SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 8-K

                                 CURRENT REPORT

         Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Date of Report: August 28, 1997



                      CORNERSTONE REALTY INCOME TRUST, INC.
             (Exact name of registrant as specified in its charter)


  VIRGINIA                  0-23954                54-1589139
(State of                  (Commission            (IRS Employer
incorporation)              File Number)       Identification No.)


         306 EAST MAIN STREET
         RICHMOND, VIRGINIA                            23219
         (Address of principal                      (Zip Code)
          executive offices)



               Registrant's telephone number, including area code:
                                 (804) 643-1761


<PAGE>



                      CORNERSTONE REALTY INCOME TRUST, INC.

                                    FORM 8-K

                                      Index



Item 2.  Acquisition or Disposition of Assets

Item 7.  Financial Statements, Pro Forma Financial
         Information and Exhibits

         a.       Independent Auditors' Report
                    (Italian Village Apartments)*

                  Historical Statement of Income and
                    Direct Operating Expenses
                    (Italian Village Apartments)*


                  Note to Historical Statement of
                    Income and Direct Operating
                    Expenses (Italian Village Apartments)*

         b.       Independent Auditors' Report
                    (Villa Marina Apartments)*

                  Historical Statement of Income and
                    Direct Operating Expenses
                    (Villa Marina Apartments)*

                  Note to Historical Statement of
                    Income and Direct Operating
                    Expenses (Villa Marina Apartments)*

         c.       Pro Forma Statement of Operations for
                    the Six Months ended June 30, 1997
                    (unaudited)*

                  Pro Forma Balance Sheet as of
                    June 30, 1997 (unaudited)*

                  Pro Forma Statement of Operations
                    for the Year ended December 31, 1996
                    (unaudited)*




                                       -2-




----------
* To be filed by amendment.

<PAGE>

         d.       Exhibits

                      4.1        Line of Credit Agreement dated as of August 28,
                                 1997 by and among the Company as  Borrower  and
                                 First  Union  National  Bank as  Agent  for the
                                 Lenders

                      4.2        $30,000,000 Note made payable by the Company to
                                 the order of First Union National Bank

                      10.1       Purchase Contract for Italian Village and Villa
                                 Marina Apartments

                      23.1       Consent of Independent Auditors*

                      23.2       Consent of Independent Auditors*


                                       -3-




----------
* To be filed by amendment.

<PAGE>



Item 2.  Acquisition or Disposition of Assets

                   ITALIAN VILLAGE AND VILLA MARINA APARTMENTS
                            Charlotte, North Carolina


         On  August  28,  1997,  Cornerstone  Realty  Income  Trust,  Inc.  (the
"Company")  purchased the Italian Village Apartments ("Italian Village") and the
Villa Marina Apartments  ("Villa  Marina"),  comprising a total of 204 apartment
units located at 6060 Landmark Drive, Charlotte, North Carolina. Italian Village
and  Villa  Marina  are  sometimes  referred  to  herein   collectively  as  the
"Property".  The Company has renamed the Property the "Heatherwood  Apartments,"
and plans to operate the Property as an integrated  apartment community with the
Heatherwood  Apartments  (formerly  the Sterling  Chase  Apartments),  which are
located  adjacent to the  Property  and which were  purchased  by the Company in
September 1996.

         The single Seller  (Italian  Investment  Company,  a  partnership)  was
unaffiliated  with the Company and its  Affiliates.  The  purchase  price was an
aggregate of $7,425,000.  At closing, the Company paid the entire purchase price
with borrowed funds under its unsecured line of credit with First Union National
Bank.  Title to the  Property  was  conveyed to the Company by limited  warranty
deed.

         LOCATION.  The following  information is based in part upon information
provided by the Charlotte Chamber of Commerce.

         Based in part upon its fast rate of growth and a  diversified  economy,
Charlotte  has in recent  years  come to  national  attention  as an  attractive
location for business and residential growth. According to the August 1995, Site
Selection magazine,  Charlotte's  corporate  popularity ranked second nationally
only to Dallas  during the period  between 1990 and 1994,  being the site of 474
significant new and expanded facilities.

         Charlotte  has  developed  into a  major  financial,  distribution  and
transportation  center,  with a  metropolitan  population of  approximately  1.3
million and a population of approximately  5.6 million within a 100-mile radius.
Charlotte's growth is also attributable to its favorable  year-round  climate, a
moderate cost of living,  excellent  quality of life,  educated work force,  pro
business  political climate,  extensive  transportation  network,  and strategic
geographic location.


