of the Local  Partnership's
profits  less  the  Partnership's  share  of  the  Local  Partnership's  losses,
distributions  and impairment  charges.  However,  since the  Partnership is not
legally  liable  for  the  obligations  of  the  Local  Partnerships,  or is not
otherwise committed to provide additional support to them, it does not recognize
losses  once its  investment  in each of the Local  Partnerships  reaches  zero.
Distributions  from the Local  Partnerships  are accounted for as a reduction of
the  investment  balance  until  the  investment  balance  is  reduced  to zero.
Subsequent  distributions  received are recognized as income in the accompanying
statements  of  operations.  For those  investments  where the  Partnership  has
determined that the carrying value of its investments approximates the estimated
fair value of those investments, the Partnership's policy is to recognize equity
in  income  of the  Local  Partnerships  only  to the  extent  of  distributions
received,  and amortization of acquisition costs from those Local  Partnerships.
During the six months ended June 30, 2003, the Partnership  recognized equity in
income of approximately $41,000 from a Local Partnership.  During the six months
ended June 30, 2002, the Partnership  recognized equity in loss of approximately
$308,000 from a Local Partnership. During the six months ended June 30, 2003 and
2002, the Partnership received approximately $29,000 and $34,000,  respectively,
in distributions  from Local  Partnerships that were recognized as income in the
statements  of  operations  since  the  Partnership's  investment  in the  Local
Partnerships has been reduced to zero.

Under recently adopted law and policy,  the United States  Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment  ("HAP")  Contracts  on a long  term  basis on the  existing  terms.  In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental  assistance  payments under renewed HAP Contracts will be based
on market rentals instead of above market  rentals,  which may be the case under
existing HAP Contracts.  The payments under the renewed HAP Contracts may not be
in an amount  that  would  provide  sufficient  cash  flow to  permit  owners of
properties  subject to HAP  Contracts to meet the debt service  requirements  of
existing  loans  insured by the Federal  Housing  Administration  of HUD ("FHA")
unless such mortgage loans are  restructured.  In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and  Affordability  Act of 1997 ("MAHRAA")  provides for
the  restructuring  of  mortgage  loans  insured  by the  FHA  with  respect  to
properties  subject  to the  Section 8 program.  Under  MAHRAA,  an  FHA-insured
mortgage  loan can be  restructured  into a first  mortgage  loan  which will be
amortized on a current basis and a low interest  second mortgage loan payable to
FHA which will only be payable on  maturity  of the first  mortgage  loan.  This
restructuring results in a reduction in annual debt service payable by the owner
of the  FHA-insured  mortgage  loan and is  expected  to result in an  insurance
payment from FHA to the holder of the  FHA-insured  loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties  serving  families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.

When the HAP  Contracts are subject to renewal,  there can be no assurance  that
the  Local  Partnerships  in which the  Partnership  has an  investment  will be
permitted to restructure its mortgage  indebtedness  under MAHRAA.  In addition,
the  economic  impact  on the  Partnership  of the  combination  of the  reduced
payments  under  the  HAP  Contracts  and  the  restructuring  of  the  existing
FHA-insured mortgage loans under MAHRAA is uncertain.

Other

AIMCO and its affiliates owned 5,718 limited partnership units (the "Units") (or
11,436 limited partnership  interests) in the Partnership  representing 4.18% of
the  outstanding  Units as of June 30,  2003.  A Unit  consists  of two  limited
partnership  interests. A number of these Units were acquired pursuant to tender
offers  made by  AIMCO  or its  affiliates.  It is  possible  that  AIMCO or its
affiliates  will acquire Units in exchange for cash or a combination of cash and
units in the operating  partnership of AIMCO either through private purchases or
tender offers.  Pursuant to the  Partnership  Agreement,  unitholders  holding a
majority of the Units are  entitled to take action with  respect to a variety of
matters that include,  but are not limited to,  voting on certain  amendments to
the Partnership  Agreement and voting to remove the Corporate  General  Partner.
Although the  Corporate  General  Partner owes  fiduciary  duties to the limited
partners of the Partnership,  the Corporate  General partner also owes fiduciary
duties  to  AIMCO  as its sole  stockholder.  As a  result,  the  duties  of the
Corporate General Partner,  as corporate general partner, to the Partnership and
its limited  partners may come into  conflict  with the duties of the  Corporate
General Partner to AIMCO, as its sole stockholder.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the  United  States  requires  the  Partnership  to make
estimates  and  assumptions.  Judgments and  assessments  of  uncertainties  are
required in applying the  Partnership's  accounting  policies in many areas. The
following may involve a higher degree of judgment and complexity.

