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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

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

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
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REAL ESTATE ASSOCIATES LIMITED III

9090 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211

May , 2001

YOUR VOTE IS IMPORTANT
PLEASE ACT TODAY

Dear Limited Partners:

As a limited partner of Real Estate Associates Limited III (the
"Partnership" or "REAL III"), you may have received a solicitation (the "Bond
Purchase Solicitation") from Bond Purchase L.L.C. ("Bond Purchase"), trying to
obtain your consent to remove National Partnership Investments Corp. ("NAPICO"
or the "Managing General Partner") and Coast Housing Investments Associates
("Coast" and collectively with NAPICO, "General Partners"), as General Partners
of the Partnership and to elect New G.P., L.L.C. ("New G.P.") as general partner
of the Partnership.

AS MANAGING GENERAL PARTNER OF THE PARTNERSHIP, NAPICO STRONGLY RECOMMENDS
THAT YOU OPPOSE THE BOND PURCHASE SOLICITATION AND URGES YOU NOT TO PROVIDE YOUR
CONSENT TO THE REMOVAL OF THE GENERAL PARTNERS AND THE ELECTION OF NEW G.P. AS
GENERAL PARTNER OF THE PARTNERSHIP. DO NOT SIGN ANY BLUE CONSENT CARD THIS
DISSENT GROUP MAY SEND YOU.

Bond Purchase is a limited partner of the Partnership and is a company
managed by David L. Johnson. As described more fully below, Bond Purchase has
purchased limited partnership interests in the Partnership relatively recently
and its interests are not aligned with the other limited partners. New G.P., the
entity that Bond Purchase is attempting to install as the general partner of the
Partnership, is an affiliate of Bond Purchase.

In what we believe is a blatant attempt to get your consent to take control
of the Partnership and its cash reserves, Bond Purchase has given you misleading
and inaccurate information in the Bond Purchase Solicitation materials and
mischaracterized the truth about the General Partnerships management of the
Partnership and concern for your investments. We urge you to consider carefully
the misleading information that Bond Purchase included in its solicitation
materials and, more importantly, the facts concerning such matters:

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BOND PURCHASE'S MISLEADING INFORMATION: THE FACTS:
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Bond Purchase advocates the sale of the You should know that Bond Purchase's
Partnership's remaining assets, but failed to interests are not aligned with yours. The
tell you that it will not be subject to the sale of the remaining Partnership assets
same tax consequences as the other limited would result in vastly different tax
partners arising out of such a sale. consequences for Bond Purchase as compared
to the other limited partners. Bond
Purchase failed to tell you that, unlike
the other limited partners, it will not be
subject to the same tax liability resulting
from the recapture of prior depreciation
expenses because it acquired its limited
partnership interests relatively recently.
(See page 3 of the enclosed materials.) WE
URGE YOU NOT TO BE MISLED.
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Bond Purchase inaccurately implied that we are We have maintained the $5 million cash
inappropriately holding in excess of $5 reserve to provide us with the financial
million that should be distributed to the flexibility to negotiate with the local
limited partners. general partners in our efforts to sell the
remaining Partnership assets and to
distribute to the limited partners to cover
the income tax liability you may incur if
we sell such assets. Nevertheless, we
intend to distribute up to $3 million of
the cash reserve to the limited partners to
the extent not otherwise utilized prior to
the end of 2001. Finally, the cash reserve
is invested and accrues interest for the
benefit of the Partnership. (See page 3 of
the enclosed materials.) WE URGE YOU NOT TO
BE MISLED.
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Bond Purchase told you that it intends to Bond Purchase told you that it intends to
investigate claims against the General investigate claims against the General
Partners when, in fact, its owner is being Partners, but provided no information
sued by the General Partners. regarding the nature of or basis for any
such claims. The General Partners know of
no grounds for such claims, but believe
that Mr. Johnson is pursuing the removal of
the General Partners as a retaliatory
measure in connection with ongoing
litigation filed against him by the General
Partners.
On September 1, 2000, we filed a lawsuit
against Mr. Johnson and entities he
controls. In the lawsuit, we assert claims
for breach of contract, breach of the
covenant of good faith and fair dealing,
breach of fiduciary duty, negligence, fraud
and civil conspiracy, unjust enrichment,
unfair business practices, securities fraud
and RICO violations, arising out their
fraudulent and improper conduct and
financial mismanagement in connection with
the operation of 22 investment property
partnerships. It wasn't until that lawsuit
was filed that Bond Purchase sent the
Solicitation Materials to you. (See page 4
of the enclosed materials.) WE URGE YOU NOT
TO BE MISLED.
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Bond Purchase wants you to believe that the The fact is that the management fees
General Partners have been charging the charged by NAPICO have been reduced
Partnership excessive management fees. substantially following the 1998 sale of
assets. In fact, management fees have
dropped by over seventy percent (70%) after
the sale of assets in 1998, falling from
more than $450,000 in 1998 to approximately
$129,000 in 1999 and 2000.
Bond Purchase also fails to tell you that
its proposed plan to significantly reduce
management fees would equate to a meager
annual savings of approximately $2.25 per
unit. (See page 4 of the enclosed
materials.) WE URGE YOU NOT TO BE MISLED.
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Bond Purchase gave you outdated and inaccurate The $506,227 in fees for 1998 that Bond
data, and mischaracterized the administrative Purchase described to you as
fees charged by the General Partners to the "administrative" were actually legal fees
Partnership. and other transactional costs incurred in
connection with the sale of Partnership
assets in 1998. Those professional and
transaction fees were incurred to allow us
to consummate a transaction resulting in a
large cash distribution to all of our
limited partners and we did not receive any
portion of these fees.
Bond Purchase also fails to tell you that
it has in effect increased the
Partnership's costs for this year by giving
you inaccurate and misleading solicitation
materials which may lead us to pursue
further legal action to defend your
interests. (See page 4 of the enclosed
materials.) WE URGE YOU NOT TO BE MISLED.
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Bond Purchase inaccurately told you that we Of the 33 interests in local limited
are not actively seeking opportunities to sell partnerships that the Partnership
the Partnership's remaining assets. originally held, one was sold in 1988, and
an additional 20 were sold in December
1998. In 1998, we publicly announced our
intent to eventually sell our remaining
interests, and to then wind up the
Partnership's affairs. We have continued
since 1998 to explore the possibility of
selling and/or refinancing properties held
by these local limited partnerships. (See
page 4 of the enclosed materials.) WE URGE
YOU NOT TO BE MISLED.
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Bond Purchase implied that we are remiss in We do not have the power to force a sale of
failing to sell the properties in which the properties held by the local limited
Partnership has an interest. But Bond Purchase partnerships in which the Partnership has
did not tell you that we do not have the power an interest. Instead, the cooperation of a
to sell the remaining Partnership assets local general partner is necessary to allow
without the consent of the local partners. us to sell the properties. We are
continuing to negotiate with every local
general partner to obtain their consent to
sell the properties and we are optimistic
about new government programs that will
facilitate the sale of these properties.
(See page 5 of the enclosed materials.) WE
URGE YOU NOT TO BE MISLED.
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Bond Purchase wants you to believe that the If the Partnership's remaining assets were
General Partners have a financial incentive to be sold, NAPICO could receive a
not to sell the Partnership's remaining significant fee. Our Partnership Agreement
assets, but conveniently failed to tell you provides for NAPICO to receive a
that the General Partners stand to benefit liquidation fee equal to the lesser of (a)
from such a sale. 10% of our net proceeds from the sale of a
Project or Project Interest or (b) 1% of
the sales price (including the mortgage)
plus 3% of the net proceeds after deducting
an amount federal and state taxes. (See
page 5 of the enclosed materials.) WE URGE
YOU NOT TO BE MISLED.
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Bond Purchase failed to tell you important Bond Purchase was described in 1999 by a
information regarding the nature of their court as an entity that seeks "to buy
business. limited portions of real estate
partnerships with a view to ousting current
management and potential liquidation of the
partnership assets." You should know that
Bond Purchase acquired its interests in the
Partnership relatively recently and at a
substantial discount to the prices paid by
other limited partners. At the time Bond
Purchase acquired these interests, the tax
benefits that were the original purpose of
the Partnership had long since been
statutorily eliminated. We believe that
Bond Purchase's interests as a limited
partner are not aligned with yours. (See
page 5 of the enclosed materials.) WE URGE
YOU NOT TO BE MISLED.
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Bond Purchase inaccurately told you that we We did respond to Bond Purchase's request
have not responded to its October 12, 2000 in a timely manner. We initially responded
request to review our books and records or to to Bond Purchase's request for information
its concern regarding the level of cash on October 25, 2000 and two weeks later
maintained by us. sent a detailed, five-page response,
directly addressing Bond Purchase's request
for access to our books and records and its
other inquiry. We never heard back from
Bond Purchase. (See page 5 of the enclosed
materials.) WE URGE YOU NOT TO BE MISLED.
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Bond Purchase sent the Bond Purchase Neither the Partnership nor the General
Solicitation Materials to you in envelopes Partners had any involvement with the
that identified "Real Estate Associates solicitation materials Bond Purchase
Limited III" on the return address section delivered to you and, in fact, we
vigorously contest the Bond Purchase
Solicitation. (See page 5 of the enclosed
materials.) WE URGE YOU NOT TO BE MISLED.
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IN LIGHT OF THE FOREGOING MISLEADING STATEMENTS MADE BY BOND PURCHASE IN
THE BOND PURCHASE SOLICITATION MATERIALS, THE GENERAL PARTNERS UNANIMOUSLY
OPPOSE THE BOND PURCHASE SOLICITATION AND URGE YOU NOT TO SIGN ANY BLUE CONSENT
CARD OR ANY OTHER FORMS WHICH MAY BE SENT TO YOU BY BOND PURCHASE. THE GENERAL
PARTNERS URGE YOU TO DISCARD ANY BLUE CONSENT CARDS SENT TO YOU BY BOND
PURCHASE.

