Exhibit 3

                                  [Schroders]

June 17, 1998

Board of Directors
ILM II Senior Living, Inc.
28 State Street, Suite 1100
Boston, MA  02109

Gentlemen:

      We refer to the tender offer (the "Tender Offer") commenced by Redwood
Investors, LLC for 500,000 shares of common stock (the "Stock") of ILM II Senior
Living, Inc. (the "Company") at a price of $8.00 per share (the "Price"). You
have requested our opinion, as of the date hereof, as to the adequacy of the
Price, from a financial point of view, to the holders of the Stock (the
"Stockholders").

      In arriving at our opinion herein we assumed, with your approval, that the
Company will effect certain contemplated restructuring alternatives intended to
increase shareholder value and liquidity. We have (1) reviewed the Tender Offer;
(2) reviewed historical consolidated financial and operating data with respect
to the Company; (3) reviewed internal business plans and financial and operating
forecasts with respect to the Company as restructured, as prepared by the
management of the Company; (4) analyzed publicly available information of
selected comparable companies and compared the Company, from a financial point
of view, with such companies; (5) considered the terms, to the extent publicly
available, of selected transactions comparable to the acquisition of the
Company; (6) considered certain proposals to acquire the Company which have been
made by third parties; and (7) conducted such other financial studies and
financial investigations as we deemed appropriate.

      We were not engaged to verify independently the accuracy or completeness
of any information furnished by the Company or any publicly available
information which we reviewed in arriving at our opinion expressed herein, and,
with your approval, we assumed and relied, without independent verification,
upon the accuracy and completeness of all such information. We assumed further,
with your approval, that the financial and operating forecasts of the Company
reviewed by us were reasonably prepared on bases reflecting the best current
estimates and good faith judgments of the management of the Company as to the
future financial and operating performance of the Company. We were not engaged
to conduct a physical inspection of any properties or make an independent
valuation or appraisal of any assets or liabilities, contingent or otherwise, of
the Company and we were not furnished with any such valuations or appraisals. We
were not engaged to review any legal, accounting or tax aspects of the Tender
Offer.


      Our opinion herein is based on our assessment of economic, monetary,
market and regul- atory conditions as they exist and can be evaluated on the
date of this letter and such other factors as we deem relevant. We express no
opinion concerning the price or trading range at which the Stock will trade
following the date of this letter or the price which any Stockholder may
ultimately realize for the Stock. We were not requested to conduct any review or
analysis with respect to the Company after the date of this letter and we do not
intend to do so.

      Our opinion herein is provided at the request and for the information of
the Board of Directors of the Company in evaluating the Price and does not
constitute a recommendation as to any action the Board of Directors or any
Stockholder should take in connection with the Tender Offer or any aspect
thereof or alternatives thereto. Without limiting the foregoing, this letter
does not constitute a recommendation to any Stockholder with respect to whether
or not to take or refrain from taking any action in connection with the Tender
Offer and should not be relied on by any Stockholder as such. In rendering our
opinion, we have not been engaged as an agent or fiduciary of the Stockholders
or any other persons and our opinion does not confer any rights or remedies upon
the Stockholders or any other persons.

      This letter may not be quoted or referred to in any filing, report,
document, release or other communication, whether written or oral, made,
prepared, issued or transmitted by the Company without the prior written
approval of Schroders, which shall not be unreasonably withheld; provided,
however, this letter may be reproduced in full in any Schedule 14D-9 filed by
the Company or as an attachment to any letter sent by the Company to the
Stockholders in response to the Tender Offer, and if reproduced in full therein
or as an attachment to such a letter, may be quoted from or referred to in such
filing or letter with our prior written approval, which shall not be
unreasonably withheld.

      On the basis of and subject to the foregoing assumptions and other matters
set forth herein, it is our opinion, as of the date hereof, that the Price is
inadequate, from a financial point of view, to the Stockholders.

                                       Very truly yours,


                                       /s/ Schroder & Co. Inc.


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