Method of Accounting for Investments in Limited Partnerships

The  Partnership,  as a limited  partner,  does not  exercise  control  over the
activities and operations,  including  refinancing or selling decisions,  of the
Local Partnerships. Accordingly, the Partnership accounts for its investments in
the Local  Partnerships  using the equity method.  The  Partnership is allocated
profits and losses of the Local Partnerships based upon its respective ownership
percentage  (between 94.9% and 99%). The  Partnership is also entitled to 99% of
the profits and losses of REA.  Distributions  of surplus  cash from  operations
from most of the Local  Partnerships  are restricted by the Local  Partnerships'
Regulatory  Agreements  with the United  States  Department of Housing and Urban
Development  ("HUD").  These  restrictions  limit the distribution to a portion,
generally  less than 10%, of the initial  invested  capital.  The excess surplus
cash is  deposited  into a  residual  receipts  reserve,  of which the  ultimate
realization by the  Partnership  is uncertain as HUD frequently  retains it upon
sale or  dissolution  of the Local  Partnership.  The  Partnership  is allocated
profits and losses and receives  distributions  from  refinancings  and sales in
accordance with the Local Partnerships' partnership agreements. These agreements
usually limit the Partnership's  distributions to an amount  substantially  less
than its ownership percentage in the Local Partnership.

The individual  investments are carried at cost plus the Partnership's  share of
the  Local  Partnership's  profits  less the  Partnership's  share of the  Local
Partnership's  losses,  distributions and impairment charges. The Partnership is
not legally  liable for the  obligations  of the Local  Partnerships  and is not
otherwise  committed to provide additional support to them.  Therefore,  it does
not  recognize  losses  once its  investment  in each of the Local  Partnerships
reaches zero.  Distributions  from the Local Partnerships are accounted for as a
reduction of the investment  balance until the investment  balance is reduced to
zero.  When  the  investment  balance  has  been  reduced  to  zero,  subsequent
distributions  received are recognized as income in the accompanying  statements
of operations.

For those  investments  where the  Partnership  has determined that the carrying
value  of its  investments  approximates  the  estimated  fair  value  of  those
investments,  the  Partnership's  policy is to recognize equity in income of the
Local Partnerships only to the extent of distributions received and amortization
of acquisition costs from those Local Partnerships.  Therefore,  the Partnership
limits its recognition of equity earnings to the amount it expects to ultimately
realize.

In January 2003,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation  No. 46 ("FIN 46"),  Consolidation of Variable Interest Entities.
FIN 46 requires the  consolidation of entities in which an enterprise  absorbs a
majority of the entity's  expected  losses,  receives a majority of the entity's
expected  residual  returns,  or both, as a result of ownership,  contractual or
other  financial  interests  in the  entity.  Prior to the  issuance  of FIN 46,
entities were generally  consolidated by an enterprise when it had a controlling
financial  interest  through  ownership  of a majority  voting  interest  in the
entity.  FIN 46 applied  immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003, FIN 46 will apply beginning July 1, 2003.

The Partnership has not entered into any partnership  investments  subsequent to
January  31,  2003.  The  Partnership  is  in  the  process  of  evaluating  its
investments in unconsolidated  partnerships that may be deemed variable interest
entities  under the  provisions of FIN 46. At June 30, 2003,  the  Partnership's
maximum  exposure to loss with  regard to  unconsolidated  partnerships  was its
recorded investment in these partnerships totaling  approximately  $102,000. The
Partnership has not yet determined the anticipated impact of adopting FIN 46 for
its partnership  agreements that existed as of January 31, 2003. However, FIN 46
may require the  consolidation  of the assets,  liabilities  and  operations  of
certain of the Partnership's  unconsolidated  partnership investments.  Although
the Partnership does not believe the full adoption of FIN 46 will have an impact
on net earnings,  the Partnership cannot make any definitive conclusion until it
completes its evaluation.

ITEM 3.     CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.  The Partnership's management,  with the
participation of the principal executive officer and principal financial officer
of the Corporate  General Partner,  who are the equivalent of the  Partnership's
principal executive officer and principal financial officer,  respectively,  has
evaluated  the  effectiveness  of  the  Partnership's  disclosure  controls  and
procedures (as such term is defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report.  Based on such  evaluation,  the principal
executive  officer and  principal  financial  officer of the  Corporate  General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal  financial officer,  respectively,  have concluded that, as of the
end of such period,  the  Partnership's  disclosure  controls and procedures are
effective.