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EVEN IF YOU PREVIOUSLY SIGNED AND RETURNED BOND PURCHASE'S BLUE CONSENT
CARD, YOU HAVE EVERY RIGHT TO REVOKE YOUR CONSENT. WE URGE YOU TO SIGN, DATE AND
MAIL THE ENCLOSED WHITE CONSENT REVOCATION CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED. YOUR PROMPT ACTION IS IMPORTANT. PLEASE RETURN THE WHITE CONSENT
REVOCATION CARD TODAY. IN ORDER TO BE SURE THAT YOU ARE REVOKING A PRIOR
CONSENT, YOU MUST MARK THE "REVOKE CONSENT" BOX ON THE WHITE CONSENT REVOCATION
CARD, OR SIGN AND DATE THE WHITE CONSENT REVOCATION CARD WITHOUT MARKING ANY
BOXES.

ADDITIONAL INFORMATION CONCERNING THE MISLEADING NATURE OF THE BOND
PURCHASE SOLICITATION AND WHAT STEPS YOU SHOULD TAKE TO OPPOSE THE BOND PURCHASE
SOLICITATION ARE PROVIDED IN THE ENCLOSED MATERIALS.

We are convinced that Bond Purchase and New G.P. do not have your best
interest in mind and has not given you important facts in an effort to get your
vote so that it may seize control of the Partnership and its cash reserves. We
urge you to consider the facts.

Your current General Partners possess the dedication, experience and
expertise to continue to manage the Partnership on your behalf. We trust that
you will carefully consider our record of success in deciding how to cast your
vote. We remain committed to continuing to act in the best interests of all of
our limited partners.

We urge you to read the full disclosure in our Consent Revocation
Statement, which is enclosed. Please read the enclosed materials carefully, and
if you have already returned your consent card, please return your signed and
dated consent revocation card in the return envelope provided as soon as
practicable.

If you have any questions or need assistance with voting your consent
revocation card, please do not hesitate to contact D.F. King & Co., Inc., the
Partnership's Information Agent, toll free at 1-800-269-6427.

On behalf of your General Partners, we thank you for your interest and your
support.

Very truly yours,

National Partnership Investments
Corp.,
Managing General Partner

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REAL ESTATE ASSOCIATES LIMITED III
9090 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211
------------------------

THIS CONSENT REVOCATION STATEMENT AND THE ENCLOSED WHITE CONSENT REVOCATION CARD
ARE FIRST BEING MAILED TO LIMITED PARTNERS ON OR ABOUT MAY , 2001.
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CONSENT REVOCATION STATEMENT FURNISHED BY THE GENERAL
PARTNERS OF REAL ESTATE ASSOCIATES LIMITED III IN OPPOSITION TO THE
SOLICITATION OF CONSENTS BY BOND PURCHASE, L.L.C.
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This Consent Revocation Statement and the accompanying WHITE Consent
Revocation Card are being furnished by the General Partners of Real Estate
Associates Limited III, a California limited partnership (the "Partnership" or
"REAL III"), to the Partnership's limited partners in opposition to the
solicitation by Bond Purchase, L.L.C., a Missouri limited liability company
("Bond Purchase"), of written consents from the limited partners ("Bond Purchase
Solicitation"). Bond Purchase is a limited partner of the Partnership and is a
company managed by David L. Johnson.

Bond Purchase is attempting to remove National Partnership Investments
Corp., a California corporation ("NAPICO" or the "Managing General Partner") and
Coast Housing Investments Associates, a California limited partnership ("Coast"
and collectively with NAPICO, "General Partners"), as General Partners of the
Partnership and to elect New G.P., L.L.C., a Missouri limited liability company
("New G.P."). New G.P. is an affiliate of Bond Purchase. You may have received a
solicitation from Bond Purchase trying to obtain your consent to elect New G.P.
as general partner of the Partnership ("Bond Purchase Solicitation Materials" or
"Solicitation Materials").

