April 29, 2005


Mail Stop 0409

Terry G. Roussel
President
Cornerstone Realty Fund, Inc.
4590 MacArthur Blvd., Suite 610
Newport Beach, California  92660

Re:	Cornerstone Realty Fund, Inc.
      Amendment No. 1 to Registration Statement on Form S-11
      Filed April 13, 2005
      Registration No. 333-121238

Dear Mr. Roussel:

	We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

General

1. Refer to comment 1.   We have the following comments relating
to
your supplemental materials:

* Refer to Tab A.  You state that "According to the National
Association of Real Estate Investment Trusts (NAREIT) and the
National Counsel of Real Estate Investment Fiduciaries (NCR
EIF)..."
traded REITs have outperformed non-traded real estate companies by
5.25% annually.  In comparing publicly-traded REITs to private
real
estate, you rely on NCREIF`s NPI index.  Our understanding is that
the NPI index reflects unleveraged returns, before deducting any
management fees, of investment grade properties as reported by
institutional investors and is not a measure of non-traded REIT
performance.  Since the NCREIF index does not relate to common
stock
in non-traded REITs and since the data referenced and relied upon
for
non-traded properties is not relevant to your targeted portfolio,
please remove the references to the  NCREIF NPI index and the
conclusions that you attribute to it.

* Please revise the disclosure referenced in Tab B and Tab C to be
consistent with the comment above.

2. We note your response to our comment 4.  We also note that you
will request a no-action position under Regulation M and Rule 13e-
4
under the Exchange Act for your stock repurchase plan.  Please be
advised that your plan may be subject to compliance with
Regulation M
and the tender offer rules unless you receive the requested
relief.

3. Your response to comment 10 indicates that the private
placement
of 27,933 shares to your advisor should not be integrated with
this
public offering because of policy grounds.  The policy position
articulated in Black Box Incorporated (avail. June 26, 1990) and
clarified in Squadron, Ellenoff, Plesant & Lehrer (avail. Feb. 28,
1992) is limited to situations where the unregistered offering is
made to no more than two or three large, institutional, accredited
investors.  We note your statement that your advisor is an
accredited
investor.  Please supplementally confirm that your advisor is also
an
institutional investor.

4. We note your response to comment 11.  Please revise your
Management section to use the term "promoter."

Prospectus Cover Page

5. Please revise to state the date the offering will end and the
minimum purchase requirement.  Refer to Item 501(b)(8) of
Regulation
S-K

6. Please consider eliminating or reducing the amount of
information
on the cover page relating to your prior programs.  This
information
is better suited for the prospectus summary or the body of the
prospectus.  The cover page should be limited to information that
is
required by Item 501 of Regulation S-K or is otherwise key to an
investment decision.

Prospectus Summary, page 1

7. Refer to comment 26.  Your response indicates that your
disclosure
has been modified to provide that the subscribers` funds will be
returned promptly; however, we are unable to locate the
disclosure.
Please advise or revise.

Questions and Answers About This Offering, page 6

What fees and reimbursements will your advisor and its affiliates
receive in connection with this offering?, page 9

8. Please revise to state the maximum fee amounts, rather than the
expected averages.  Similarly, please revise the description of
monthly asset management fees and property disposition fees to
state
that the fees are "equal to" the stated percentages, rather than
"expected to be."

      How will I be notified of how my investment is doing?, page
12

9. You indicate that you will provide shareholders periodic
updates
on the performance of your stock, in your discretion and with
shareholder consent via various methods including electronic
delivery.  Please supplementally explain your procedures for
electronic delivery of your annual reports and supplements to the
prospectus.

Estimated Use of Proceeds, page 33

10. Supplementally, please explain why you have used 55,400,000
shares to calculate the maximum gross proceeds in the offering.
We
note that 1,562,500 shares will be issued for no additional
consideration to record holders in the special distribution.
Thus,
it does not appear to be appropriate to include those shares in
the
gross offering proceeds.  Please revise or advise.

Our Advisor, page 42

11. Please expand the discussion of Mr. McFarland`s business
experience to include his position as the general partner and
managing member of limited liability companies that acquire raw
land
and process entitlements for such land to sell to developers.  We
note your response to prior comment 54.

Management Compensation, page 46

12. You indicate in the second paragraph on page 47 that the
acquisition fees will be paid to your advisor as money is raised
in
this offering.  Please revise to quantify the amount of gross
offering proceeds that you will advance to your advisor.  If the
amount is not fixed, please disclose how you will determine the
amount.  Provide similar clarification in foonote (4).

13. We note your response to comment 62 and your statement that
you
do not need to discuss the effects if you leverage your properties
because you will not own properties with permanent debt financing.
We also note that your charter would not prohibit you from using
up
to 75% leverage in the acquisition of your real estate
investments.
Since there is no assurance that you will not use leverage to
acquire
your properties, please revise the footnote as previously
requested
to discuss the effect of leverage on your asset management fee.
Also, explain in more detail how you concluded that your asset
management fee of 1.25% is equivalent to a 0.625% fee charged by
other companies using a 50% leverage.  Provide similar
clarification
in footnote (4).  Alternatively, delete the language comparing
your
asset management fee to other companies that use leverage.