(b) Internal Control Over Financial  Reporting.  There have not been any changes
in the Partnership's  internal control over financial reporting (as such term is
defined in Rules  13a-15(f)  and  15d-15(f)  under the Exchange  Act) during the
fiscal quarter to which this report relates 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

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership  interests in the Partnership and two investors holding an aggregate
of five units of limited partnership interests in Real Estate Associates Limited
VI (an affiliated  partnership in which NAPICO is the corporate general partner)
commenced an action in the United States District Court for the Central District
of California against the Partnership,  NAPICO and certain other defendants. The
complaint  alleged that the  defendants  breached  their  fiduciary  duty to the
limited partners of certain NAPICO managed  partnerships and violated securities
laws by  making  materially  false  and  misleading  statements  in the  consent
solicitation  statements  sent to the  limited  partners  of  such  partnerships
relating  to  approval  of the  transfer  of  partnership  interests  in limited
partnerships,  owning  certain  of  the  properties,  to  affiliates  of  Casden
Properties  Inc.,  organized by an affiliate of NAPICO.  The  plaintiffs  sought
equitable relief, as well as compensatory  damages and litigation related costs.
On August 4, 1999, one investor holding one unit of limited partnership interest
in Housing Programs Limited (another  affiliated  partnership in which NAPICO is
the corporate  general  partner)  commenced a virtually  identical action in the
United States District Court for the Central District of California  against the
Partnership,  NAPICO and certain other entities.  The second action was subsumed
in the first action,  and was  certified as a class action.  On August 21, 2001,
plaintiffs filed a supplemental complaint,  which added new claims,  including a
rescission of the transfer of partnership interests and an accounting.

In November 2002, the jury returned  special verdicts against NAPICO and certain
other defendants in the amount of approximately  $25.2 million for violations of
securities laws and against NAPICO for approximately  $67.3 million for breaches
of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages
against  NAPICO of  approximately  $92.5  million.  On April 29, 2003, the Court
entered  judgment  against NAPICO and certain other  defendants in the amount of
$25.2 million for  violations of  securities  laws and against  NAPICO for $67.3
million for breaches of  fiduciary  duty,  both  amounts plus  interest of $25.6
million, and for punitive damages against NAPICO in the amount of $2.6 million.

On May 30, 2003,  NAPICO and certain other defendants  entered into a memorandum
of  understanding  with the plaintiff  class and their  counsel  relating to the
settlement of the litigation.

On August 11,  2003,  NAPICO  entered  into a  Stipulation  of  Settlement  (the
"Stipulation of Settlement")  with the plaintiff  class (the  "Plaintiffs")  and
their counsel  relating to the settlement of the litigation.  The Stipulation of
Settlement remains subject to the preliminary and final approval of the court as
well  as the  approval  of  the  Plaintiffs.  Pursuant  to  the  Stipulation  of
Settlement,  within two days after receiving the court's preliminary approval of
the proposed settlement,  Alan I. Casden, on behalf of himself, NAPICO and other
defendants in the litigation,  is responsible for depositing $29 million into an
escrow  account for the benefit of the  Plaintiffs.  Upon final court  approval,
approval  by the  Plaintiffs  and the  lapse of any  time to  appeal  the  court
approval of the settlement, the following shall occur:

      1.    Alan I. Casden, on behalf of himself, NAPICO and other defendants in
            the litigation,  will transfer to an agent for the Plaintiffs shares
            of common stock  ("Class A Common  Stock") of AIMCO owned by certain
            affiliates  of Alan I. Casden with an aggregate  market value of $19
            million,  subject to certain  transfer  restrictions,  or at Alan I.
            Casden's option, $19 million in cash.

      2.    NAPICO will issue an  aggregate of $35 million in  promissory  notes
            for the benefit of the  Plaintiffs.  An  aggregate  of $7 million of
            notes are to be repaid each year. The notes will bear interest based
            on applicable rates of U.S. Treasury bills with similar  maturities.
            The notes will be guaranteed by AIMCO Properties, L.P., an affiliate
            of AIMCO.

      3.    The parties to the Stipulation of Settlement will release each other
            and  related  parties  from any and all claims  associated  with the
            litigation and the Plaintiffs' investment in the Partnership and the
            other affiliated partnerships.

      4.    The $29 million in the escrow account  established by Alan I. Casden
            will be released to the Plaintiffs.