YOUR VOTE IS IMPORTANT TO THE FUTURE OF YOUR INVESTMENT

THE GENERAL PARTNERS UNANIMOUSLY OPPOSE THE BOND PURCHASE SOLICITATION AND
URGE YOU NOT TO SIGN ANY BLUE CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE SENT
TO YOU BY BOND PURCHASE. PLEASE DISCARD ANY BLUE CONSENT CARDS SENT TO YOU BY
BOND PURCHASE.

IF YOU HAVE ANY QUESTIONS ABOUT GIVING YOUR REVOCATION OF CONSENT OR
REQUIRE ASSISTANCE, PLEASE CALL D.F. KING & CO., INC., WHICH IS ASSISTING THE
PARTNERSHIP, TOLL FREE AT 1-800-269-6427.

REASONS FOR OPPOSING THE BOND PURCHASE SOLICITATION

THE GENERAL PARTNERS OPPOSE THE BOND PURCHASE SOLICITATION AND URGE YOU NOT
TO SIGN ANY BLUE CONSENT CARD OR ANY OTHER FORMS WHICH MAY BE SENT TO YOU BY
BOND PURCHASE.

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further described below, Bond Purchase is attempting to mislead the
Partnership's limited partners. In particular, the Bond Purchase Solicitation
Materials are misleading in that:

- They do not give you important facts regarding the tax consequences to
the limited partners that may be triggered by the proposed sale of the
Partnership's assets or to the fact that Bond Purchase may not be subject
to the same tax consequences.

- They inaccurately imply that we are inappropriately holding in excess of
$5 million that should be distributed to the limited partners. We have
maintained the $5 million cash reserve to provide us with the financial
flexibility to negotiate with the local general partners in our efforts
to sell the remaining Partnership assets and to distribute to the limited
partners to cover the income tax liability you may incur if we sell such
assets. Nevertheless, we intend to distribute up to $3 million of the
cash reserve to the limited partners to the extent not otherwise utilized
prior to the end of 2001. Finally, the cash reserve is invested and
accrues interest for the benefit of the Partnership.

- They indicate that New G.P. intends to investigate supposed "claims"
against us, but they did not provide any details concerning the nature of
these alleged claims. In addition, they fail to tell you about our
lawsuit, filed on September 1, 2000, against Mr. Johnson and entities he
controls that serve as the operating general partners of 22 investment
property partnerships. As it wasn't until that lawsuit was filed that
Bond Purchase sent the Solicitation Materials to you, we believe Bond
Purchase is attempting to remove the General Partners as a retaliatory
measure.

- They imply that we have been charging the Partnership excessive
management fees, but they fail to tell you that the management fees have
decreased by over 70% since the sale of other Partnership interests in
1998.

- They include outdated and inaccurate data, and mischaracterize the
administrative fees charged by us to the Partnership. The fees they
describe to you as "administrative" are really legal fees and other
transactional costs incurred in connection with the sale of Partnership
interests in 1998. Those professional and transaction fees were incurred
to allow us to sell a number of assets resulting in a large distribution
to all of our limited partners. We did not receive any portion of these
fees.

- They indicate that we are not actively seeking opportunities to sell the
Partnership's assets. This is simply not true. The fact is that, we have
publicly announced our intent to sell the Partnership's assets and
eventually wind down its affairs and we are continuing efforts to sell
the Partnership's remaining assets.

- They imply that we are remiss in failing to sell the properties in which
the Partnership maintains interests. Bond Purchase failed to tell you,
however, that we do not have the power to force a sale of the properties
without the consent of our local general partners. Therefore, if New G.P.
were elected as general partner of the Partnership, it would be
constrained in its efforts to sell the properties as well.

- They indicate that we have a financial incentive not to sell the assets
of the Partnership but did not give you important relevant information
about the terms of the REAL III Restated Certificate and Agreement of
Limited Partnership dated as of January 5, 1981 (the "Partnership
Agreement") that provides NAPICO with a significant financial incentive
to sell the assets.

- They do not give you important information regarding the nature of Bond
Purchase's business, which has been described by a court as acquiring
limited portions of real estate partnerships with a view to ousting
current management and potential liquidation of the partnership's assets.

- They indicate that we have not responded to a request by Bond Purchase to
review the Partnership's books and records. Once again this is simply not
true. In fact, we did respond in a timely manner.

- They indicate that we have not responded to Bond Purchase's concern that
the level of cash held by the Partnership is inappropriate, or its
request for information as to how these funds have been invested. Again,
this is not true. In fact, we did respond in a timely manner.

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- They were sent to you in envelopes that identified "Real Estate
Associates Limited III" on the return address section which was
misleading because neither REAL III nor the General Partners are
participants in the solicitation of your consent.

FOR THESE REASONS AND THOSE THAT FOLLOW, WE BELIEVE THAT NEITHER BOND
PURCHASE NOR NEW G.P. REPRESENT THE BEST INTERESTS OF THE PARTNERSHIP, AND WE
URGE YOU TO (1) WITHHOLD YOUR CONSENT FROM BOND PURCHASE OR (2) REVOKE YOUR
CONSENT PREVIOUSLY SUBMITTED TO BOND PURCHASE. DO NOT RETURN THE BLUE BOND
PURCHASE CONSENT CARD TO ANYONE. INSTEAD, PLEASE SIGN, DATE AND PROMPTLY MAIL
YOUR WHITE CONSENT REVOCATION CARD. PLEASE ACT TODAY.

On behalf of your General Partners, we thank you for your interest and your
support.

Very truly yours,

National Partnership Investments
Corp.,
Managing General Partner

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TABLE OF CONTENTS

PAGE
----

QUESTIONS AND ANSWERS ABOUT THE BOND PURCHASE SOLICITATION
MATERIALS................................................. 1
REASONS FOR OPPOSING THE BOND PURCHASE SOLICITATION......... 3
Limited Partner Approval.................................. 6
THE PARTNERSHIP............................................. 7
General................................................... 7
General Partners.......................................... 7
Objectives................................................ 7
Our Record of Success..................................... 7
Assets.................................................... 7
Distributions............................................. 8
MANAGEMENT.................................................. 9
Interests of Our General Partners in the Matters To Be
Acted Upon............................................. 9
Experience of Our Managing General Partner................ 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 10
LEGAL PROCEEDINGS........................................... 10
OPPOSITION PROCEDURE........................................ 11
Voting Procedures and Consent Revocation Card............. 11
No Dissenters' Rights of Appraisal........................ 12
Solicitation of Consent Revocation Cards.................. 12
PARTNER PROPOSALS........................................... 12
IMPORTANT NOTE.............................................. 12
WHERE YOU CAN FIND MORE INFORMATION......................... 12

REAL ESTATE ASSOCIATES LIMITED III
9090 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211

May , 2001

CONSENT REVOCATION STATEMENT

In this Consent Revocation Statement , the words "we," "our," "ours" and
"us" refer to Real Estate Associates Limited III and its Managing General
Partner, NAPICO, unless the context requires or we state otherwise.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.

