PURCHASE AGREEMENT
                  17135 Kieth Harrow Boulevard
                           Houston, TX

This  AGREEMENT, entered into effective as of the 30th of  July,
2002.

l.   PARTIES.  Seller  is  AEI  Real  Estate  Fund  XVI   Limited
Partnership ("Seller").  Seller holds an undivided 100%  interest
in  the fee title to that certain real property legally described
in the attached Exhibit "A" (the "Property").  Buyer is Edward A.
Routzong and Pamela C. Baca and/or its assigns ("Buyer").  Seller
wishes to sell and Buyer wishes to buy the Property.

2. PROPERTY. The Property to be sold to Buyer in this transaction
is  legally described on Exhibit "A" attached hereto, subject  to
the  provisions  of Buyer review of title as set forth  below  in
paragraph  8, including that certain Net Lease Agreement  between
Seller and Creative Years Early Learning Centers, Inc.

3.  PURCHASE  PRICE.  The purchase price  for  this  Property  is
$230,000  cash plus $50 independent consideration, based  on  the
following terms:

4.  TERMS.  Subject  however  to sections  15(b)  and  15(c)  the
purchase price for the Property will be paid by Buyer as follows:

     (a)  When this agreement is executed, Buyer will pay  $1,000
     in  cash  or  good  funds (the "First Payment")  to  Houston
     Title,  Attn:  Tanya McLaren, 777 Post Oak Boulevard,  Suite
     200, Houston, TX 77056 ("Escrowee").  The First Payment will
     be  credited against the purchase price when and  if  escrow
     closes  and  the  sale is completed, or otherwise  disbursed
     pursuant  to  the  terms  of  this  Agreement.   After   the
     expiration  of the Review Period as defined in  paragraph  6
     below,  the  First  Payment held for the account  of  Seller
     shall become non-refundable.

      (b)  Buyer will pay the balance of purchase price  for  the
Property,  $229,000  in  cash or       good  funds  (the  "Second
Payment"),  at  closing  to  the Escrowee  who  shall  close  the
transaction according to the terms hereof.

     (c) When this Agreement is executed, Buyer will also pay $50
in   cash   in   good   funds     directly  to  Seller   ("Option
Consideration"),  which  shall be in consideration  for  Seller's
execution  of  this Agreement, but will be credited  against  the
purchase  price  when and if    escrow closes  and  the  sale  is
completed.  The Option Consideration shall be considered     non-
refundable if this Agreement is terminated for any reason.

5.  CLOSING  DATE.  Subject however to sections 15(b)  and  15(c)
escrow  shall  close  on or before the thirtieth  day  after  the
Inspection and Feasibility Study is completed.

6.  DUE  DILIGENCE. Buyer will have until the expiration  of  the
90th   day   after  delivery  of  the  signed  "Agreement"   (the
"Inspection and Feasibility Study Period"), to conduct all of its
inspections and due diligence and satisfy itself regarding  title
to  the  Property, and to inspect the Property. Buyer  agrees  to
indemnify  and  hold  harmless for any  loss  or  damage  to  the
Property or persons caused by Buyer or its agents arising out  of
such  physical  inspections  of  the  Property.  Buyer  expressly
acknowledges that the sale of the Property as provided for herein
is  made  on  an "AS IS" basis, and such provision shall  survive
closing.

     Subject however to sections 15(b) and 15(c) buyer may cancel
this  agreement  for  any  reason  in  its  sole  discretion   by
delivering  a  cancellation  notice  by  certified  mail,  return
receipt  requested, or by personal delivery to Seller and  escrow
holder  before  the expiration of the Inspection and  Feasibility
Study  Period or Inspection Period as defined in Section  16.  If
this  Agreement  is not canceled as set forth herein,  the  First
Payment  shall  be  non-refundable unless  Seller  shall  default
hereunder.

      If  Buyer  cancels this Agreement as permitted  under  this
Section  or  Section  16, except for any title  insurance  and/or
escrow  cancellation fees of the escrowee which will be  paid  by
the  Buyer,  and  any liabilities under sections  15(a)(iii)  and
16(b)  of  this  Agreement  (which will  survive),  Buyer  (after
execution  of  such documents reasonably requested by  Seller  to
evidence  the  termination hereof) shall be  returned  its  First
Payment,  and  Buyer will have absolutely no  rights,  claims  or
interest  of  any  type in connection with the Property  or  this
transaction,  regardless  of any alleged  conduct  by  Seller  or
anyone else.