Pursuant to the Stipulation of Settlement, upon final approval of the settlement
by the court,  the parties shall jointly  request that a new judgment be entered
in the litigation that will, among other things, expunge the judgment originally
entered against NAPICO and the other defendants on April 29, 2003.

On August 12, 2003, in connection with the proposed  settlement  pursuant to the
Stipulation of Settlement, NAPICO and AIMCO executed a Settlement Agreement (the
"Settlement  Agreement") with the prior  shareholders of Casden  Properties Inc.
The principal terms of the Settlement Agreement include:

     1.   That NAPICO will  voluntarily  discontinue  the action it commenced on
          May 13, 2003 against the former shareholders of Casden Properties Inc.
          and other  indemnitors  in AIMCO's  March 2002  acquisition  of Casden
          Properties Inc. (the "Casden Merger").

     2.   That Alan I. Casden and certain related  entities will resolve certain
          pending  claims for  indemnification  made by NAPICO,  AIMCO and their
          affiliates.  These  claims  include  indemnification  related  to  the
          litigation  and certain other  matters in  connection  with the Casden
          Merger.

     3.   AIMCO,  or an  affiliate,  will deposit $25 million of the $29 million
          that Alan I.  Casden is  responsible  for  depositing  into the escrow
          account for the benefit of the Plaintiffs pursuant to the terms of the
          Stipulation of Settlement.  In connection  with this deposit by AIMCO,
          The Casden  Company  will  transfer to AIMCO  531,915  shares of AIMCO
          Class A Common Stock owned by The Casden Company,  which shares are to
          be held in escrow by AIMCO until final approval of the  Stipulation of
          Settlement by the court and the Plaintiffs.  Upon such approval, AIMCO
          will become the owner of the 531,915 shares.  If final approval by the
          court and the Plaintiffs is not obtained, the $25 million deposited by
          AIMCO into the escrow account will be returned to AIMCO and AIMCO will
          return to The Casden Company the 531,915 shares.

     4.   The Casden  Company  will  promise to pay an  aggregate  amount of $35
          million on a secured,  nonrecourse basis to NAPICO. The Casden Company
          will  be  obligated  to  repay  an  aggregate  of $7  million  of  the
          obligation  each year.  The  obligation  to repay the $35 million will
          bear  the  same  interest  and  mature  on the  same  schedule  as the
          promissory  notes issued by NAPICO to the  plaintiffs  pursuant to the
          Stipulation  of  Settlement.  Payment  of  these  obligations  will be
          secured  by (i) a pledge of  744,681  shares  of AIMCO  Class A Common
          Stock  owned by Alan I.  Casden or an  affiliated  entity,  plus up to
          60,000 additional shares for accrued interest,  and (ii) cash proceeds
          of  recoveries  or  settlements  that  Alan  I.  Casden  or any of his
          affiliates,  or any of the former  shareholders  of Casden  Properties
          Inc.,  receive  in  connection  with  or  related  to  the  litigation
          (collectively,  "Recoveries").  The payment obligations to NAPICO will
          be required to be prepaid with any Recoveries received. Payment may be
          made in cash or in  shares  of  AIMCO  Class A  Common  Stock,  except
          payments with respect to Recoveries must be made in cash.

Millenium   Management,   LLC  ("Millenium")  and  Everest  Properties  II,  LLC
("Everest") have filed with the SEC a preliminary Consent Solicitation Statement
requesting the consent of the limited partners of Real Estate Associates Limited
III  (the   "Partnership")  to  remove  the  current  general  partners  of  the
Partnership and to elect Millenium as the new general  partner.  The Partnership
has filed  with the SEC a  preliminary  Consent  Revocation  Statement  opposing
Millenium's and Everest's efforts to remove the general  partners.  An affiliate
of  the  general  partner  has  purchased  Everest's  partnership  interest  and
Everest's consent solicitation has been terminated.

In addition to the litigation  discussed above, the Corporate General Partner is
involved in various other  lawsuits  arising from  transactions  in the ordinary
course of  business.  In the opinion of  management  and the  Corporate  General
Partner,   the  claims  will  not  result  in  any  material  liability  to  the
Partnership.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

          Exhibit 3 Restated  Certificate  and Agreement of Limited  Partnership
               herein  dated  January 5, 1981  incorporated  by reference to the
               Partnership's Form S-11 No. 268983.