QUESTIONS AND ANSWERS ABOUT THE
BOND PURCHASE SOLICITATION MATERIALS

Q: WHAT IS BOND PURCHASE ASKING ME TO VOTE UPON?

A: Bond Purchase has sent you solicitation materials in which it asked your
consent to remove NAPICO and Coast as our General Partners and to elect New
G.P., an affiliate of Bond Purchase, as our general partner. As explained in
this document, we do not believe that such action is in your best interests.
Accordingly, we are asking that you either withhold your consent from Bond
Purchase or, if you have already given your consent, revoke your consent.

Q: WHAT DOES THE PARTNERSHIP RECOMMEND I DO?

A: We believe that neither Bond Purchase nor New G.P. represent the best
interests of the Partnership, and we urge you to withhold your consent from Bond
Purchase or revoke your consent if you have already voted.

Q: WHO IS MAKING THIS CONSENT REVOCATION STATEMENT?

A: This Consent Revocation Statement is sent to you by the Managing General
Partner on behalf of the Partnership.

Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY CONSENT CARD?

A: Yes. You have every legal right to change your vote at any time before May
31, 2001. However, it is critical that you change your vote as soon as possible
so that the required consents are not obtained by Bond Purchase. Please sign and
date the WHITE consent revocation card in the enclosed envelope stating that you
want to revoke your consent. You must then mail your WHITE consent revocation
card to:

ACS Security Services Inc.
3988 No. Central Expressway,
Bldg. 5, Sixth Floor
Dallas, TX 75204

Q: WHAT SHOULD I DO IF I WANT TO KEEP THE CURRENT GENERAL PARTNERS?

A: If you have already returned a BLUE consent card to Bond Purchase, you must
revoke your consent by completing the WHITE consent revocation card enclosed and
mail it in the pre-addressed postage-paid envelope provided. You do not need to
do anything if you are absolutely certain that you have not already voted.

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Q: WHAT DO I NEED TO DO NOW?

A: After carefully reading and considering the information contained in this
document, we are asking that you please fill out and sign the WHITE consent
revocation card in the enclosed envelope as soon as possible so that your
interests are represented. Even though you do not need to do anything unless you
have already voted, we ask you to promptly return your WHITE revocation of
consent card so that we may know that your interests are represented.

WHO CAN HELP ANSWER YOUR QUESTIONS

If you would like additional copies of this document, or if you would like
to ask any questions about these materials or need assistance in voting your
WHITE revocation of consent card, you should contact D. F. King & Co., Inc. at
1-800-269-6427.

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REASONS FOR OPPOSING THE BOND PURCHASE SOLICITATION

Recently, you may have received a communication from a limited partner,
Bond Purchase, a company managed by Mr. Johnson. Unlike many of you, Bond
Purchase recently became a limited partner in 1998 and acquired its units at
discounted prices. We believe the interests of Bond Purchase are not aligned
with yours.

The Bond Purchase Solicitation Materials seek your consent to:

- remove our General Partners,

- elect to continue the Partnership, and

- elect New G.P. as our new general partner.

THE GENERAL PARTNERS OPPOSE THE BOND PURCHASE SOLICITATION AND URGE YOU, IN
WHAT WE BELIEVE TO BE YOUR BEST INTERESTS, NOT TO SIGN ANY BLUE CONSENT CARD OR
ANY OTHER FORMS WHICH MAY BE SENT TO YOU BY BOND PURCHASE.

In an attempt to obtain the consent of the limited partners, Bond Purchase
made misleading statements and did not to tell you about other important facts.

The Bond Purchase Solicitation Materials are misleading because:

- BOND PURCHASE FAILED TO TELL YOU THAT IT WILL NOT BE SUBJECT TO THE SAME
TAX CONSEQUENCES AS THE OTHER LIMITED PARTNERS ARISING OUT OF THE
PROPOSED SALE OF OUR ASSETS. You should know that Bond Purchase's
interest is not aligned with your interest. Bond Purchase conveniently
failed to tell you that it will not suffer the same tax consequences as a
result of a sale of our assets.

Currently, the original limited partners have deficit capital accounts
with us due to the fact that they have taken more net tax deductions than
the amount of money they have invested into the Partnership. When your
partnership interests -- or the underlying assets held by us -- are sold,
many of the limited partners will recognize taxable income equal to the
deficit in their capital account plus the amount of any net proceeds
distributable to them. Based upon current figures, even the sale of the
remaining properties we own for little or no gain may result in a taxable
gain to us and the limited partners in excess of $18 million. This amount
may translate into a combined federal and state income tax liability in
excess of $5 million to the limited partners. You should consult your tax
accountant to determine the precise effect of a sale of the properties
upon you.

The tax liability that may be incurred by many of the limited partners
does not apply to Bond Purchase, because it did not begin to acquire its
partnership interests until April 1998, and acquired 225 of its 233 Units
between July 1, 1998 and November 1, 1998. When Bond Purchase acquired
Units in 1998, it "inherited" the deficit capital account of the former
limited partners from whom it acquired the Units (the "Selling Limited
Partners"). However, Bond Purchase acquired an outside tax accounting
basis for its partnership interests that may have fully erased the
transferors' negative capital account balances. Under the tax laws, these
Selling Limited Partners were forced to incur and pay the tax liability
upon their "phantom gain" on the Units at the time of the sale. As a
result, to the extent that our assets are sold or we are dissolved, Bond
Purchase will receive whatever distribution is made to the limited
partners without being liable to the same extent for the tax liability, or
recapture, to be imposed upon the other limited partners on the phantom
gain component. We urge you not to be misled.

- BOND PURCHASE INACCURATELY IMPLIED THAT WE ARE INAPPROPRIATELY HOLDING IN
EXCESS OF $5 MILLION THAT SHOULD BE DISTRIBUTED TO THE LIMITED
PARTNERS. We have maintained the $5 million cash reserve to provide us
with the financial flexibility to negotiate with the local general
partners in our efforts to sell the remaining Partnership assets and to
distribute to the limited partners to cover the income tax liability you
may incur if we sell such assets. Nevertheless, we intend to distribute
up to $3 million of the cash reserve to the limited partners to the
extent not otherwise utilized prior to the end of 2001. Finally, the cash
reserve is invested and accrues interest for the benefit of the
Partnership. Do not be misled.

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- BOND PURCHASE DID NOT PROVIDE YOU WITH ANY DETAILS CONCERNING THE NATURE
OF ALLEGED CLAIMS AGAINST THE GENERAL PARTNERS OR THAT ITS OWNER IS
CURRENTLY BEING SUED BY THE GENERAL PARTNERS. Bond Purchase told you, in
the event New G.P. is elected as our new managing general partner, New
G.P. will investigate claims against the current General Partners.
However, you should note that Bond Purchase failed to provide you, the
General Partners or the Partnership with any explanation relating to the
nature of the supposed claims, the party asserting such claims and the
parties against whom such claims would be made. The fact is, we are not
aware of any such claims and we believe this is nothing but a bold
attempt to get your vote once again. Do not be misled.