                                       -4-




<PAGE>



         According to the  Charlotte  Chamber of Commerce,  during the first six
months of 1995,  approximately  530 firms  announced new or expanded  businesses
which will provide  approximately 6,200 new jobs in the area.  Charlotte is home
to major  offices  of more  than 225 of the  Fortune  500  industrial  firms and
approximately 300 of the Fortune 500 service firms.

         Charlotte is the leading financial center of the Southeast,  serving as
corporate   headquarters  to  NationsBank  and  First  Union,   with  assets  of
approximately  $170  billion  and $124  billion,  respectively.  The  growth  of
Charlotte's  banking and financial  communities has had a positive effect on the
growth  of its  supporting  industries,  such as  insurance,  accounting,  legal
services, and real estate.  Another recent aspect of Charlotte's  development is
as the location of professional  basketball and football franchises known as the
Charlotte Hornets and the Carolina Panthers, respectively.

         The city of Charlotte is located near the border of North  Carolina and
South Carolina within  Mecklenburg  County. It is located at the intersection of
Interstates 77 and 85, the major north/south and east/west  thoroughfares in the
region, which provide convenient access to all other regional areas.

         Italian  Village  and Villa  Marina are  located in a  well-established
portion of the expanding Charlotte market. The surrounding neighborhood includes
both retail and  residential  development  and the  Property  enjoys  convenient
access to all major areas of the city.  As noted above,  the  Property  shares a
common property line with the Heatherwood  Apartments acquired by the Company in
1996 (under the name  Sterling  Chase),  and the Company  intends to operate all
three  properties as an  integrated  apartment  community.  The  properties  are
adjacent to Providence  Square Shopping  Center,  which features a Harris Teeter
and  Eckerdt  Drug Store,  and are readily  accessible  from  Interstate  85 and
Interstate  77.  The  Property  is  located  approximately  four  miles from the
SouthPark  Mall area and  approximately  seven miles from the Charlotte  central
business district via Providence Road.

         DESCRIPTION OF THE PROPERTY. Italian Village was built in 1970 and 1971
and consists of 156 garden- and townhouse-style apartments on approximately 22.5
acres of land.  Italian Village offers eight unit types.  The unit mix and rents
currently being charged to new tenants are as follows.


                                       -5-




<PAGE>




                                              APPROXIMATE
                                               INTERIOR                 MONTHLY
QUANTITY            TYPE                    SQUARE FOOTAGE              RENTAL

   20          One bedroom, one bath              728                    $510
   7           One bedroom, one bath              950                     500
               (large)
   7           Two bedrooms, one                1,000                     550
               bath
   15          Two bedrooms, two                1,060                     610
               baths
   18          Two bedrooms, one and            1,116                     610
               one half baths
               (townhouse)
   20          Three bedrooms, two              1,235                     710
               baths
   52          Three bedrooms, two              1,578                     710
               and one half baths
               (townhouse)
   17          Four bedrooms, two               1,992                     870
               and one half baths
               (townhouse)


         Villa  Marina  was  built  in  1980.   Villa  Marina   consists  of  48
garden-style  apartments on approximately  four acres. It offers two unit types.
The unit types and rents currently being charged new tenants are as follows.


                                            APPROXIMATE
                                             INTERIOR                   MONTHLY
QUANTITY                TYPE              SQUARE FOOTAGE                RENTAL

   36          One bedroom, one bath            700                      $510
   12          Two bedrooms, two              1,000                       610
               baths


         The units at the Property provide for a combined total of approximately
242,000 square feet of net rentable area. The

                                       -6-




<PAGE>



Property  features  two outdoor  swimming  pools,  a tennis  court and a laundry
facility.  There  are also two  lakes  and a  playground  on the  Property.  The
Property has a clubhouse with a kitchen,  fireplace and leasing office. There is
ample paved parking for tenants.

         The  Company  believes  that  the  Property  has  generally  been  well
maintained  and is in good  condition.  However,  the Company  believes that the
Property is in need of a "face-lift." The Property has a desirable location but,
in the opinion of management,  must be repositioned in the marketplace following
significant  capital  improvements.  Management of the Company believes that the
completion of the capital  improvements and repositioning of the Property in the
market will permit  substantial  increases  in rents.  The Company has  budgeted
approximately  $1,750,000 in  renovations  to the  Property,  which will include
residing,  roof  replacement,  replacing and  repainting  trim and fascia board,
repaving  of the  parking  areas,  extensive  interior  upgrades  and  clubhouse
renovations.