      Unless  Seller  shall  be  in  default  of  any  obligation
hereunder, or this Agreement is canceled by Buyer pursuant to the
terms  hereof, if Buyer fails to make the Second Payment,  Seller
shall   be  entitled  to  retain  the  First  Payment  and  Buyer
irrevocably  will be deemed to have canceled this  Agreement  and
relinquish  all rights in and to the Property. If this  Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.

7.  ESCROW. Escrow shall be opened by Buyer and the First Payment
shall  be  deposited  by Buyer with Escrowee.   A  copy  of  this
Agreement  will be delivered to the escrow holder and will  serve
as escrow instructions together with the escrow holder's standard
instructions  and  any additional instructions  required  by  the
escrow  holder  to  clarify its rights and duties.   The  parties
agree  to sign these additional instructions of the Escrowee,  if
any.  If  there is any conflict between these other  instructions
and  this Agreement, this Agreement will control. Escrow will  be
opened upon acceptance of this Agreement by Seller.

8.  TITLE.  Closing  will be conditioned  on  the  commitment  of
Escrowee to issue an Owner's policy of title insurance, dated  as
of the close of escrow, in an amount equal to the purchase price,
insuring that Buyer will own marketable and insurable fee  simple
title  to  the Property subject only to: the Permitted Exceptions
as  defined in paragraph 2 above; current real property taxes and
assessments;  and survey exceptions.  Buyer shall  have  a  Title
Commitment issued and tendered to Buyer within twenty  (20)  days
of the date this Purchase Agreement is delivered to Escrowee.

       Buyer  shall  be  allowed  until  the  expiration  of  the
"Inspection and Feasibility Study Period" for examination and the
making  of  any  objections to the survey and  to  any  exception
contained in the Title Commitment, said objections to be made  in
writing  or  deemed waived.  If any objections are so  made,  the
Seller  shall  be  allowed  thirty  (30)  days  to  cure  Buyer's
objections,  or  in the alternative to obtain  a  commitment  for
insurable  title  insuring over Buyer's  objections.   If  Seller
shall decide to make no efforts to cure Buyer's objections, or is
unable to make title marketable or obtain insurable title, (after
execution  by  Buyer  of such documents reasonably  requested  by
Seller  to evidence the termination hereof) Buyer's First Payment
shall  be returned and this agreement shall be null and void  and
of no further force and effect.

     Pending correction of title, the payments hereunder required
shall  be postponed, but upon correction of title and within  ten
(10)  days  after written notice of correction to the Buyer,  the
parties shall perform this agreement according to its terms.

      If  Buyer shall make no written objection to Seller  within
the  Review Period setting forth Buyer's objections to the status
of  title, Buyer shall have been deemed to have waived  any  such
objections.

9.  CLOSING COSTS.  Seller will pay the deed stamp taxes, if any,
and  one-half of escrow fees attributable to the closing services
for  this  transaction.  Buyer shall pay for the cost of  issuing
the  title  commitment.  Buyer will pay the  cost  of  the  title
insurance  premium for an Owner's policy (if desired  by  Buyer).
Buyer  will pay all recording fees, one-half of the escrow  fees,
the  costs of a new survey or an update to the Survey in Seller's
possession (if an update is required by Buyer).  Each party  will
pay  its own attorneys' fees and costs to document and close this
transaction.  Buyer will pay real estate commissions to  brokers,
if any.

10.  REAL  ESTATE  TAXES,  SPECIAL  ASSESSMENTS  AND  PRORATIONS.
Seller  represents  that to the best of its knowledge,  all  real
estate  taxes and assessments due and payable in all years  prior
to  the  year  of Closing have been paid in full.  Responsibility
for  real  estate taxes and special assessments shall be prorated
as  of the date of closing based upon the most recently available
tax  bill with no readjustment for the taxes due for the year  in
which  closing  shall occur. All real estate  taxes  and  special
assessments  due and payable in the years following the  year  in
which  closing  occurs shall otherwise be the  responsibility  of
Buyer.  The parties acknowledge and agree that the tenant of  the
property  is responsible for payment of taxes and thus no  actual
proration of funds at closing shall occur.  However, seller shall
remain  responsible  for the pro-rata share  of  taxes  prior  to
closing  and  Buyer assumes the responsibility for  the  pro-rata
share of taxes after closing.