On September 1, 2000, we filed a lawsuit against Mr. Johnson and entities
he controls that serve as the operating general partners of 22 investment
property partnerships. In the lawsuit, we assert claims for breach of
contract, breach of the covenant of good faith and fair dealing, breach of
fiduciary duty, negligence, fraud and civil conspiracy, unjust enrichment,
unfair business practices, securities fraud and RICO violations, arising
out their fraudulent and improper conduct and financial mismanagement in
connection with the operation of the 22 partnerships. As it wasn't until
that lawsuit was filed that Bond Purchase sent the Solicitation Materials
to you, we believe Bond Purchase is attempting to remove the General
Partners as a retaliatory measure to that suit. Do not be misled.

- BOND PURCHASE DID NOT TELL YOU THAT THE MANAGEMENT FEES HAVE DECREASED
SIGNIFICANTLY SINCE THE SALE OF OTHER PARTNERSHIP INTERESTS IN 1998. Bond
Purchase wants you to believe that the General Partners have been
charging the Partnership excessive management fees. Once again, this is
not true. Bond Purchase told you that management fees should be reduced
because of the sale of assets in 1998. The fact is that the management
fees charged by NAPICO have been reduced substantially following the sale
of many of our assets. The management fees are calculated based on our
total invested assets. Our cash on hand is not included in the
calculation of management fees. Because of this, management fees dropped
by over seventy percent (70%) after the sale of assets in 1998, falling
from in excess of $450,000 in 1998 to approximately $129,000 in 1999 and
2000. We urge you not to be misled.

Bond Purchase also failed to tell you that its proposed plan to
significantly reduce management fees would equate to a meager annual
savings of approximately $2.25 per unit. We urge you not to be misled.

- BOND PURCHASE GAVE YOU OUTDATED AND INACCURATE DATA, AND MISCHARACTERIZED
THE ADMINISTRATIVE FEES CHARGED BY THE GENERAL PARTNERS TO THE
PARTNERSHIP. Bond Purchase opted to file its Consent Solicitation
Statement weeks before the filing of our current Form 10-K for the year
ending December 31, 2000, and has presented outdated and inaccurate data,
and mischaracterized the administrative fees charged by us to the
Partnership. The fees they described to you as "administrative" are
really legal fees and other transactional costs incurred in connection
with the sale of Partnership interests in 1998. We incurred those fees to
allow us to sell certain properties and make a large distribution to all
of our limited partners. We did not receive any portion of those fees and
they allowed you to receive more money. Bond Purchase also told you the
Partnership incurred "administrative" expenses of $506,227 in 1999.
However, as reflected in our current Form 10-K, filed March 30, 2001,
such expenses were reduced to $66,082 in 2000. We urge you not to be
misled.

Bond Purchase also failed to tell you that it has in effect increased the
Partnership's costs for this year by giving you inaccurate and misleading
Solicitation Materials which may lead us to pursue further legal action to
defend your interests.

- BOND PURCHASE INACCURATELY TOLD YOU THAT WE ARE NOT ACTIVELY SEEKING
OPPORTUNITIES TO SELL OUR REMAINING ASSETS. This is simply not true. We
have publicly announced our intent to dispose of our assets and
eventually wind down our affairs and have made continuing efforts to sell
the remaining assets. We originally held interests in 33 local limited
partnerships. One of these interests was sold in 1988, and an additional
20 interests were sold in December 1998. In our 1998 Consent Solicitation
Statement relating to the sale of 20 local limited partnership interests
by us in 1998, we told you our intent to eventually dispose of our
interests in the local limited partnerships not included in the 1998
sale, and to then wind up the Partnership's affairs. We have continued
since 1998 to explore the
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possibility of selling and/or refinancing properties held by these local
limited partnerships and continue to negotiate with each and every local
limited partner to obtain their consent to sell the properties. Indeed,
NAPICO has a disposition group that specifically examines these
possibilities and are continuing our efforts on behalf of all limited
partners. We urge you not to be misled.

- BOND PURCHASE DID NOT TELL YOU THAT WE DO NOT HAVE THE POWER TO SELL THE
PROPERTIES WITHOUT THE CONSENT OF THE GENERAL PARTNERS OF THE LOCAL
LIMITED PARTNERSHIPS. Bond Purchase did not tell you about the inherent
limitations on our ability to sell the properties held by the local
limited partnerships without the consent and participation of the general
partners of those local limited partnerships. Bond Purchase implied
however, that we are remiss in failing to sell the properties in which we
have an interest. This is simply not true. The fact is that we do not
have the power to force a sale of properties held by the local limited
partnerships to a third party. Instead, the cooperation of a local
general partner is necessary to allow us to sell the properties. We are
continuing to negotiate with every local limited partner to obtain their
consent to sell the properties and we are optimistic about new government
programs that will facilitate the sale of these properties. Yet, Bond
Purchase failed to tell you that a new general partner would have no more
authority to sell the Partnership assets than NAPICO. We urge you not to
be misled.

- BOND PURCHASE WANTS YOU TO BELIEVE THAT THE GENERAL PARTNERS HAVE A
FINANCIAL INCENTIVE NOT TO SELL OUR ASSETS BUT CONVENIENTLY FAILED TO
TELL YOU ABOUT THE TERMS OF THE PARTNERSHIP AGREEMENT THAT PROVIDE NAPICO
WITH A SIGNIFICANT FINANCIAL INCENTIVE TO SELL THE REMAINING ASSETS. Bond
Purchase did not give you important information about section 9.6.2 of
the Partnership Agreement, which provides for NAPICO to receive a
liquidation fee equal to the lesser of (a) 10% of our net proceeds from
the sale of a Project or Project Interest or (b) 1% of the sales price
(including the mortgage) plus 3% of the net proceeds after deducting an
amount federal and state taxes. Do not be misled.

- BOND PURCHASE FAILED TO TELL YOU IMPORTANT INFORMATION REGARDING THE
NATURE OF THEIR BUSINESS, WHICH HAS BEEN DESCRIBED BY A COURT AS
ACQUIRING "LIMITED PORTIONS OF REAL ESTATE PARTNERSHIPS WITH A VIEW TO
OUSTING CURRENT MANAGEMENT AND POTENTIAL LIQUIDATION OF THE PARTNERSHIP
ASSETS." Bond Purchase did not give you accurate information about its
business. While Bond Purchase did tell you that New G.P., "was formed in
2000 for the purpose of seeking to become the general partner of other
real estate limited partnerships," it did not give you important
information about its business which has been described in 1999 by a
court as an entity that seeks "to buy limited portions of real estate
partnerships with a view to ousting current management and potential
liquidation of the partnership assets." Bond Purchase acquired its
Partnership interests relatively recently and the interests of Bond
Purchase are not aligned with yours. Consider this carefully in deciding
how to cast your vote. Do not be misled.