          Exhibit 10  Material  contracts:  The  registrant  is not party to any
               material  contracts,  other  than the  Restated  Certificate  and
               Agreement of Limited  Partnership  dated January 5, 1981, and the
               thirty-three contracts representing the Partnership investment in
               Local  Partnerships  as previously  filed at the  Securities  and
               Exchange Commission,  File #268983,  which is hereby incorporated
               by reference.

          Exhibit 31.1  Certification  of equivalent of Chief Executive  Officer
               pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
               Adopted  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
               2002.

          Exhibit 31.2  Certification  of equivalent of Chief Financial  Officer
               pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as
               Adopted  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
               2002.

          Exhibit 32.1  Certification  Pursuant to 18 U.S.C.  Section  1350,  as
               Adopted  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
               2002.

(b) Reports on Form 8-K filed during the quarter ended June 30, 2003:

         (1)      Current  Report on Form 8-K dated  April 30, 2003 and filed on
                  April 30, 2003, disclosing the judgment entered April 29, 2003
                  against the corporate general partner of the Partnership.

         (2)      Current  Report on Form 8-K  dated  May 30,  2003 and filed on
                  June 2, 2003,  disclosing the proposed  settlement between the
                  corporate  general  partner of the  Partnership  and the prior
                  shareholders of Casden Properties, Inc.

                                   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.


                                    REAL ESTATE ASSOCIATES LIMITED III
                                    (a California limited partnership)


                                    By:   National Partnership Investments Corp.
                                          Corporate General Partner


                                    By:   /s/David R. Robertson
                                          David R. Robertson
                                          President and Chief Executive Officer

                                    By:   /s/Brian H. Shuman
                                          Brian H. Shuman
                                          Senior Vice President and Chief
                                          Financial Officer


                                    Date: August 13, 2003

Exhibit 31.1


                                  CERTIFICATION


I, David R. Robertson, certify that:


1.    I have  reviewed  this  quarterly  report on Form  10-QSB  of Real  Estate
      Associates Limited III;

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

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

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

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

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

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

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and


      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date:  August 13, 2003

                                    /s/David R. Robertson
                                    David R. Robertson
                                    President and Chief  Executive Officer of
                                    National Partnership Investments Corp.,
                                    equivalent of the chief executive officer of
                                    the Partnership

Exhibit 31.2


                                  CERTIFICATION


I, Brian H. Shuman, certify that:


1.    I have  reviewed  this  quarterly  report on Form  10-QSB  of Real  Estate
      Associates Limited III;

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

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

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

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

      (b)   Evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures and presented in this report our  conclusions  about
            the effectiveness of the disclosure  controls and procedures,  as of
            the  end  of the  period  covered  by  this  report  based  on  such
            evaluation; and

      (c)   Disclosed  in this  report any change in the  registrant's  internal
            control  over   financial   reporting   that  occurred   during  the
            registrant's  most recent fiscal  quarter (the  registrant's  fourth
            fiscal  quarter in the case of an annual report) that has materially
            affected,   or  is  reasonably  likely  to  materially  affect,  the
            registrant's internal control over financial reporting; and

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

      (a)   All significant  deficiencies and material  weaknesses in the design
            or operation of internal control over financial  reporting which are
            reasonably  likely to adversely affect the  registrant's  ability to
            record, process, summarize and report financial information; and


      (b)   Any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal control over financial reporting.


Date:  August 13, 2003

                                    /s/Brian H. Shuman
                                    Brian H. Shuman
                                    Senior Vice President and Chief Financial
                                    Officer of National Partnership Investments
                                    Corp., equivalent of the chief financial
                                    officer of the Partnership

Exhibit 32.1


                          Certification of CEO and CFO
                       Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002



In connection with the Quarterly Report on Form 10-QSB of Real Estate Associates
Limited III (the "Partnership"), for the quarterly period ended June 30, 2003 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  David R. Robertson, as the equivalent of the chief executive officer
of the  Partnership,  and  Brian  H.  Shuman,  as the  equivalent  of the  chief
financial  officer of the  Partnership,  each hereby  certifies,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:

      (1)   The Report fully complies with the  requirements of Section 13(a) or
            15(d) of the Securities Exchange Act of 1934; and

      (2)   The  information  contained in the Report  fairly  presents,  in all
            material respects, the financial condition and results of operations
            of the Partnership.


                                           /s/David R. Robertson
                                    Name:  David R. Robertson
                                    Date:  August 13, 2003


                                           /s/Brian H. Shuman
                                    Name:  Brian H. Shuman
                                    Date:  August 13, 2003


This  certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.