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

FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2005

or

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________


Commission File #0-17593


Inland Monthly Income Fund II, L.P.
(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No     

Indicate by a checkmark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2)    Yes     No  X 

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Balance Sheets

March 31, 2005 and December 31, 2004
(unaudited)

Assets

See accompanying notes to financial statements.

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Balance Sheets
(continued)

March 31, 2005 and December 31, 2004
(unaudited)

Liabilities and Partners' Capital

See accompanying notes to financial statements.

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Statements of Operations

For the three months ended March 31, 2005 and 2004
(unaudited)

See accompanying notes to financial statements.

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Statements of Cash Flows

For three months ended March 31, 2005 and 2004
(unaudited)

See accompanying notes to financial statements.

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Notes to Financial Statements

March 31, 2005
(unaudited)

Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2004, which are included in the Partnership's 2004 annual report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report.

(1) Organization and Basis of Accounting

Inland Monthly Income Fund II, L.P. (the "Partnership"), was formed on June 20, 1988 pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in improved residential, retail, industrial and other income producing properties. On August 4, 1988, the Partnership commenced an offering of 50,000 (subject to increase to 80,000) limited partnership units or Units pursuant to a Registration under the Securities Act of 1933. The offering terminated on August 4, 1990, with total sales of 50,647.14 Units at $500 per Unit, resulting in gross offering proceeds of $25,323,569, not including the General Partner's contribution for $500. All of the holders of these Units have been admitted to the Partnership. Inland Real Estate Investment Corporation is the General Partner. The Limited Partners of the Partnership share in the benefits of ownership of the Partnership's real property investments in proportion to the number of Units held. The Partnership repurchased 551.64 Units for $260,285 from various Limi ted Partners through the unit repurchase program. There are no funds remaining for the repurchase of Units through this program.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the periods presented herein. Results of interim periods are not necessarily indicative of the results to be expected for the year. Certain reclassifications were made to the 2004 financial statements to conform to the 2005 presentation.

Comprehensive income is defined as the change in equity of a business enterprise from transactions and other events from non-owner sources. Comprehensive income includes net earnings and other non-owner changes in equity which bypass the statement of operations and are reported as a separate component of partners' capital. For the three months ended March 31, 2005, other comprehensive income includes the unrealized gain on the available-for-sale investment. There was no comprehensive income as of March 31, 2004.

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INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

March 31, 2005
(unaudited)

(2) Deferred Rent Receivable

Certain tenant leases contain provisions providing for stepped rent increases. Generally accepted accounting principles require that rental income be recorded for the period of occupancy using the straight-line basis. The accompanying financial statements include decreases of $168,997 and $12,432 for the three months ended March 31, 2005 and 2004, respectively, of rental income for the period of occupancy for which stepped rent increases apply and $0 and $168,997 in related deferred rent receivable as of March 31, 2005 and December 31, 2004, respectively.

(3) Transactions with Affiliates

The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership. Such costs are included in professional services to affiliates and general and administrative expenses to affiliates, of which $7,817 and $2,192 was unpaid as of March 31, 2005 and December 31, 2004, respectively.

An affiliate of the General Partner earned property management fees of $2,651 and $3,606, for the three months ended March 31, 2005 and 2004, respectively, in connection with managing the Partnership's properties. Such fees are included in property operating expenses to affiliates, all of which was paid as of March 31, 2005 and December 31, 2004.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things, competition for tenants; federal, state, or local regulations; adverse changes in general economic or local conditions; uninsured losses; and potential conflicts of interest between us and our Affiliates, including the general partner.

We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgements in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties, recognize revenue, and our cost capitalization and depreciation policies. These judgements often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in fin ancial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgements known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

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In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected rental and vacancy rates, property operating expenses, capital expenditures and interest rates. The capitalization and discount rates used to determine property valuation are based on the market in which the property is located, length of leases, tenant financial strength, the economy in general, demographics, environment, property location, visibility, age, physical condition and investor return requirements among others. All of the aforementioned factors are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property. As of March 31, 2005 and December 31, 2004, we have recorded an impairment loss on the Kmart property of $762,000.

