MAXUS CAPITAL CORP.
P.O. Box 34729, North Kansas City, MO 64116


January 11, 2005


Dear Limited Partners:

In accordance with Section 8.2 of the partnership agreement, the General Partner
has made distributions of Net Extraordinary Cash Income of $10 per unit for each
quarter of the last three fiscal years.

For distributions to be made,  working capital must exceed the amount considered
appropriate by the General Partner to provide reserves to pay taxes,  insurance,
debt  service,  repairs,  and any  other  costs  and  expenses  incident  to the
ownership or operation of the property, Woodhollow Apartments. At this time, the
General  Partner  has  determined  that the amount of working  capital  does not
support  making a quarterly  distribution.  We will continue to review this each
quarter.

Woodhollow  experienced  decreased  occupancy levels in 2004 due to a fire and a
weakened regional  apartment market.  Twenty-two (22) units, or approximately 5%
of the  property,  were  vacant  for a  majority  of the year due to a fire that
occurred  on April 16,  2004.  The  damage  was  limited to the 22 units in that
building.  Management  estimates  that  most  of the  damages  (estimated  to be
$310,000) are covered by insurance,  less a $10,000 deductible and approximately
$10,000 of make-ready  expenses.  The insurance policy also covers loss of rents
and has indicated  that the  Partnership  will be reimbursed  for $30,000 due to
sustained rental losses.

Based  on  industry  information,   the  average  occupancy  of  the  sub-market
Woodhollow  competes with is in the low to mid 90% range.  Interest rates remain
low, which normally  increases losses of tenants who move out of apartments when
they purchase homes.  Missouri  currently ranks the 5th lowest in the nation for
cost of living which has provided a highly accessible entry-level housing market
and resulted in increased vacancy rates and a lower demand for apartments.

We will  continue  our efforts to maximize  property  operations  by focusing on
increased  rental and other income sources and  controlling  operating  expenses
wherever possible.

If you have any questions regarding partnership matters you may contact Investor
Relations at (816) 303-4500.

Thank you for your continued interest and support.

Sincerely,

/s/ David L. Johnson
-------------------
David L. Johnson
President, Director
Maxus Capital Corp.
General Partner