11. SELLER'S REPRESENTATION AND AGREEMENTS.

     Seller represents and warrants as of this date that:

     (i)   The  Property is subject to a Net Lease  Agreement  as
     follows:

          (a)  Net Lease Agreement entered into December 21, 1990
     by  and  between  Seller and Creative Years  Early  Learning
     Centers,  Inc.,  as  amended  by  Amendment  To  Net   Lease
     Agreement effective as of August 5, 1993.

     (ii)   It  is  not  aware  of  any  pending  litigation   or
     condemnation  proceedings against the Property  or  Seller's
     interest  in  the Property that have not been  disclosed  to
     Buyer.

     (iii)   It  is  not  aware of any contracts  affecting  this
     Property and potentially or actually binding on Buyer  after
     the closing date.

     (iv)   Seller  has  all  requisite power  and  authority  to
     consummate  the  transaction contemplated by this  Agreement
     and  has by proper proceedings duly authorized the execution
     and  delivery of this Agreement and the consummation of  the
     transaction contemplated hereby.

12. DISCLOSURES.

     (a)   Seller  has  been an absentee landlord.  Consequently,
     Seller  has  little,  if  any,  knowledge  of  the  physical
     characteristics of the Property.

     Accordingly, except as otherwise specifically stated in  the
     Agreement,   Seller   hereby  specifically   disclaims   any
     warranty,  guaranty,  or representation,  oral  or  written,
     past,  present, or future of, as to, or concerning  (i)  the
     nature  and  condition of the Property,  including,  without
     limitation,   the   water,  soil,  and  geology,   and   the
     suitability  thereof and of the Property  for  any  and  all
     activities  and  uses  which  Buyer  may  elect  to  conduct
     thereon; (ii) except for the warranty of title contained  in
     the  Deed  to  be  delivered by Seller at the  closing,  the
     nature  and  extent of any right of way, lease,  possession,
     lien,  encumbrance,  license,  reservation,  condition,   or
     otherwise, and (iii) the compliance of the Property  or  its
     operation with any laws, ordinances, or regulations  of  any
     government or other body.

     (b)  This  Agreement is subject to an inspection contingency
     as  set  forth in Section 16.  Buyer acknowledges and agrees
     that  Buyer  is  not  relying  upon  any  representation  or
     warranties  made  by Seller or Seller's Agent  except  those
     provided herein.

     (c)   Buyer   acknowledges  that,  having  been  given   the
     opportunity to inspect the Property, Buyer is relying solely
     on  its  own  investigation of the Property and not  on  any
     information provided by Seller or to be provided  except  as
     set  forth  herein.  Buyer expressly acknowledges  that,  in
     consideration of the agreements of the Seller herein, except
     as  otherwise specified herein, Seller makes no Warranty  or
     representation, express or implied, or arising by  operation
     of  law,  including,  but not limited to,  any  warranty  or
     condition,  habitability,  tenantability,  suitability   for
     commercial  purposes,  merchantability,  profitability,   or
     fitness  for  a  particular  purpose,  in  respect  of   the
     Property.

     (d) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY IN
     ITS  THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER HAS
     NO  OBLIGATION  TO  CONSTRUCT  OR  REPAIR  ANY  IMPROVEMENTS
     THEREON, OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY.
     WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ALSO
     AGREES  THAT  SELLER  WILL HAVE NO LIABILITY  OF  ANY  TYPE,
     DIRECT OR INDIRECT, TO BUYER OR BUYER'S SUCCESSORS, ASSIGNS,
     LENDERS  OR  AFFILIATES IN CONNECTION  WITH  ANY  HAZARDOUS,
     TOXIC,   DANGEROUS,   FLAMMABLE,   EXPLOSIVE   OR   CHEMICAL
     SUBSTANCES OF ANY TYPE (WHETHER OR NOT DEFINED AS SUCH UNDER
     ANY  APPLICABLE LAWS) ON OR IN CONNECTION WITH THE  PROPERTY
     EITHER BEFORE OR AFTER THE CLOSING DATE.