Revenue Recognition - Under GAAP, we are required to recognize rental income based on the effective monthly rent for each lease. The effective monthly rent is equal to the average monthly rent during the term of the lease, not the stated rent in the lease for any particular month. The process, known as "straight-lining" rent generally has the effect of increasing rental revenues during the early phases of a lease and decreasing rental revenues in the latter phases of a lease. If rental income calculated on a straight-line basis exceeds the cash rent due under the lease, the difference is recorded as an increase in deferred rent receivable and included as a component of rental income in the accompanying Statements of Operations. If the cash rent due under the lease exceeds rental income calculated on a straight-line basis, the difference is recorded as a decrease in deferred rent receivable and is also included as a component of rental income in the accompanying Statements of Operations.

Cost Capitalization and Depreciation Policies - We review all expenditures and capitalize any item exceeding $5,000 deemed to be an upgrade or a tenant improvement. If we capitalize more expenditures, current depreciation expense would be higher; however, total current expenses would be lower. Depreciation expense is computed using the straight-line method. Buildings and improvements are depreciated based upon estimated useful lives of 30 to 40 years for buildings and improvements and the remaining life of the related lease for tenant improvements.

Liquidity and Capital Resources

On August 4, 1988, we commenced an offering of 50,000 (subject to increase to 80,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 4, 1990, after we had sold 50,647.14 units at $500 per unit, resulting in gross offering proceeds of $25,323,569, not including the general partner's contribution of $500. All of the holders of these units have been admitted to our partnership. We acquired five properties utilizing $21,224,542 of capital proceeds collected. On January 8, 1991, we sold one of our properties, The Wholesale Club. On November 30, 1999, we sold another of our properties, Eurofresh Plaza. As of March 31, 2005, cumulative distributions to limited partners totaled $29,309,086; of which $4,395,565 represents proceeds from the sale of The Wholesale Club, $2,392,818 represents proceeds from the sale of Eurofresh Plaza and $22,520,703 represents distributable cash flow from the properties. We repurchas ed 551.64 units for $260,285 from various limited partners through the unit repurchase program. There are no funds remaining for the repurchase of units through this program.

As of March 31, 2005, we had cash and cash equivalents of $2,981,642 which includes approximately $304,000 expected to be used for the payment of real estate taxes for Colonial Manor Living Center. We intend to use such remaining funds for distributions and for working capital requirements.

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Through June 30, 2002, the properties owned by us were generating cash flow in excess of the 8% annualized distributions to the limited partners (paid monthly), in addition to covering all our operating expenses. As of June 30, 2002, we made cumulative distributions of $253,868 in addition to the 8% annualized return to the limited partners from excess cash flow. As a result of the termination of the Kmart lease on June 29, 2002, we reduced the annualized return to the limited partners to 5%, beginning in July 2002. In December 2002, our general partner temporarily suspended distributions to the limited partners due to uncertainty of the Elite and Scandinavian Health Club leases and re-tenanting costs anticipated with the Kmart property. We will continue to monitor our cash needs and the cash available for distribution. To the extent that the cash flow from the properties is insufficient to meet our needs, we may rely on advances from affiliates of the general partner, other short-term financing, or may sell one or more of the properties.

On August 5, 2004, we received 5,710 shares of Kmart common stock as a termination fee on the lease. The value of the stock at the close of business on August 5, 2004 was $67.53 per share resulting in lease terminations fees valued at $385,596, which was included in rental income in 2004. During 2004, we sold 5,673 shares of the Kmart stock and recorded a gain of $84,944. We anticipate that we may receive additional shares of Kmart stock in the second quarter of 2005. We will continue to evaluate when it is in our best interest to liquidate the remaining 37 shares.

Effective March 1, 2003, due to economic conditions in the nursing home industry, the general partner executed an amendment to the Elite lease to reduce the annual rent to $666,855 per year with no increases in rent over the term of the lease. The tenant of the Colonial Manor nursing home did not make its March 2005 rental payment and informed our general partner that it intended to default on all of its lease obligations under its lease and the lease of the Douglas and Hillside nursing homes (owned by a separate partnership also managed by our general partner). Rent for all three nursing home properties was secured by a $400,000 letter of credit which covered all three properties on a joint and several basis. The sale of the Douglas and Hillside nursing homes was completed on April 21, 2005, and was contingent, however, upon the release of the letter of credit. Our general partner is currently determining how to equitably allocate the letter of credit between the three properties. Sales proceeds from the sale of the Douglas and Hillside nursing homes equal to the Colonial Manor proportionate share of the letter of credit may be allocated to us to reimburse us for the Colonial Manor rent which would have been covered under the letter of credit had it not been terminated.