- BOND PURCHASE INACCURATELY TOLD YOU THAT WE HAVE NOT RESPONDED TO ITS
OCTOBER 12, 2000 REQUEST TO REVIEW OUR BOOKS AND RECORDS OR TO ITS
CONCERN REGARDING THE LEVEL OF CASH MAINTAINED BY US. Once again this is
simply not true. The fact is that we did respond to Bond Purchase's
request in a timely manner. We initially responded to Bond Purchase's
request for information on October 25, 2000, acknowledging -- in
correspondence addressed to Mr. Johnson, Christine A. Robinson, a
participant in the Solicitation Materials, and Bond Purchase -- Bond
Purchase's requests related to a number of different partnerships and
noted that we would respond shortly. Two weeks later, we sent a detailed,
five-page response to Mr. Johnson, Ms. Robinson and Bond Purchase,
directly addressing Bond Purchase's request for access to our books and
records and its other inquiry. Our responses to their requests were
submitted in a timely manner and were delivered over four months prior to
Bond Purchase's delivery of the Solicitation Materials. Bond Purchase
never responded. We urge you not to be misled.

- BOND PURCHASE SENT THE SOLICITATION MATERIALS TO YOU IN ENVELOPES THAT
IDENTIFIED "REAL ESTATE ASSOCIATES LIMITED III" ON THE RETURN ADDRESS
SECTION. We had no involvement with, and vigorously contest the
Solicitation Materials Bond Purchase delivered to you. Nevertheless,
their Solicitation Materials were delivered in envelopes that identified
us in the return address section. Do not be misled.

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FOR THESE REASONS, WE BELIEVE THAT NEITHER BOND PURCHASE NOR NEW G.P.
REPRESENT OUR BEST INTERESTS OR YOURS, AND WE URGE YOU TO WITHHOLD YOUR CONSENT
FROM BOND PURCHASE OR, IF YOU HAVE ALREADY DELIVERED YOUR CONSENT, REVOKE THE
CONSENT YOU DELIVERED. REGARDLESS OF THE SIZE OF YOUR INVESTMENT, YOUR
REVOCATION OF CONSENT IS IMPORTANT. PLEASE ACT TODAY!

LIMITED PARTNER APPROVAL

The Partnership Agreement requires the consent of limited partners holding
a majority of the limited partnership interests (a "Majority Vote") to remove a
general partner and to elect a new general partner. Each limited partnership
interest is entitled to one vote. If Bond Purchase does not obtain a Majority
Vote, there will be no change in our general partners and we will continue to be
operated in accordance with the terms of the Partnership Agreement. The
Partnership shall bear the costs of this Consent Revocation Statement.

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THE PARTNERSHIP

GENERAL

The Partnership is a limited partnership formed under the laws of the State
of California on July 25, 1980. On January 5, 1981, we offered 3,000 units,
consisting of 6,000 limited partnership interests and warrants to purchase a
maximum of 6,000 additional limited partnership interests at $5,000 per unit,
through an offering managed by an affiliate of the predecessor of Lehman
Brothers Inc. Each unit consists of two limited partnership interests and one
warrant which entitles the purchaser of a unit to acquire two additional limited
partnership interests during the period set forth in the Partnership Agreement
(the "Units"). As of December 31, 2000, there were 1,889 registered holders of
our Units and 5,728 Units outstanding.

GENERAL PARTNERS

Our Managing General Partner is NAPICO. Coast is the non-managing General
Partner of the Partnership. Our business is conducted primarily by NAPICO.
Pursuant to an agreement between NAPICO and Coast, NAPICO has the primary
responsibility for the performance of any duties required to be performed by the
General Partners and, in general, has sole and final discretion to manage and
control our business and make all related decisions. We have no employees of our
own.

Casden Properties Operating Partnership, L.P., a majority owned subsidiary
of Casden Properties, Inc. owns 95.25% of NAPICO's stock. The remaining 4.75% is
owned by Casden Investment Corporation. The current members of NAPICO's Board of
Directors are Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden. Alan I.
Casden organized Casden Properties, Inc. and is the sole director and
stockholder of Casden Investment Corporation.

OBJECTIVES

Our original objectives were to own and operate real estate assets for
investment so as to obtain:

- tax benefits for the limited partners;

- reasonable protection for the Partnership's capital investments;

- potential for appreciation, subject to considerations of capital
preservation; and

- potential for future cash distributions from operations (on a limited
basis); refinancings or sales of assets.

OUR RECORD OF SUCCESS

We have been successful in accomplishing our primary purposes. From
inception through 1990, the limited partners obtained tax benefits equal to at
least 111% of their investments. In 1986, however, the tax laws changed in such
a way as to substantially reduce the ongoing tax benefits to the limited
partners. As a result, we determined that the best course of action was to sell
a majority of our interests in real property. In 1998, we obtained the consent
of the limited partners and sold our interest in the real estate assets of
twenty local limited partnerships. In March 1999, we made a cash distribution to
the limited partners of $6,881,025. Since that time, the Managing General
Partner has continued to explore the possibility of disposing or refinancing our
remaining local limited partnership interests.

ASSETS

As of December 31, 2000, we hold limited partnership interests in 11 local
limited partnerships and a general partner interest in Real Estate Associates, a
California general partnership, which in turn holds limited partnership
interests in an additional local limited partnership, each of which own a low
income housing project that is subsidized and/or has a mortgage note payable to
or insured by an agency of the federal government or local housing agency. The
properties we have an interest in are located in six states and Puerto Rico.
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The local limited partnerships in which we have invested were, in general,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. We became the principal
limited partner in these real estate holding limited partnerships pursuant to
arm's-length negotiations with these developers, or others, who act as general
partners. As a limited partner, the Partnership's liability for obligations of
the real estate holding limited partnerships is limited to its investment. The
general partners of such local limited partnerships retain responsibility for
maintaining, operating and managing the properties and must consent to the sale
of limited partnership assets.

DISTRIBUTIONS

In March 1999, we made a cash distribution to the limited partners of
$6,881,025, after the sale of a majority of our interests in local limited
partnerships. The Partnership Agreement sets forth a procedure for allocating
distributions among the limited partners and General Partners. The General
Partners are entitled to receive 1% of the net cash flow from operations to be
distributed, reduced by any amount paid to the General Partners as an annual
management fee. The limited partners as a class are entitled to receive the
balance of the net cash flow from operations to be distributed. There are no
regulatory or legal restrictions on the Partnership's current or future ability
to pay distributions, although, pursuant to certain state housing finance
statutes and regulations, certain of the local limited partnerships are subject
to limitations on the distributions to the Partnership.

