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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-Q/A

              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1998
                                                          ------------------

                          Commission File Number 1-9240
                                                 ------

                     TRANSCONTINENTAL REALTY INVESTORS, INC.
        -------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

           Nevada                                                94-6565852
 -------------------------------                            -------------------
 (State or Other Jurisdiction of                              (I.R.S. Employer
  Incorporation or Organization)                             Identification No.)


10670 North Central Expressway, Suite 300, Dallas, Texas             75231
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  (Address of Principal Executive Office)                          (Zip Code)

                                 (214) 692-4700
                         -------------------------------
                         (Registrant's Telephone Number,
                              Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X].  No [ ].

                      APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.


Common Stock, $.01 par value                               3,875,944
- ----------------------------                  ---------------------------------
        (Class)                               (Outstanding at October 30, 1998)




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This Form 10-Q/A amends the Registrant's quarterly report on Form 10-Q for the
quarter ended September 30, 1998 as follows:


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES - pages
14.
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ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS


Introduction

Transcontinental Realty Investors, Inc. (the "Company") invests in real estate
through direct ownership and partnerships and invests in mortgage loans,
including first, wraparound and junior mortgage loans. The Company is the
successor to a business trust which was organized on September 6, 1983, and
commenced operations on January 31, 1984.

Liquidity and Capital Resources

Cash and cash equivalents aggregated $19.7 million at September 30, 1998
compared with $24.7 million at December 31, 1997. The Company's principal
sources of cash have been and will continue to be from property operations,
proceeds from property sales, the collection of mortgage notes receivable and
borrowings. The Company anticipates that its cash on hand, as well as cash
generated from the collection of mortgage notes receivable, sales of properties,
borrowings against certain of the Company's unencumbered properties and
refinancing or extensions of certain of its mortgage debt will be sufficient to
meet all of the Company's cash requirements including debt service obligations
and expenditures for property maintenance and improvements.

Net cash provided by operating activities decreased from $10.2 million for the
nine months ended September 30, 1997 to $1.1 million for the nine months ended
September 30, 1998. The primary factors affecting the Company's cash from
operations are discussed in the following paragraphs.

The Company's cash flow from property operations (rents collected less payments
for expenses applicable to rental income) increased from $12.0 million in the
first nine months of September 30, 1997 to $23.1 million in the first nine
months of 1998. Of this increase $4.9 million is the result of the Company
having acquired 32 properties during 1997 and 1998, $1.6 million is due to an
increase in rental rates and common area maintenance income at the Company's
commercial properties and $1.7 million is due to the sale of Republic Towers in
1997. These increases were partially offset by a decrease of $615,000 due to
properties sold during 1997 and 1998.

Interest collected decreased from $882,000 for the nine months ended September
30, 1997 to $592,000 in the corresponding period in 1998. The decrease is due to
four mortgage notes receivable being paid in full in 1997.

Interest paid increased to $15.6 million for the nine months ended September 30,
1998 from $11.4 million in the corresponding period in 1997. This increase is
due to the acquisition of 32 properties subject to debt, and financings and
refinancings obtained on previously unencumbered properties during 1997 and
1998. These increases were partially offset by a decrease of $430,000 due to the
sale of 7 properties in 1997 and 1998.

Advisory and net income fee payments increased to $2.8 million for the nine
months ended September 30, 1998 from $1.4 million in the corresponding period in
1997. The increase is primarily due to the 1998 payment of accrued fourth
quarter 1997 net income fee of $1.0 million. The net income fee is paid based on
7.5% of the Company's net income. The remainder of the increase is due to an
increase in the advisory fee paid, such increase is due to an increase in the
Company's gross assets, the basis of such fee.

General and administrative expenses paid decreased to $1.8 million for the nine
months ended September 30, 1998 from $2.1 million in the corresponding period in
1997. This decrease is due to a decrease in legal fees relating to the Republic
Towers property loss and Olive litigation.

Distributions from equity joint ventures decreased to $112,000 for the nine
months ended September 30, 1998 from $1.7 million in the corresponding period in
1997. The 1997 amount included a distribution from the refinancing of two
apartment complexes in the Tri-City joint venture.

In January 1997, the Company received an insurance settlement of $9.5 million
relating to 1995 hail storm and flood damage to the Republic Towers Office
Building in Dallas, Texas. No such amount was received in 1998.

In January 1998, the Company purchased (i) the Mountain Plaza Apartments in El
Paso, Texas, for $4.0 million, consisting of $1.0 million in cash and mortgage
financing of $3.0 million, (ii) the Hunters Glen Apartments in Midland, Texas,
for $2.5 million, consisting of $600,000 in cash and seller financing of $1.9
million, (iii) a 1.41 acre parcel of land in Dallas, Texas, for $1.9 million in
cash, and (iv) the Bent Tree Garden Apartments in Addison, Texas, for $8.1
million, consisting of $1.7 million in cash and mortgage financing of $6.4
million.

In February 1998, the Company purchased (i) the Parkway North Office Building in
Dallas, Texas, for $5.4 million, consisting of $1.5 million in cash and mortgage
financing of $3.9 million, and (ii) a 2.14 acre parcel of land in Dallas, Texas,
for $3.4 million in cash.

In March 1998, the Company refinanced the mortgage debt secured by the Tricon
Warehouses in Atlanta, Georgia. The Company received net cash of $5.4 million
after paying off $4.8 million in mortgage debt.



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                                   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 thereunto duly authorized.



                                                 TRANSCONTINENTAL REALTY
                                                 INVESTORS, INC.



Date:    January 27, 1999                     By:  /s/ Randall M. Paulson
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                                                 Randall M. Paulson
                                                 President


Date:    January 27, 1999                     By:  /s/ Thomas A. Holland
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                                                 Thomas A. Holland
                                                 Executive Vice President and
                                                 Chief Financial Officer
                                                 (Principal Financial and
                                                 Accounting Officer)




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