Approval of our Independent Directors, page 56

14. We note your response to prior comment 66.  Supplementally,
please confirm that you will identify in the prospectus any new
directors elected before the effective date of the registration
statement.

Investment Objectives and Acquisition Policies, page 59

15. We note your response and revision to comment 67.
Supplementally, provide a copy of the Torto Wheaton Research
report
that that you cite.  The material should be dated and
appropriately
marked to identify the supporting information.

Plan of Operation, page 67

	General, page 67

16. You indicate in your response to comment 68 that your
"advisor"
may establish reserves from the gross proceeds of this offering.
You
also indicate in the second paragraph on page 67 that "we" may
also
establish reserves from gross proceeds of this offering.  Please
revise to indicate whether your advisor may establish reserves
from
the gross proceeds of this offering.

Liquidity and Capital Resources, page 67

17. The disclosure in this section states that you will repay
advances from your advisor and reimburse your advisor up to 15% of
the gross offering proceeds.  Disclosure on page 47, however,
indicates that your advisor will pay offering expenses in excess
of
5% of gross offering proceeds.  Please revise to reconcile these
two
statements or advise.

Prior Performance Summary

Public Program, page 73

18. It does not appear that the activities of Cornerstone Realty
Fund, LLC have been included in the prior performance tables.
Please
advise us why this program has been excluded from the tables, or
revise as necessary in accordance with Guide 5.

Federal Income Tax Considerations, page 74

19. Refer to the second full paragraph on page 75.  Please revise
to
clarify that Preston Gates & Ellis is of the opinion that you will
qualify for taxation as a REIT, rather than stating that you are
"in
a position" to qualify.

Plan of Distribution, page 107

20. We note your response to comment 76.  Supplementally, please
provide copies of all relevant screen shots from the dealer
manager`s
website showing how investors will access the prospectus and
subscription documents.  Also, please advise us in the event that
you
decide to post offering subscription documents on your website and
provide us with the relevant screen shots from your website.

21. We note your response to comment no. 78; however, we are
unable
to locate the requested disclosure.  Please advise or revise.

Balance Sheet, page F-3

22. Please update your balance sheet in accordance with Rule 3-12
of
Regulation S-X.  An audited balance sheet as of December 31, 2004
must be presented in the next amendment if the registrant has a
calendar year end.

Notes to Balance Sheet

Note 2. Summary of Significant Accounting Policies

Real Estate Purchase Price Allocation, page F-5

23. We note your response to comment 79 and await a revision of
your
purchase price allocation policy to disclose the method you will
use
to allocate the purchase price of acquired properties to tangible,
as
well as intangible assets.  We also note in your response that you
plan to allocate the purchase price of properties acquired based
on
the relative fair value of the land, improvements and intangible
assets.  Please be aware that if a property purchased constitutes
a
business acquisition under EITF 98-3, the purchase price must be
allocated based upon the component assets` fair values, not
relative
fair values, in accordance with SFAS 141.

Prior Performance Tables

Table V: Results of Completed Programs for the Period January 1,
1999
through December 31, 2004

24. We note your response to comment 84 in which you state that
Profit from Sales is determined after deducting carry costs of
mortgage financing.  Based on Table V, it appears that Profit from
Sales is calculated by subtracting Total Acquisition Cost from the
Net Sales Price.  Please supplementally advise us of the
relationship
between Total Acquisition Cost and the carry costs of mortgage
financing for the properties in this table.  Please also advise us
of
the consideration you gave to the carrying value of the
properties,
in addition to the carry costs of related mortgages, when
determining
the Profit from Sales.

Exhibit 8.1 - Tax Opinion

25. Refer to numbered paragraph 2 on page 2 of the opinion letter.
Please provide a revised opinion that states the first year for
which
you will qualify as a REIT under the Code.  We note disclosure in
the
prospectus indicating that you will qualify for your taxable year
ending December 31, 2005.

  *  *  *

      As appropriate, please amend your registration statement in
response to these comments.  You may wish to provide us with
marked
copies of the amendment to expedite our review.  Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review.  Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

	You may contact Kristi Beshears, Accountant, at (202) 551-
3429
or Linda Van Doorn, Senior Assistant Chief Accountant, at (202)
551-
3498 if you have questions regarding comments on the financial
statements and related matters.  Please contact Jeffrey Shady,
Attorney-Advisor, at (202) 551-3471 or me at (202) 551-3780 with
any
other questions.


Sincerely,



Karen J. Garnett
Assistant Director

cc:	Karen Winnett, Esq. (via facsimile)
      Preston Gates & Ellis LLP
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Cornerstone Realty Fund, Inc.
Page 6