         Leases at the  Property  are for terms of one year or less.  Generally,
rental  rates for the past five  years at the  Property  have  increased.  As an
example,  a two bedroom,  one and one-half bath (1,116 square feet) apartment at
Italian  Village rented for $455 in 1992,  $460 in 1993,  $495 in 1994,  $520 in
1995, and $545 in 1996. The average  effective  annual rental per square foot at
Italian Village for 1992, 1993, 1994,  1995, and 1996 was $4.53,  $4.58,  $4.93,
$5.18,  and  $5.43  respectively.  A one  bedroom,  one bath (700  square  feet)
apartment at Villa Marina rented for $400 in 1992,  $405 in 1993,  $415 in 1994,
$425 in 1995, and $435 in 1996. The average  effective  annual rental per square
foot at Villa Marina for 1992,  1993,  1994,  1995,  and 1996 was $6.50,  $6.58,
$6.75, $6.91, and $7.07, respectively.

         The 18 two- and  three-story  buildings at Italian Village are concrete
masonry and wood-frame  construction on concrete slabs. The exteriors are stucco
on  concrete  masonry or painted  wood  siding and the roofs  consist of plywood
sheathing  and three tab  shingles.  The three  three-story  buildings  at Villa
Marina are wood-frame with painted  masonite  siding.  The roofs at Villa Marina
consist of plywood sheathing and three tab shingles.

         All apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually  controlled  heating and air conditioning unit. Each
kitchen  is  equipped  with a  refrigerator/freezer,  electric  range  and oven,
dishwasher  and garbage  disposal.  Selected  units at Italian  Village  feature
vaulted ceilings, skylights, wet bars and large

                                       -7-




<PAGE>



balconies or decks.  Selected units at Villa Marina include fireplaces and large
balconies.  The owner of the Property  supplies  cold water,  sewer  service and
trash  removal.  The tenants are  responsible  for  electricity,  which includes
heating, air conditioning, hot water, cooking and lights.

         There are at least five  apartment  properties in the area that compete
with the Property.  As noted above, in 1996, the Company  purchased the Sterling
Chase  Apartments,  located  adjacent to Italian  Village and Villa Marina.  The
Company  intends to operate  all three  apartment  properties  as an  integrated
apartment community known as Heatherwood. The other properties that will compete
with  Heatherwood  offer similar  amenities  and  generally  have rents that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Company  estimates  that  occupancy  in nearby  competing  projects now averages
approximately 93%.

         According to information provided by the seller,  physical occupancy at
Italian  Village and Villa Marina  averaged  approximately  93% in 1992,  94% in
1993,  94% in 1994,  94% in 1995,  and 96% in 1996.  On  August  20,  1997,  the
Property was 93% occupied.  The tenants of the Property are a mix of blue-collar
and white-collar workers, students and retired persons. Of the tenants for which
financial  information  was  available,  the tenants were  approximately  evenly
divided among the following four income levels:  below $20,000;  between $20,000
and $30,000;  between $30,000 and $40,000; and in excess of $40,000.  Management
of the Company  believes that the resident profile is somewhat below that of the
general market area.

         The following tables set forth 1996 real estate tax information for the
Property.


                                       -8-




<PAGE>




ITALIAN VILLAGE


            ASSET               VALUE              TAX              TAX
                                                  RATE
Land                         $1,074,760.00      $1.2550         $13,488.24
Buildings                     3,560,490.00       1.2550          44,684.15
Other features                   44,980.00       1.2550             564.50
                                 ---------                          ------
   Total                     $4,680,230.00                      $58,736.89
                             =============                      ==========
        Solid Waste Fee:                                         $5,148.00
        TOTAL TAX:                                              $63,884.89
                                                                ==========



VILLA MARINA


            ASSET               VALUE              TAX              TAX
                                                  RATE
Land                           $337,680.00      $1.2550          $4,237.88
Buildings                       978,320.00       1.2550          12,277.92
Other features                   56,570.00       1.2550             709.95
                                 ---------                          ------
   Total                     $1,372,570.00                      $17,225.75
                             =============                      ==========
        Solid Waste Fee:                                         $1,617.00
        TOTAL TAX:                                              $18,842.75
                                                                ==========


         The  Company  believes  that the  Property  is and will  continue to be
adequately covered by property and liability insurance.