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MANAGEMENT

INTERESTS OF OUR GENERAL PARTNERS IN THE MATTERS TO BE ACTED UPON

Our General Partners have a substantial interest in the matters you are
being asked to vote upon. If a Majority Vote is obtained by Bond Purchase, the
current General Partners will no longer be the General Partners of the
Partnership and their interests in the Partnership will be sold.

EXPERIENCE OF OUR MANAGING GENERAL PARTNER

We do not have any directors or officers. The management of the Partnership
is conducted by NAPICO, our Managing General Partner. Set forth below is
information about NAPICO's directors, executive officers and key employees.

NAME AGE POSITION
---- --- --------

Charles H. Boxenbaum.............. 71 Chairman of the Board and CEO of NAPICO
Bruce Nelson...................... 49 President and Chief Operating Officer of NAPICO
Alan I. Casden.................... 54 Director
Brian H. Shuman................... 38 Vice President and Chief Financial Officer
Jeffrey H. Sussman................ 34 Senior Vice President, General Counsel and
Secretary
Patricia W. Toy................... 71 Senior Vice President -- Communications and
Assistant Secretary

Mr. Boxenbaum has been associated with NAPICO since its inception. He has
been active in the real estate industry since 1960, and prior to joining NAPICO
was a real estate broker with the Beverly Hills firm of Carl Rhodes Company. Mr.
Boxenbaum has been a member of the Board of Directors of Casden Properties Inc.
since 1998. Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
He is one of the founders and a past director of the First Los Angeles Bank,
organized in November 1974. Since March 1995, Mr. Boxenbaum has served on the
Board of Directors of the National Housing Council. Mr. Boxenbaum received his
Bachelor of Arts degree from the University of Chicago.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He
is responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments. Mr.
Nelson is a member of the Board of Directors of Casden Properties Inc. and is a
Director of the Affordable Housing Tax Credit Coalition. From February 1979 to
October 1980, Mr. Nelson held the position of Associate General Counsel at
Western Consulting Group, Inc., private residential and commercial real estate
syndicators. Prior to that time, Mr. Nelson was engaged in the private practice
of law in Los Angeles. Mr. Nelson received his Bachelor of Arts degree from the
University of Wisconsin and is a graduate of the University of Colorado School
of Law. He is a member of the State Bar of California and is a licensed real
estate broker in California and Texas.

Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums. Mr. Casden is a member of the American Institute of Certified
Public Accountants and of the California Society of Certified Public
Accountants. Mr. Casden is a member of the advisory board of the National
Multi-Family Housing Conference, the Multi-Family Housing Council, the
President's Council of the California Building Industry Association and the
Urban Land Institute. He also serves on the Board of Trustees of the University
of Southern California. He holds a Bachelor of Science degree and a Masters in
Business Administration degree from the University of Southern California.

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Mr. Shuman joined NAPICO in 2000, and is responsible for the financial
affairs of NAPICO, as well as the limited partnerships sponsored by it. From
1996 until joining NAPICO in August 2000, Mr. Shuman was Vice
President -- Finance for Preferred Health Management Inc., the largest provider
of worker compensation diagnostic imaging services in California formed in 1996,
and was responsible for establishing and managing the accounting, billing,
collection, treasury and financial reporting departments. From 1994 to 1996, he
was the Controller for DVI Business Credit Corporation, which provides asset
based lending to a wide range of health concerns. From 1985 to 1994, Mr. Shuman
served in senior management positions, as a director or manager of finance, a
portfolio tax analyst, and a senior accountant/tax consultant. He holds a
Bachelor of Arts degree in economics and accounting from the University of
Maryland. Mr. Shuman is a Certified Public Accountant and is a member of
American Institute of Certified Public Accountants and the California Society of
Public Accountants.

Mr. Sussman joined NAPICO in 1998, and is responsible for the legal affairs
of NAPICO and its affiliates. He is also the President of NPEI and a member of
the preliminary investment committee. Prior to joining NAPICO in April 1998, Mr.
Sussman was an associate with the law firm of Rus, Miliband, Williams & Smith in
Irvine, California. His practice emphasized real estate finance and insolvency
law and included the representation of borrowers, lenders, and court-appointed
trustees in matters involving apartment complexes, retail centers and hotels.
Mr. Sussman received a Bachelor of Arts degree from the University of
California, Berkeley and Juris Doctor and Master in Business Administration
degrees from the University of Southern California. He is a member of the State
Bar of California, and holds Series 22, 39 and 63 licenses issued by the
National Association of Securities Dealers, Inc.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The General Partners own all of the outstanding general partnership
interests of the Partnership; no person is known to own beneficially in excess
of 5% of the outstanding limited partnership interests.

As of December 31, 2000, security ownership of management is as listed:

PERCENTAGE OF
AMOUNT AND OUTSTANDING
NATURE OF LIMITED
BENEFICIAL PARTNERSHIP
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNER INTERESTS
------------------------ -------------- ---------- -------------

Limited Partnership
Charles H. Boxenbaum.................... Interest.................... $32,500 *
9090 Wilshire Blvd.
Beverly Hills, CA 90211
Limited Partnership
Bruce E. Nelson......................... Interest.................... $ 5,000 *
9090 Wilshire Blvd.
Beverly Hills, CA 90211

- - ---------------
* Cumulative limited partnership interests owned by corporate officers or the
General Partner is less than 1% interest of total outstanding limited
partnership interests.

LEGAL PROCEEDINGS

Lawsuit filed against David Johnson and his affiliated entities prior to
Bond Purchase's Solicitation Materials. On September 1, 2000, certain limited
partnerships for which NAPICO serves as general partner (the "NCTC Funds"), as
well as certain affiliated corporations (the "NCTC Corporations"), filed a
lawsuit against Mr. Johnson and entities he controls that serve as the operating
general partners of 22 investment property partnerships. The NCTC Funds invest
in local property partnerships that own or acquire low-income housing complexes,
including the 22 partnerships controlled by Mr. Johnson and his affiliated
entities, while

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the NCTC Corporations are either special limited partners or administrative
general partners in such partnerships. In the lawsuit, the NCTC Funds and the
NCTC Corporations assert claims for:

- breach of contract,

- breach of the covenant of good faith and fair dealing,

- breach of fiduciary duty,

- negligence,

- fraud and civil conspiracy,

- unjust enrichment,

- unfair business practices,

- securities fraud and

- RICO violations.

These claims arise out Mr. Johnson's and his affiliated entities' fraudulent and
improper conduct and financial mismanagement in connection with the operation of
the 22 investment property partnerships. It wasn't until after that lawsuit was
filed that Bond Purchase sent the Solicitation Materials to you.