     The provisions (a) through (d) shall survive closing.

13. CLOSING.

     (a) Before the closing date, Seller will deposit into escrow
     an  executed  limited  warranty deed  subject  to  Permitted
     Exceptions  conveying insurable title  of  the  Property  to
     Buyer.  At Closing, Seller shall deliver to Buyer a standard
     Seller's  Affidavit  regarding liens and  judgments.   Buyer
     will  be given five (5) business days, prior to closing,  to
     review all closing documents.

     (b)  On or before the closing date, Buyer will deposit  into
     escrow:  the  balance  of the purchase price  when  required
     under  Section  4; any additional funds required  of  Buyer,
     (pursuant to this agreement or any other agreement  executed
     by  Buyer)  to  close escrow.  Both parties  will  sign  and
     deliver  to the escrow holder any other documents reasonably
     required by the escrow holder to close escrow.

      (c)  On  the  closing date, if escrow is in a  position  to
close,  the escrow holder will: record   the deed in the official
records  of the county where the Property is located;  cause  the
title       company   to  commit  to  issue  the  title   policy;
immediately deliver to Seller the portion of
            the purchase price deposited into escrow by cashier's
check or wire transfer (less debits
             and prorations, if any); deliver to Seller and Buyer
a signed counterpart of the escrow
             holder's  certified closing statement and  take  all
other actions necessary to close escrow.

14.  DEFAULTS.  If Buyer defaults, Buyer will forfeit all  rights
and  claims  and  Seller will be relieved of all obligations  and
will  be  entitled to retain all monies heretofore  paid  by  the
Buyer as Seller's sole remedy.

     If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim,  action or proceeding of any type in connection  with  the
Property or this or any other transaction involving the Property,
and  will  not  do  anything to affect title to the  Property  or
hinder,  delay  or  prevent  any  other  sale,  lease  or   other
transaction involving the Property (any and all of which will  be
null  and void), unless: it has paid the First Payment, performed
all  of its other obligations and satisfied all conditions  under
this  Agreement,  and  unconditionally notifies  Seller  that  it
stands  ready  to tender full performance, purchase the  Property
and  close escrow as per this Agreement.  Provided, however, that
in  no  event  shall  Seller  be liable  for  any  consequential,
punitive  or  speculative damages arising out of any  default  by
Seller hereunder.

15. BUYER'S REPRESENTATIONS AND WARRANTIES.

     a.  Buyer represents and warrants to Seller as follows:

     (i)   Buyer  has  all  requisite  power  and  authority   to
     consummate  the  transaction contemplated by this  Agreement
     and  has by proper proceedings duly authorized the execution
     and  delivery of this Agreement and the consummation of  the
     transaction contemplated hereby.

     (ii)   With  the  exception listed in paragraphs  15(b)  and
     15(c) below to Buyer's knowledge, neither the execution  and
     delivery  of  this  Agreement nor the  consummation  of  the
     transaction  contemplated  hereby  will  violate  or  be  in
     conflict with (a) any applicable provisions of law, (b)  any
     order  of  any  court or other agency of  government  having
     jurisdiction  hereof, or (c) any agreement or instrument  to
     which Buyer is a party or by which Buyer is bound.

     (iii)   Buyer  agrees to indemnify and hold Seller  harmless
     from any and all claim of any persons or entities claiming a
     brokerage  or  other  fee arising out of  representation  of
     Buyer.

     b.   It is however, understood and acknowledged by Buyer and
     Seller,  that  the present lessee of the property,  Creative
     Years  Early Learning Centers, Inc. has filed for bankruptcy
     protection under United States Bankruptcy Code Chapter 11.

          In   order  to  complete   the  purchase  transaction,
     Sellers  acknowledges that court approval may  be  required.
     Should this occur, Seller grants buyer an extension of  time
     to  get said approval and will accordingly extend the 90 day
     period  referred to in paragraph 6 above until such approval
     is granted or denied, or for 60 days, whichever is sooner.

     c.   Seller  further agrees that the first payment  paid  by
     Buyer  will  be  returned in full to the  Buyer  subject  to
     payment  of  any title insurance or any escrow cancellations
     fees  and any liabilities under sections 15(a) (iii) and  16
     (b)  of  this  Agreement in the unlikely  event  that  court
     approval to sell the property is denied.