         Material  Factors  Considered in Assessing  the  Property.  The factors
considered  by the  Company  to be  relevant  in  evaluating  the  Property  for
acquisition by the Company included the following:

         1.  The Company believes that the Charlotte, North Carolina
area will experience continued strong economic development and
steady population increase, and that such development and

                                       -9-




<PAGE>



increase will support stable  occupancy rates and reasonable  increases in rents
at the Property.

         2.  Based  upon an  engineering  report  and its own  inspections,  the
Company believes that the Property is in generally sound condition. In addition,
the Company  believes  that the  completion of its planned  significant  capital
improvements  will  reposition  the  Property  in  its  marketplace  and  permit
significant increases in rental rates to prevailing market levels.

         3.  The Property is conveniently located and proximate to
major employers and shopping.

         4. The Company is very familiar with the Charlotte  rental market.  The
Company already owns other apartment  complexes in the Charlotte area, which may
provide  certain  economies  and  efficiency in operation.  In  particular,  the
Company already owns an apartment community located immediately  adjacent to the
Property.  The Company  believes that the knowledge it has obtained  through the
prior  operation  of  the  adjacent  property  will  provide  advantages  in the
operation  of the new Property  and that the  operation of all of the  apartment
properties as an integrated  community will offer  operational,  advertising and
marketing advantages.

         The Company is not aware of any material  adverse  factors  relating to
the  Property  not set forth in this  report  that  would  cause  the  financial
information contained in this report not to be necessarily  indicative of future
operating results.




                                      -10-




<PAGE>




                                   ITEM 7.a.*




----------
* To be filed by amendment.  It is  impracticable to include herein the required
financial statements for Italian Village. The required financial statements will
be filed as an  amendment  to this report as soon as  possible,  but in no event
more than 60 days after the date of filing of this report.




                                      -11-




<PAGE>







                                   ITEM 7.b.*




----------
* To be filed by amendment.  It is  impracticable to include herein the required
financial statements for Villa Marina. The required financial statements will be
filed as an amendment  to this report as soon as possible,  but in no event more
than 60 days after the date of filing of this report.




                                      -12-




<PAGE>







                                   ITEM 7.c.*




----------
* To be filed by amendment.  It is  impracticable to include herein the required
pro forma financial  information.  The required pro forma financial  information
will be filed as an  amendment  to this  report as soon as  possible,  but in no
event more than 60 days after the date of filing of this report.

                                      -13-




<PAGE>





                                   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.


                                           Cornerstone Realty Income Trust, Inc.


Date: August 11, 1997                             By:/s/ Stanley J. Olander, Jr.
                                                     ---------------------------
                                                       Stanley J. Olander, Jr.,
                                                       Chief Financial Officer
                                                       of Cornerstone Realty
                                                       Income Trust, Inc.

                                      -14-




<PAGE>



                                  EXHIBIT INDEX

                         Cornerstone Realty Income Trust
                         Form 8-K dated August 28, 1997


EXHIBIT NUMBER      EXHIBIT                                          
--------------      -------                                          


         4.1        Line of Credit Agreement dated as of August
                    28, 1997 by and among the Company as
                    Borrower and First Union National Bank as
                    Agent for the Lenders

         4.2        $30,000,000 Note made payable by the
                    Company to the order of First Union
                    National Bank


         10.1       Purchase Contract for
                    Italian Village and Villa Marina Apartments


         23.1       Consent of Independent Auditors*

         23.2       Consent of Independent Auditors*


----------
* To be filed by amendment.



                                      -15-
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SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

         Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Date of Report: August 28, 1997

                      CORNERSTONE REALTY INCOME TRUST, INC.
             (Exact name of registrant as specified in its charter)

  VIRGINIA                  0-23954                54-1589139
(State of                  (Commission            (IRS Employer
incorporation)              File Number)       Identification No.)

         306 EAST MAIN STREET
         RICHMOND, VIRGINIA                            23219
         (Address of principal                      (Zip Code)
          executive offices)

               Registrant's telephone number, including area code:
                                 (804) 643-1761
CORNERSTONE REALTY INCOME TRUST, INC.

