Uniprop Fund I 10-Q: PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND, A MICHIGAN LIMITED PARTNERSHIP

Balance Sheets

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND, A MICHIGAN LIMITED PARTNERSHIP

1. Summary of significant accounting policies:

Presentation:

The balance sheet as of September 30, 1998, the related statements of income and statements of cash flow for the periods ended September 30, 1998 and 1997 have been prepared by management, pursuant to the rules and regulations of the Securities and Exchange Commission, without audit by independent public accountants. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of such financial statements have been included.

The financial statements and notes are presented as permitted by the rules and regulations of the Securities and Exchange Commission for Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes, which should be consulted.

2. Payments to affiliates:

ITEM 2.

Capital Resources

The Partnership's capital resources consist primarily of its four manufactured housing communities. On March 25, 1997 the Partnership borrowed $33,500,000 from Nomura Asset Capital Corporation (the "Financing"). The Partnership secured the Financing by placing liens on its four communities. As a result of the Financing, the Partnership distributed $30,000,000 to the Limited Partners, which represented a full return of the original capital contributions of $1,000 per unit.

Liquidity

As a result of the Financing, the Partnership's four properties are mortgaged. At the time of the Financing, the aggregate principal amounts due under the four mortgage notes was $33,500,000 and the aggregate fair market value of the Partnership's mortgaged properties was $53,200,000. The Partnership expects to meet its short-term liquidity needs generally through its working capital provided by operating activities.

The Partnership's long-term liquidity is based, in part, upon its investment strategy. Notwithstanding, that the properties owned by the Partnership were anticipated to be held for seven to ten years after their acquisition, all of the properties have been owned by the Partnership more than ten years. The General Partner may elect to have the Partnership own the properties for as long as, in the opinion of the General Partner, it is in the best interest of the Partnership to do so.

The Partnership has a renewable $600,000 line of credit with National City Bank of Michigan/Illinois (formerly First of America Bank). The interest rate on such line of credit, floats 180 basis points above 1 month LIBOR, which on September 30, 1998 was 5.66%. The sole purpose of the line of credit is to purchase new and used homes to be used as model homes and offered for sale within the Partnership's communities. Over the past two years, sales of the new and used model homes have been growing and the General Partner believes that continuing the model home program is in the best interest of the Partnership. As of September 30, 1998, the outstanding balance on the line of credit was $469,523.

Net Cash from Operations available for aggregate distributions to all Partners in UMHCIF during the quarter ended September 30, 1998 amounted to $419,505. The amount available during the same period in 1997 was $353,192. Management considers Net Cash from Operations to be a supplemental measure of the Partnership's operating performance. Net Cash from Operations is defined to mean net income computed in accordance with generally accepted accounting principles ("GAAP"), plus real estate related depreciation and amortization. Net Cash from Operations does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. Net Cash from Operations should not be considered as an alternative to net income as the primary indicator of the Partnership's operating performance or as an alternative to cash flow as a measure of liquidity.

The quarterly Partnership Management Distribution due and paid to the General Partner for the second quarter was $139,500, or one-fourth of 1.0% of the most recent appraised value of the properties held by the Partnership. ($55,800,000 x .01 = $558,000 / 4 = $139,500)

The cash available, after payment of the Partnership Management Distribution of $139,500 from Net Cash from Operations, was $280,005. From this amount, the General Partner elected to make a total distribution of $75,000 for the third quarter of 1998, 80.0% or $60,000 was paid to the Limited Partners and 20.0% or $15,000 was paid to the General Partner. The General Partner will continue to monitor on-going Net Cash from Operations generated by the Partnership during the coming quarters. If Net Cash from Operations is lower or higher than the amount needed to maintain the current distribution level, the General Partner may elect to reduce or increase the level of future distributions paid to the Limited Partners.

While the Partnership is not required to maintain a working capital reserve, the Partnership has not distributed all the cash generated from operations in order to build cash reserves. As of September 30, 1998, the Partnership cash reserves amounted to $966,643. The level of cash reserves maintained is at the discretion of the General Partner.

Results of Operations

Overall, as illustrated in the tables below, the four properties enjoyed a combined average occupancy of 98.1% (1,790/1,824 sites) at the end of September 1998, versus 97.9% a year ago. The average monthly rent in September 1998 was approximately $396, or 3.1% more than the $384 average monthly rent in September 1997.

		Total		Occupied		Occupancy		Average
		Capacity		Sites		Rate		Rent
Aztec Estates		645		628		97.4%		$441
Kings Manor		314		304		96.8		$422
Old Dutch Farms		293		286		97.6		$389
Park of the Four Seasons		572		572		100.0		$343
Total on 9/30/98		1,824		1,790		98.1%		$397
Total on 9/30/97		1,824		1,786		97.9%		$384

Comparison of Quarter Ended September 30, 1998 to Quarter Ended September 30, 1997

Gross revenues increased $118,276, or 5.9%, to $2,135,485 in 1998, as compared to $2,017,209 in 1997. The increase in gross revenues is the result of higher overall occupancy and higher average rents at the Partnership's four communities (see table on previous page).

Administrative expenses increased $26,674, or 6.5% to $437,790 in 1998, as compared to $411,116 in 1997. The increase is the result of higher wages and an increase in property management fees. Partnership management costs decreased $46,818, or 62.2%, to $28,471 in 1998, as compared to $75,289 in 1997. This decrease is due to the absence of legal/professional fees associated with the financing of the properties that was completed by the Partnership in 1997. Property operation costs increased $18,493, or 7.8%, to $255,355 in 1998, as compared to $236,862 in 1997. The increase was the result of higher maintenance and marketing expense.

As a result of the foregoing factors, net income increased to $191,305 for the quarter ended September 30, 1998 from $146,243 reported for the same period in 1997.

MANAGEMENT EXPENSES

Net Partnership management expenses paid during the quarter amounted to $28,471. Gross expenses of $39,620 (data processing, accounting and legal expenses, office supplies and wages to employees of the Partnership) were partially offset by income of $11,149 generated by interest on the Partnership's reserves and transfer fees. The figures for last year's third quarter were $75,289, $80,697 and $5,408, respectively.

PART II - OTHER INFORMATION