16. PROPERTY INSPECTION AND ENVIRONMENTAL.

     (a)  Seller shall provide Buyer access to the Property  from
     time  to  time  for  the  purpose of conducting  inspections
     thereof  including  mechanical, structural,  electrical  and
     other  physical inspections. Buyer has until 90  days  after
     the  signing  of  the agreement by Seller to  complete  such
     physical   inspection  (the  "Inspection   and   Feasibility
     Study").

     (b)  Buyer shall indemnify, defend, and hold harmless Seller
     from  and  against  any and all losses,  claims,  causes  of
     action, liabilities, and costs to the extent caused  by  the
     actions  of  Buyer, its agents, employees,  contractors,  or
     invitees,  during  any  such entry upon  the  Property.  The
     foregoing duty of indemnification shall include the duty  to
     pay all reasonable attorney's fees incurred by the Seller in
     responding to or defending any such claims or proceedings.

     (c) Buyer shall pay for any Phase I Environmental studies it
     wants  to  be performed on the Property. If Buyer desires  a
     Phase  I  Environmental, Buyer shall obtain and  review  the
     same within ninety (90) days from the date this agreement is
     signed  by Seller. If the Phase I Environmental report  does
     not  meet  hazardous material standards as required  by  the
     ruling  state and Federal agencies, the Buyer may  terminate
     this Agreement within said 90 days period and receive a full
     refund  of  the Earnest Money. However, if Buyer terminates,
     Buyer  prior to termination will provide Seller with  copies
     of  all reports and test results Buyer had performed on  the
     Property.

     (d)  Seller  shall deliver to Buyer, on or before  ten  (10)
     days  following  the  date Seller signs this  contract,  the
     following items to the extent within Seller's possession, or
     if such item(s) do not exist or Seller does not possess such
     items, a statement to that effect:

          (a.) Any leases on the Property;
          (b.) All surveys of the property currently in the possession of
               Seller.

     If  this  transaction does not close as scheduled, Purchaser
     shall  return  the  items set forth in (a.)-(b.)  to  Seller
     within a reasonable time following termination of Contract.

     The  Inspection and Feasibility Study Period (as hereinafter
     defined) shall be extended for one (1) day for each  day  by
     which Seller is late in delivering the items (a.)-(b.).

17. DAMAGES, DESTRUCTION AND EMINENT DOMAIN.

     (a)  If,  prior to closing, the Property or any part thereof
     be  destroyed  or further damaged by fire, the elements,  or
     any cause, due to events occurring subsequent to the date of
     this Agreement to the extent that the cost of repair exceeds
     $20,000,  this  Agreement shall become  null  and  void,  at
     Buyer's  option exercised, if at all, by written  notice  to
     Seller within ten (10) days after Buyer has received written
     notice  from Seller of said destruction or damage.   Seller,
     however,  shall  have  the right to  adjust  or  settle  any
     insured  loss  until  (i)  all contingencies  set  forth  in
     Paragraph 6 hereof have been satisfied, or waived; and  (ii)
     any  period provided for above in this Subparagraph 17a  for
     Buyer  to  elect to terminate this Agreement has expired  or
     Buyer has, by written notice to Seller, waived Buyer's right
     to terminate this Agreement.  If Buyer elects to proceed and
     to   consummate   the  purchase  despite  said   damage   or
     destruction, there shall be no reduction in or abatement  of
     the  purchase  price, and Seller shall assign to  Buyer  the
     Seller's  right, title, and interest in and to all insurance
     proceeds  resulting from said damage or destruction  to  the
     extent  that the same are payable with respect to damage  to
     the Property.

     If  the cost of repair is less than $20,000.00, Buyer  shall
     be  obligated  to  otherwise  perform  hereinunder  with  no
     adjustment  to  the Purchase Price, reduction or  abatement,
     and  Seller shall assign Seller's right, title and  interest
     in  and  to  all  insurance  proceeds  in  relation  to  the
     Property.