                                    FORM 8-K

                                      Index

Item 2.  Acquisition or Disposition of Assets

Item 7.  Financial Statements, Pro Forma Financial
         Information and Exhibits

         a.       Independent Auditors' Report
                    (Italian Village Apartments)*

                  Historical Statement of Income and
                    Direct Operating Expenses
                    (Italian Village Apartments)*

                  Note to Historical Statement of
                    Income and Direct Operating
                    Expenses (Italian Village Apartments)*

         b.       Independent Auditors' Report
                    (Villa Marina Apartments)*

                  Historical Statement of Income and
                    Direct Operating Expenses
                    (Villa Marina Apartments)*

                  Note to Historical Statement of
                    Income and Direct Operating
                    Expenses (Villa Marina Apartments)*

         c.       Pro Forma Statement of Operations for
                    the Six Months ended June 30, 1997
                    (unaudited)*

                  Pro Forma Balance Sheet as of
                    June 30, 1997 (unaudited)*

                  Pro Forma Statement of Operations
                    for the Year ended December 31, 1996
                    (unaudited)*

                                       -2-

----------
* To be filed by amendment.
d.       Exhibits

                      4.1        Line of Credit Agreement dated as of August 28,
                                 1997 by and among the Company as  Borrower  and
                                 First  Union  National  Bank as  Agent  for the
                                 Lenders

                      4.2        $30,000,000 Note made payable by the Company to
                                 the order of First Union National Bank

                      10.1       Purchase Contract for Italian Village and Villa
                                 Marina Apartments

                      23.1       Consent of Independent Auditors*

                      23.2       Consent of Independent Auditors*

                                       -3-

----------
* To be filed by amendment.
Item 2.  Acquisition or Disposition of Assets

                   ITALIAN VILLAGE AND VILLA MARINA APARTMENTS
                            Charlotte, North Carolina

         On  August  28,  1997,  Cornerstone  Realty  Income  Trust,  Inc.  (the
"Company")  purchased the Italian Village Apartments ("Italian Village") and the
Villa Marina Apartments  ("Villa  Marina"),  comprising a total of 204 apartment
units located at 6060 Landmark Drive, Charlotte, North Carolina. Italian Village
and  Villa  Marina  are  sometimes  referred  to  herein   collectively  as  the
"Property".  The Company has renamed the Property the "Heatherwood  Apartments,"
and plans to operate the Property as an integrated  apartment community with the
Heatherwood  Apartments  (formerly  the Sterling  Chase  Apartments),  which are
located  adjacent to the  Property  and which were  purchased  by the Company in
September 1996.

         The single Seller  (Italian  Investment  Company,  a  partnership)  was
unaffiliated  with the Company and its  Affiliates.  The  purchase  price was an
aggregate of $7,425,000.  At closing, the Company paid the entire purchase price
with borrowed funds under its unsecured line of credit with First Union National
Bank.  Title to the  Property  was  conveyed to the Company by limited  warranty
deed.

         LOCATION.  The following  information is based in part upon information
provided by the Charlotte Chamber of Commerce.

         Based in part upon its fast rate of growth and a  diversified  economy,
Charlotte  has in recent  years  come to  national  attention  as an  attractive
location for business and residential growth. According to the August 1995, Site
Selection magazine,  Charlotte's  corporate  popularity ranked second nationally
only to Dallas  during the period  between 1990 and 1994,  being the site of 474
significant new and expanded facilities.

         Charlotte  has  developed  into a  major  financial,  distribution  and
transportation  center,  with a  metropolitan  population of  approximately  1.3
million and a population of approximately  5.6 million within a 100-mile radius.
Charlotte's growth is also attributable to its favorable  year-round  climate, a
moderate cost of living,  excellent  quality of life,  educated work force,  pro
business  political climate,  extensive  transportation  network,  and strategic
geographic location.

                                       -4-
According to the  Charlotte  Chamber of Commerce,  during the first six
months of 1995,  approximately  530 firms  announced new or expanded  businesses
which will provide  approximately 6,200 new jobs in the area.  Charlotte is home
to major  offices  of more  than 225 of the  Fortune  500  industrial  firms and
approximately 300 of the Fortune 500 service firms.

         Charlotte is the leading financial center of the Southeast,  serving as
corporate   headquarters  to  NationsBank  and  First  Union,   with  assets  of
approximately  $170  billion  and $124  billion,  respectively.  The  growth  of
Charlotte's  banking and financial  communities has had a positive effect on the
growth  of its  supporting  industries,  such as  insurance,  accounting,  legal
services, and real estate.  Another recent aspect of Charlotte's  development is
as the location of professional  basketball and football franchises known as the
Charlotte Hornets and the Carolina Panthers, respectively.

