Bond Purchase, L.L.C.
                                 104 Armour Road
                        North Kansas City, Missouri 64116


                                                                    June 2, 2001

                                 Did you know...

Dear Fellow Limited Partner:

As a unitholder in Real Estate  Associates  Limited III ("REAL III"),  you are a
participant  in a  lawsuit  filed on behalf  of all  unitholders  of REAL III in
United States  District  Court,  Central  District of  California.  Four of your
fellow unitholders initiated this lawsuit on August 27, 1998, in connection with
the sale of 20 of the 32  underlying  assets  of REAL III by  NAPICO to a NAPICO
affiliate. Bond Purchase, L.L.C. is NOT a party to this lawsuit, other than as a
unitholder such as yourself.

The defendants in the suit are: NAPICO, Alan J. Casden, Charles H. Boxenbaum and
others.  The lawsuit  alleges  violations of Section 14(a) of the Securities and
Exchange  Act of 1934,  a breach of  fiduciary  duty and  breach of trust by the
defendants - NAPICO and others.

                                   -- TAXES --

The complaint alleges, as a result of the sale by NAPICO of the 20 local limited
partnerships to their affiliated REIT, unitholders' tax liability resulting from
the  transaction  would  be as much as  $1,140  more  per  unit  than  the  cash
distributed by REAL III.

The complaint  further alleges that the tax liability was a direct result of the
managing general partner of the local limited partnerships:

o        NOT OBTAINING AN INDEPENDANT MARKET VALUATION;

o        NOT SEEKING TO OBTAIN OFFERS FROM UNAFFILIATED THIRD PARTIES;

o        MISLEADING  LIMITED  PARTNERS BY  SUGGESTING  THAT THIRD  PARTIES WOULD
         NOT BE INTERESTED IN BIDDING; and

o        NOT INCLUDING RESERVES  AND  OTHER  ASSETS  HELD BY  THE LOCAL  LIMITED
         PARTNERSHIPS.

NAPICO has claimed that our plan to sell the  remaining  Partnership  assets may
cause the  limited  partners  to incur  significant  tax  liabilities.  However,
Section 9.3(d) of the Partnership  Agreement  states the  "Partnership  WILL NOT
SELL any  Project or Project  Interest  except  pursuant  to  exempted  sales to
qualified  tenant  groups,  if the cash proceeds would be less than the taxes at
the then maximum state and federal tax rates..."(emphasis added). WE WILL COMPLY
WITH  THE  PARTNERSHIP  AGREEMENT.   Given  NAPICO's  record  of  violating  the
Partnership Agreement by not allowing Bond Purchase,  L.L.C. access to the books
and records as recently as May 24, 2001, we have ongoing concerns that if NAPICO
is allowed to remain as the general partner, there can be no assurances that any
future sales of  Partnership  assets by NAPICO will adhere to this  provision in
the Partnership Agreement.



               -- MATERIALLY FALSE AND MISLEADING SOLICITATIONS--

The complaint further lists alleged  Materially False and Misleading  statements
because NAPICO:

o        omitted reserves held by the local limited partnerships;

o        omitted the value of the management fees;

o        omitted the fair value of all assets to be received by NAPICO;

o        placed limits on the  fairness  opinion issued  by Robert  A. Stanger &
         Co., Inc.;

o        encouraged  unitholders  to rely on a  fairness  opinion which excluded
         Tens of Millions of Dollars of Undisclosed  and Unspecified assets; and

o        seven other Materially False and Misleading statements.

Bond  Purchase,  L.L.C.,  while  not a party  to this  lawsuit  other  than as a
unitholder,  agrees with the plaintiffs  that NAPICO made  Materially  False and
Misleading statements in its August 1998 Solicitation Statement.

NAPICO claimed in 1998 that they would  "eventually"  liquidate the Partnership.
We are  concerned  that if the  remaining  assets  are not  fully  disclosed  or
properly valued,  when  "eventually"  occurs,  unitholders may receive less than
they deserve and may pay more in taxes.

      THE TIME HAS COME TO REPLACE NAPICO. THE TIME HAS COME FOR A CHANGE.

      Please cast your vote on the BLUE consent form and vote FOR a change.

                         |X| Vote FOR proposal number 1
                         |X| Vote FOR proposal number 2

Regardless of the number of units you hold, your vote is very important.  We are
receiving overwhelming support from your fellow limited partners who have voted.
However,  we still need your vote.  Please take this  opportunity to mark, sign,
date and return the  enclosed  BLUE  consent  form in the  postage  paid  return
envelope.   Alternatively,   you  may  fax  your   consent  form  toll  free  to
1.866.470.4300.

       This letter is being mailed to limited partners on or about June 2, 2001.

       Thank you for your continued support.


                                                           Very Truly Yours,


                                                           Bond Purchase, L.L.C.




                               (Form of Consent)
                       Real Estate Associates Limited III
              a California Limited Partnership (the "Partnership")

                           CONSENT OF LIMITED PARTNER

          THIS CONSENT IS SOLICITED ON BEHALF OF BOND PURCHASE, L.L.C.

LIMITED PARTNERS WHO RETURN A SIGNED CONSENT BUT FAIL TO INDICATE THEIR APPROVAL
OR  DISAPPROVAL  AS TO ANY MATTER  WILL BE DEEMED TO HAVE VOTED TO APPROVE  SUCH
MATTER.  THIS  CONSENT  IS  VALID  FROM THE DATE OF ITS  EXECUTION  UNLESS  DULY
REVOKED.

  THIS CONSENT CARD WILL REVOKE ANY PREVIOUSLY EXECUTED REVOCATION OF CONSENT.

The undersigned has received the Consent Solicitation  Statement dated March 13,
2001 as amended  April 30,  2001,  ("Consent  Solicitation  Statement")  by Bond
Purchase,  L.L.C.,  a Missouri  limited  liability  company ("Bond  Purchase."),
seeking the approval by written consent of the following proposals:

(1)  the  removal  of  the  current  general  partners,   National   Partnership
Investments  Corp.,  a  California  corporation  and Coast  Housing  Investments
Associates, a California limited partnership; and

(2) the  continuation of the Partnership and the election of New G.P. as the new
general  partner of the  Partnership  (which is  conditioned  on the approval of
proposal (1) above).

Each  of  the  undersigned,  by  signing  and  returning  this  Consent,  hereby
constitutes  and  appoints  Bond  Purchase,  acting  through  its  officers  and
employees as his or her  attorney-in-fact  for the purposes of executing any and
all  documents  and taking any and all actions  required  under the  Partnership
Agreement in connection with this Consent and the Consent Solicitation Statement
or in order to  implement  an approved  proposal;  and hereby  votes all limited
partnership  interests of the  Partnership  held of record by the undersigned as
follows for the proposals set forth above,  subject to the Consent  Solicitation
Statement.

            Proposal                            FOR       AGAINST       ABSTAIN

1. Removal of General Partners                  [ ]         [ ]           [ ]

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

(Please sign exactly as your name appears on the  Partnership's  records.  Joint
owners should each sign. Attorneys-in-fact, executors, administrators, trustees,
guardians,  corporation  officers or others  acting in  representative  capacity
should indicate the capacity in which they sign and should give FULL title,  and
submit appropriate evidence of authority to execute the Consent)


                                            Dated: _______________________, 2001
                                                 (Important - please fill in)
[Limited Partner Name,
address and units held]
                              ___________________________________Signature/Title

                              ___________________________________Signature/Title

                              __________________________________Telephone Number