     (b) If, prior to closing, the Property, or any part thereof,
     is  taken (other than as disclosed in writing to Buyer prior
     to  the  date  of  this Agreement) by eminent  domain,  this
     Agreement shall become null and void, at Buyer's option.  If
     Buyer  elects  to  proceed  and to consummate  the  purchase
     despite  said  taking, there shall be no  reduction  in,  or
     abatement of, the purchase price, and Seller shall assign to
     Buyer all the Seller's right, title, and interest in and  to
     any   award  made,  or  to  be  made,  in  the  condemnation
     proceeding in relation to the Property.

      In the event that this Agreement is terminated by Buyer  as
provided above in Subparagraph 17(a) or 17(b), the First  Payment
shall  be immediately returned to Buyer (after execution by Buyer
of  such documents reasonably requested by Seller to evidence the
termination hereof).

18.  SELLER'S AND BUYER'S BROKERS.  The Seller is not represented
by  a  broker  in  this  transaction.   Any  real  estate  broker
commission earned by a broker enlisted by the Buyer is to be paid
solely by the Buyer.  Both parties represent and warrant that  no
other broker has been involved on behalf of the warranting party,
and  both  parties agree to indemnify the other and hold harmless
from any claim through or on behalf of such other party.

19.  CANCELLATION.  If any party elects to cancel  this  Contract
because  of  any breach by another party, the party  electing  to
cancel  shall  deliver  to escrow agent a notice  containing  the
address  of  the party in breach and stating that  this  Contract
shall  be  canceled  unless the breach is cured  within  13  days
following the delivery of the notice to the escrow agent.  Within
three  days after receipt of such notice, the escrow agent  shall
send  it  by  United States Mail to the party in  breach  at  the
address  contained in the Notice and no further notice  shall  be
required.   If  the  breach  is not  cured  within  the  13  days
following  the delivery of the notice to the escrow  agent,  this
Contract shall be canceled.

20. MISCELLANEOUS.

     (a)  This Agreement may be amended only by written agreement
     signed by both Seller and Buyer, and all waivers must be  in
     writing  and signed by the waiving party.  Time  is  of  the
     essence.   This  Agreement  will not  be  construed  for  or
     against  a party whether or not that party has drafted  this
     Agreement.  If there is any action or proceeding between the
     parties relating to this Agreement the prevailing party will
     be  entitled to recover attorney's fees and costs.  This  is
     an  integrated  agreement containing all agreements  of  the
     parties  about the Property and the other matters described,
     and  it  supersedes any other agreements or  understandings.
     Exhibits  attached  to this Agreement are incorporated  into
     this Agreement.

     (b)  If  this  escrow  has not closed through  no  fault  of
     Seller,  by  the thirtieth day after the completion  of  the
     Inspection and Feasibility Study, Seller may either, at  its
     election,  extend  the  closing date,  exercise  any  remedy
     available  to  it  by  law, including  but  not  limited  to
     terminating this Agreement.

     (c)  FUNDS TO BE DEPOSITED OR PAID BY BUYER WILL BE GOOD AND
     CLEAR  FUNDS IN THE FORM OF CASH, CASHIER'S CHECKS  OR  WIRE
     TRANSFERS.

     (d)  All  notices from either of the parties hereto  to  the
     other  shall be in writing and shall be considered  to  have
     been  duly  given or served if sent by first class certified
     mail,  return receipt requested, postage prepaid,  or  by  a
     nationally recognized courier service guaranteeing overnight
     delivery to the party at his or its address set forth below,
     or  to  such  other  address  as such  party  may  hereafter
     designate by written notice to the other party.

     If to Seller:

          Attention:  Robert P. Johnson
          AEI Real Estate Fund XVI Limited Partnership
          1300 Minnesota World Trade Center
          30 E. 7th Street
          St. Paul, MN  55101-4901

     If to Buyer:

          Edward A. Routzong and
          Pamela C. Baca
          c/o 14855 Memorial Drive #1515
          Houston, TX 77079

     (e) Buyer may freely assign his rights and obligations under
this  Agreement  to a third party controlled by  Buyer,  provided
however,   Buyer  shall  not  be  relieved  of  his   obligations
hereunder.

