United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-Q/A



                                 AMENDMENT NO. 1



 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange 
                                  Act of 1934
                  FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998

                         COMMISSION FILE NUMBER: 0-11769


                          CONAM REALTY INVESTORS 3 L.P.
                          -----------------------------
              EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER



         CALIFORNIA                                  13-3176625
         ----------                                  ----------
STATE OR OTHER JURISDICTION OF           I.R.S. EMPLOYER IDENTIFICATION NO.
INCORPORATION OR ORGANIZATION


1764 SAN DIEGO AVENUE
SAN DIEGO, CA  92110  ATTN. ROBERT J. SVATOS                       92110-1906
- --------------------------------------------                       ----------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES                              ZIP CODE

                                 (619) 297-6771
                                 --------------
               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE



The undersigned registrant hereby amends the following section of its Report for
August 31, 1998 on Form 10-Q as set forth in the pages attached hereto:



                                     PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

YEAR 2000




                                     PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

YEAR 2000

The statements made in the following five paragraphs are made as of October 13,
1998, the date of the Form 10-Q which is amended by this Form 10-Q/A. Subsequent
to such date, on January 29, 1999, the Partnership consummated the sale of its
remaining properties. A Form 8-K describing such sale will be filed with the
Securities and Exchange Commission on or before February 16, 1999. As a result
of such sale, the Partnership has dissolved and is in liquidation. Since the
General Partner plans to complete the liquidation of the Partnership prior to
January 1, 2000, the General Partner believes that there will be no Year 2000
issues for the Partnership.

The Partnership has assessed the potential impact of the Year 2000 issue on its
computer systems, operating equipment with imbedded microchips and major third
party vendors. If the proposed sale of its remaining properties is consummated,
the Partnership will liquidate prior to January 1, 2000, and no Year 2000 issues
will be presented.

In the event that the sale is not consummated, the Partnership has relied on the
efforts of ConAm Management Corporation ("ConAm Management"), which has been
retained by the Partnership to manage the business and financial operation of
the Partnership's properties, to resolve any potential Year 2000 issues. In the
course of providing property management services for the Partnership, ConAm
Management retained a third party consultant to modify all applicable software
to provide for a 4-digit year field. The General Partner believes that the
modifications undertaken by ConAm Management related to computer systems are
sufficient to address any potential Year 2000 problems and that the impact of
the Year 2000 issue will not materially affect the Partnership's operating
results or financial condition if the Partnership is not liquidated prior to
January 1, 2000. Accordingly, neither ConAm Management nor the Partnership has
taken any further actions with respect to the Year 2000 issue related to the
computer systems.

The Partnership plans to initiate a program to evaluate the Year 2000 readiness
of each property's operating equipment with embedded microchips and replace as
considered necessary. In the event that the replacement project is not completed
by the Year 2000, failure of the property's operating equipment as a result of
the Year 2000 issue is not expected to have a significant impact on operations.

The Partnership plans to initiate discussion with significant suppliers and
other third parties to determine the extent to which the Partnership may be
vulnerable to the failure of these parties to address and correct their own Year
2000 issues. However, there can be no guarantee that the systems of other
companies that support the Partnership's operations will be timely converted or
that a failure by these companies to correct their Year 2000 problems would not
have a material adverse effect on the Partnership. At the present time the
Partnership does not have a contingency plan in place, in the event of Year 2000
failure related to significant suppliers and other third parties, but plans to
create one within the next year.

The Partnership currently has no indication that the costs associated with any
remedial actions in connection with the Year 2000 related to its operating
equipment with imbedded microchips and major third party vendors issue will be
material. All costs related to the remediation plan of the computer system were
incurred by ConAm Management in connection with their management services.






                                   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 hereunto duly authorized.


                           CONAM PROPERTY SERVICES IV, LTD.
                           General Partner of ConAm Realty Investors 3 L.P.

                           BY:  CONTINENTAL AMERICAN DEVELOPMENT, INC.
                                GENERAL PARTNER


Date: February 12, 1999             BY:/s/ DANIEL J. EPSTEIN
                                           -----------------
                                    Daniel J. Epstein
                                    Director, President, and Principal 
                                    Executive Officer


Date: February 12, 1999             BY:/s/ ROBERT J. SVATOS
                                           ----------------
                                    Robert J. Svatos
                                    Vice President and Director