Currently, the Colonial Manor nursing home is being operated by the former subtenant of such property. The General Partner is currently marketing the Colonial Manor property to nursing home operators and land developers. In the interim, the former subtenant has agreed to continue to operate the nursing home to afford a smooth transition with a new operator.

We executed an amendment of the Scandinavian Health Club lease through September 30, 2013. Annual base rent increased from $359,094 to $383,231 per year commencing April 1, 2003. As part of the extension, in 2003, we paid $400,000 for tenant improvements and equipment at the property. We are currently marketing this property for sale.

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Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of their employees relating to our administration. Such costs of $10,406 and $8,055 are included in professional services to affiliates and general and administrative expenses to affiliates for the three months ended March 31, 2005 and 2004, respectively, of which $7,817 and $2,192 was unpaid as of March 31, 2005 and December 31, 2004, respectively.

An affiliate of our general partner earned property management fees of $2,651 and $3,606 for the three months ended March 31, 2005 and 2004, respectively, in connection with managing our properties. Such fees are included in property operating expenses to affiliates, all of which was paid as of March 31, 2005 and December 31, 2004.

Results of Operations

At March 31, 2005, we own three operating properties. Two of our three operating properties, Scandinavian Health Spa and Colonial Manor Living Center, are leased on a "triple-net" basis which means that all expenses of the property are passed through to the tenant. We are responsible for maintenance of the structure and the parking lot and insurance, real estate taxes and common area maintenance of the Kmart property since the termination of the Kmart lease.

Rental income was $37,954 and $250,088 for the three months ended March 31, 2005 and 2004, respectively. The decrease in rental income for the three months ended March 31, 2005, as compared to the three months ended March 31, 2004, is due to the tenant of the Colonial Manor nursing home not making its March 2005 rental payment. The tenant informed our general partner that it intended to default on all of its lease obligations under its lease and the lease of the Douglas and Hillside nursing homes (owned by a separate partnership also managed by our general partner). Rent for all three properties was secured by a $400,000 letter of credit which covered all three properties on a joint and several basis. The sale of the Douglas and Hillside nursing homes was completed on April 21, 2005 and was contingent, however, upon release of the letter of credit. Our general partner is currently determining how to equitably allocate the letter of credit between the three properties. Sales proceeds from the sale of the Dou glas and Hillside nursing homes equal to the Colonial Manor proportionate share of the letter of credit may be allocated to us to reimburse us for the Colonial Manor rent which would have been covered under the letter of credit had it not been terminated. As a result of the Colonial Manor tenant's intent to default on its lease obligations, we have written off the remaining deferred rent receivable of $168,997 as of March 31, 2005.

Interest income was $9,476 and $3,256 for the three months ended March 31, 2005 and 2004, respectively. The increase in interest income for the three months ended March 31, 2005, as compared to the three months ended March 31, 2004, is due to an increase in cash and cash equivalents available to invest in overnight investments.

General and administrative expenses to affiliates were $6,488 and $3,611 for the three months ended March 31, 2004 and 2003, respectively. The increase in 2005 was due to an increase in data processing expense. General and administrative expenses to non-affiliates were $15,011 and $2,792 for the three months ended March 31, 2004 and 2003, respectively. The increase in 2005 was due to an increase in state tax expense.

Property operating expenses to non-affiliates were $38,677 and $75,522 for the three months ended March 31, 2004 and 2003, respectively. The decrease in 2005 was due to decreases in insurance and maintenance expenses for the three months ended March 31, 2005.

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The following is a list of approximate occupancy levels for the partnership's investment properties as of the end of each quarter during 2004 and 2005:

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Our general partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There were no changes in our internal controls over financial reporting that occurred during the three months ended March 31, 2005 that materially affected, or are reasonably likely to materially affect, our internal control of financial reporting.

PART II - Other Information

Items 1 through 5 are omitted because of the absence of conditions under which they are required.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.