When  accepted, this offer will be a binding agreement for  valid
and  sufficient consideration which will bind and benefit  Buyer,
Seller  and  their respective successors and assigns.   Buyer  is
submitting  this  offer  by signing a  copy  of  this  offer  and
delivering  it to Seller and delivering a copy of this  Agreement
signed  by  Buyer  and  the  $1,000 First  Payment  to  Escrowee;
Escrowee shall sign below acknowledging receipt of this Agreement
signed by Buyer and the First Payment, which will be deposited in
to  escrow by Escrowee.  Seller has five (5) business days  after
receipt   of  the  executed  offer,  Option  Consideration,   and
acknowledgment of receipt of the First Payment by Escrowee within
which  to accept this offer by fully executing this contract  and
giving  both  Buyer and Escrowee written notice thereof;  if  not
accepted  by Seller, Escrowee shall immediately return the  First
Payment  to  Buyer  and shall not require  any  releases  by  the
Seller.

IN  WITNESS  WHEREOF,  the Seller and Buyer  have  executed  this
Agreement effective as of the day and year above first written.

BUYER:



      By: /s/ Pamela C. Baca  /s/ Edward A. Routzong
          Its: Individually        Individually
                   Title              Title

SELLER:

      AEI  Real  Estate Fund XVI Limited Partnership, a Minnesota
      limited partnership.

      By:   AEI Fund Management XVI, Inc., its corporate general
            partner, a Minnesota corporation

      By:  /s/ Mark E. Larson
           Mark E. Larson, Chief Financial Officer



ESCROWEE:

      The  Title Company hereby acknowledges receipt of  a  fully
executed copy of this Agreement and the First Payment referred to
in  the  Agreement on  2002, and agrees to accept, hold,  deliver
and  disburse the First Payment and Second Payment, together with
all  interest accrued thereon and received by the Title  Company,
strictly  in  accordance with the terms and  provisions  of  this
Agreement.  In performing any of its duties hereunder, the  Title
Company  shall not incur any liability to anyone for any damages,
losses  or  expenses, except for negligence, willful  default  or
breach of trust, and it shall accordingly not incur any liability
with  respect  (i) to any action taken or omitted in  good  faith
upon  advice  of  its  counsel, or (ii) to any  action  taken  or
omitted  in  reliance upon any instrument, including any  written
notice or instruction provided for in this Agreement, not only as
to  its  due execution and the validity and effectiveness of  its
provisions,  but  also  as  to the  truth  and  accuracy  of  any
information contained therein, which the Title Company  shall  in
good  faith  believe  to  be genuine,  to  have  been  signed  or
presented by a proper person or persons and to conform  with  the
provisions of this Agreement.  Seller and Buyer hereby  agree  to
indemnify and hold harmless the Title Company against any and all
losses,  claims, damages, liabilities and expenses, imposed  upon
the  Title Company or incurred by the Title Company in connection
with  its  acceptance or the performance of its duties hereunder,
including any litigation arising from this Agreement or involving
the  subject matter hereof, unless such losses, claims,  damages,
liabilities and expenses arise out of Title Company's negligence,
willful  default or breach of trust.  In the event of  a  dispute
between  Seller  and Buyer sufficient in the  discretion  of  the
Title Company to justify its doing so, the Title Company shall be
entitled  to  tender into the registry of the District  Court  of
Harris  County, Texas, all money or property in its  hands  under
this  Agreement, together with such legal pleadings as  it  deems
appropriate, and thereupon be discharged from all further  duties
and  liabilities  under this Agreement.  Seller and  Buyer  shall
bear all costs and expenses of such legal proceedings.