Limited partner lawsuits relating to our sale of a majority of our
assets. As a result of our sale of a majority of our assets in 1998, two
investors holding an aggregate of eight our partnership units and two investors
holding an aggregated of five units of limited partnership interest in an
affiliated limited partnership (of which we are also the general partner,
generally referred to as "NAPICO Partnerships") commenced a class action in the
United States District Court for the Central District of California against
NAPICO, National Partnership Investments Associates, National Partnership
Investment Associates II, Alan I. Casden, Henry C. Casden, Charles H. Boxenbaum,
Bruce E. Nelson, and seven NAPICO Partnerships, including the Partnership and
Real Estate Associates Limited VI. The complaint alleges that the defendants
violated Section 14(a) of the Securities and Exchange Act of 1934, as amended,
and breached their fiduciary duty to the limited partners of such NAPICO
Partnerships 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 to us of partnership interests in limited
partnerships owning certain of the properties. The plaintiffs seek injunctive
relief and other equitable relief, as well as compensatory and punitive damages.
On August 4, 1999, an investor holding one unit of limited partner interest in
Housing Programs Limited (a NAPICO Partnership) commenced an action in the
United States District Court for the Central District of California. This suit
is substantially identical to the first action. The second action has been
subsumed in the first action which has been certified as a class action. The
defendants believe that the plaintiffs' claims in both of these suits are
without merit, and the defendants are vigorously contesting both actions.

OPPOSITION PROCEDURE

VOTING PROCEDURES AND CONSENT REVOCATION CARD

These materials outline the procedures to be followed if you do not want to
change our general partners. A BLUE consent card may have already been sent to
you by Bond Purchase. We urge you not to return the BLUE consent card. If you
have already returned the consent card, you have every legal right to change
your vote by returning your WHITE consent revocation card. These procedures must
be strictly followed in order for the instructions of a limited partner as
marked on a consent card to be revoked. The following is a summary of the
procedures to follow if you wish to revoke your consent:

- A limited partner may revoke his or her election on the consent only
during the solicitation period which started the date of delivery of the
Bond Purchase Solicitation Materials and continues until May 31, 2001
(unless extended by Bond Purchase).

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- IF YOU HAVE ALREADY RETURNED YOUR BLUE CONSENT CARD, YOU ARE ENCOURAGED
TO RETURN A PROPERLY COMPLETED SIGNED AND DATED WHITE CONSENT REVOCATION
CARD IN THE RETURN ENVELOPE PROVIDED AS SOON AS POSSIBLE.

According to the Bond Purchase Solicitation Materials, only limited
partners of record on March 12, 2001 (the "Record Date") will be given notice
of, and allowed to give their consent regarding the matters addressed in this
Consent Revocation Statement. As permitted by the Partnership Agreement, we have
not scheduled a special meeting of the limited partners to discuss the Bond
Purchase Solicitation Materials.

NO DISSENTERS' RIGHTS OF APPRAISAL

Under the Partnership Agreement and California law, limited partners do not
have dissenters' rights of appraisal.

SOLICITATION OF CONSENT REVOCATION CARDS

This Consent Revocation Statement is being made by the Partnership. The
Managing General Partner and its officers, directors and employees may assist in
this solicitation of consent revocation cards and in providing information to
limited partners in connection with any questions they may have with respect to
this Consent Revocation Statement and the consent revocation procedures. The
cost of the solicitation of revocations of consent will be borne by the
Partnership. We have also engaged D.F. King & Co., Inc. to assist with the
solicitation of revocation of consents with expected fees of approximately
[[$ ]] plus reasonable out-of-pocket expenses. The Partnership has
agreed to indemnify DF King against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws.

PARTNER PROPOSALS

In accordance with the terms of our Partnership Agreement, we do not have
annual meetings. Thus, there is no deadline for submitting partner proposals as
set forth in Rule 14a-5 of the Securities Exchange of 1934. The limited partners
may call a special meeting to vote upon matters permitted by our Partnership
Agreement with the prior consent of at least 10% of the limited partnership
interests.

IMPORTANT NOTE

Bond Purchase could cease the solicitation of consents once it has
determined that valid and unrevoked consents representing a majority of the
limited partnership interests as of the Record Date have been obtained and
deliver such consents to the Partnership in accordance with the Partnership
Agreement. ACCORDINGLY, IT IS IMPORTANT THAT LIMITED PARTNERS WHO HAVE EXECUTED
A CONSENT AND DESIRE TO REVOKE SUCH CONSENT SIGN, DATE AND MAIL THE ACCOMPANYING
CONSENT REVOCATION CARD AS SOON AS POSSIBLE.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance with the
Exchange Act, file reports, consent solicitation statements and other
information with the Securities and Exchange Commission (the "SEC"). This
document references important business and financial information about our
Partnership from documents we have filed with the SEC but have not included or
delivered with this document. If you call or write us, we will send you these
documents, excluding exhibits, without charge or you may view Partnership
financial information including the Form 10-K Annual Report on the web site
http://www.napico.com. The contents of the Partnership's web site are not deemed
to be a part of this Consent Revocation Statement. You can contact us at:

9090 Wilshire Blvd., Suite 201
Beverly Hills, California 90211
310-278-2191
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Please request documents before May , 2001. If you request any documents,
we will mail the documents to you by first class mail, or another equally prompt
means, by the next business day after we receive your request.

In addition, the SEC maintains a Website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the site is http://www.sec.gov.

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DATED MAY , 2001

FORM OF CONSENT REVOCATION CARD

REAL ESTATE ASSOCIATES LIMITED III

THIS REVOCATION OF CONSENT IS SOLICITED BY REAL ESTATE ASSOCIATES
LIMITED III IN OPPOSITION TO THE SOLICITATION BY BOND PURCHASE, LLC.

The undersigned, a limited partner of Real Estate Associates Limited III
(the "Partnership"), acting with respect to all of the limited partnership
interests held by the undersigned, hereby revokes any and all consents that the
undersigned may have given with respect to each of the following proposals:

THE GENERAL PARTNERS OF THE PARTNERSHIP UNANIMOUSLY
RECOMMEND THAT YOU "REVOKE CONSENT" FOR ITEMS 1 AND 2.

1. Removal of General Partners

[ ] REVOKE CONSENT [ ] DO NOT REVOKE CONSENT

2. Continuation of the Partnership and election of new general partner, New
G.P.

[ ] REVOKE CONSENT [ ] DO NOT REVOKE CONSENT

IF NO DIRECTION IS MADE, THIS CONSENT REVOCATION CARD WILL BE DEEMED TO
REVOKE ALL PREVIOUSLY EXECUTED CONSENTS WITH RESPECT TO ANY OR ALL OF THE
PROPOSALS SET FORTH HEREIN.

PLEASE SIGN, DATE AND MAIL THIS CONSENT REVOCATION CARD TODAY.

Please sign your name below exactly as it appears hereon. If your interests
are held jointly, each limited partner should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by authorized person.

Dated: , 2001

--------------------------------
Name:
Title:

--------------------------------
Name (if held jointly):
Title:

PLEASE SIGN, DATE AND RETURN
THIS CONSENT REVOCATION
PROMPTLY. IF YOU HAVE ANY
QUESTIONS OR NEED ASSISTANCE,
PLEASE CALL D.F. KING & CO.,
INC. TOLL-FREE AT
1-800-249-6427.