HOUSTON TITLE


By:

Its:



                           Exhibit "A"

                        Legal Description
            17135 Kieth Harrow Boulevard, Houston, TX


            0.99757 ACRE (CALLED 1.0071 ACRE) OF LAND
              IN THE W.C.R.R. CO. SURVEY, BLOCK 2,
                  SECTION 13, ABSTRACT NO. 909
                      HARRIS COUNTY, TEXAS


BEING      all  of a tract or parcel of land in the W.C.R.R.  Co.
Survey,  Block 2, Section 13, Abstract No. 909, in Harris County,
Texas.  Said 0.99757 Acre tract is more particularly described as
follows:

COMMENCING at a 5/8-inch iron rod found marking an angle point in
the westerly line of Glencairn Village Subdivision as recorded in
Volume 281, Page 51 of the Harris County Map Records;

THENCE,  North 00 degrees 28 minutes 36 seconds West, along  said
westerly  line and the easterly right-of-way line of an "Existing
175-foot Drainage Easement" recorded in Volume 2279, Page 597  of
the Harris County Deed Records, for a distance of 1419.26 feet to
a  5/8-inch  iron rod found marking the northwesterly  corner  of
said  subdivision, and the southwesterly corner of  said  0.99757
Acre tract and the POINT OF BEGINNING;

THENCE,  North 00 degrees 28 minutes 36 seconds West, along  said
easterly right-of-way line, for a distance of 149.60 feet (called
150.14  feet)  to  a  1/2-inch iron rod set  for  corner  in  the
southerly  right-of-way  line of Keith Harrow  Boulevard  (100.00
feet wide);

THENCE,  North 89 degrees 44 minutes 33 seconds East, along  said
southerly  right-of-way  line, for  a  distance  of  115.40  feet
(called  115.50  feet) to a 1/2-inch rod set for  corner  in  the
point of curvature of the curve to the right;

THENCE,  along  the  arc of said curve with a radius  of  1950.00
feet, an arc length of 180.35 feet subtending a central angle  of
5  degrees 17 minutes 57 seconds, a chord distance of 180.29 feet
bearing South 87 degrees 36 minutes 52 seconds East to a 1/2-iron
rod set for corner;

THENCE,  South  00  degrees 12 minutes 52 seconds  East,  leaving
Keith Harrow Boulevard, along the westerly line of a 0.9835  Acre
tract  recorded in F.C. ###-##-#### called Cairn Village  Center,
for a distance of 140.90 feet to a 1/2-inchrod set for corner  in
the northerly line of said Glencairn Village Subdivision;


THENCE,  South 89 degrees 51 minutes 40 seconds West, along  said
northerly  line  for a distance of 294.32 feet to  the  POINT  OF
BEGINNING  containing 0.99757 Acre, more or less,  called  1.0071
Acres.



February 13, 2003

Mr. Edward A. Routzong
Ms. Pamela C. Baca
% Creative Years Ealry Learning Centers, Inc.
14855 Memorial Drive #1515
Houston, TX 77079

RE:     Creative Years Early Learning Center
        17135 Keith Harrow Boulevard
        Houston, TX 77084
        AEI Real Estate Fund XVI Limited Partnership

        Dear Mr. Routzong:

        This letter is a follow-up to your telephone conversation of
        February 12, 2003 with Brian Schulz.  On July 30, 2002 AEI Real
        Estate Fund XVI Limited Partnership ("Seller") entered into a
        Purchase Agreement with Edward A. Routzong and Pamela C. Baca
        ("Buyer"). The Buyer was given until approximately October 28,
        2002 to perform due diligence under an Inspection and Feasibility
        Study Period.  By an October 28, 2002 letter agreement we extended
        the Inspection and Feasibility Study Period to December 17, 2002.
        By a December 13, 2002 letter agreement we further extended the
        Inspection and Feasibility Study Period to February 19, 2003.  We
        have now agreed to extend the Inspection and Feasibility Study
        Period to May 20, 2003.

        Please confirm Buyer's agreement to the above terms by signing
        below and returning a faxed copy of this letter to me.  Except
        as provided above, all of the other terms and provisions of the
        Agreement are not amended by this letter.  The Purchase Agreement,
        as hereby amended, shall remain in full force and effect.

        AEI Real Estate Fund XVI Limited Partnership,
                a Minnesota limited partnership.

                By:   AEI Fund Management XVI, Inc.,
                      its corporate general partner a Minnesota corp

                By:   /s/ Patrick W. Keene
                      Patrick W. Keene, Chief Financial Officer

        Enclosures

        cc:     Michael Daugherty, Esq.

        AGREE this 17th day of February 2003:

        Seller:

        /s/ Edward A. Routzong           /s/ Pamela C. Baca
            Edward A. Routzong               Pamela C. Baca