         The city of Charlotte is located near the border of North  Carolina and
South Carolina within  Mecklenburg  County. It is located at the intersection of
Interstates 77 and 85, the major north/south and east/west  thoroughfares in the
region, which provide convenient access to all other regional areas.

         Italian  Village  and Villa  Marina are  located in a  well-established
portion of the expanding Charlotte market. The surrounding neighborhood includes
both retail and  residential  development  and the  Property  enjoys  convenient
access to all major areas of the city.  As noted above,  the  Property  shares a
common property line with the Heatherwood  Apartments acquired by the Company in
1996 (under the name  Sterling  Chase),  and the Company  intends to operate all
three  properties as an  integrated  apartment  community.  The  properties  are
adjacent to Providence  Square Shopping  Center,  which features a Harris Teeter
and  Eckerdt  Drug Store,  and are readily  accessible  from  Interstate  85 and
Interstate  77.  The  Property  is  located  approximately  four  miles from the
SouthPark  Mall area and  approximately  seven miles from the Charlotte  central
business district via Providence Road.

         DESCRIPTION OF THE PROPERTY. Italian Village was built in 1970 and 1971
and consists of 156 garden- and townhouse-style apartments on approximately 22.5
acres of land.  Italian Village offers eight unit types.  The unit mix and rents
currently being charged to new tenants are as follows.

                                       -5-
APPROXIMATE
                                               INTERIOR                 MONTHLY
QUANTITY            TYPE                    SQUARE FOOTAGE              RENTAL

   20          One bedroom, one bath              728                    $510
   7           One bedroom, one bath              950                     500
               (large)
   7           Two bedrooms, one                1,000                     550
               bath
   15          Two bedrooms, two                1,060                     610
               baths
   18          Two bedrooms, one and            1,116                     610
               one half baths
               (townhouse)
   20          Three bedrooms, two              1,235                     710
               baths
   52          Three bedrooms, two              1,578                     710
               and one half baths
               (townhouse)
   17          Four bedrooms, two               1,992                     870
               and one half baths
               (townhouse)

         Villa  Marina  was  built  in  1980.   Villa  Marina   consists  of  48
garden-style  apartments on approximately  four acres. It offers two unit types.
The unit types and rents currently being charged new tenants are as follows.

                                            APPROXIMATE
                                             INTERIOR                   MONTHLY
QUANTITY                TYPE              SQUARE FOOTAGE                RENTAL

   36          One bedroom, one bath            700                      $510
   12          Two bedrooms, two              1,000                       610
               baths

         The units at the Property provide for a combined total of approximately
242,000 square feet of net rentable area. The

                                       -6-
Property  features  two outdoor  swimming  pools,  a tennis  court and a laundry
facility.  There  are also two  lakes  and a  playground  on the  Property.  The
Property has a clubhouse with a kitchen,  fireplace and leasing office. There is
ample paved parking for tenants.

         The  Company  believes  that  the  Property  has  generally  been  well
maintained  and is in good  condition.  However,  the Company  believes that the
Property is in need of a "face-lift." The Property has a desirable location but,
in the opinion of management,  must be repositioned in the marketplace following
significant  capital  improvements.  Management of the Company believes that the
completion of the capital  improvements and repositioning of the Property in the
market will permit  substantial  increases  in rents.  The Company has  budgeted
approximately  $1,750,000 in  renovations  to the  Property,  which will include
residing,  roof  replacement,  replacing and  repainting  trim and fascia board,
repaving  of the  parking  areas,  extensive  interior  upgrades  and  clubhouse
renovations.

         Leases at the  Property  are for terms of one year or less.  Generally,
rental  rates for the past five  years at the  Property  have  increased.  As an
example,  a two bedroom,  one and one-half bath (1,116 square feet) apartment at
Italian  Village rented for $455 in 1992,  $460 in 1993,  $495 in 1994,  $520 in
1995, and $545 in 1996. The average  effective  annual rental per square foot at
Italian Village for 1992, 1993, 1994,  1995, and 1996 was $4.53,  $4.58,  $4.93,
$5.18,  and  $5.43  respectively.  A one  bedroom,  one bath (700  square  feet)
apartment at Villa Marina rented for $400 in 1992,  $405 in 1993,  $415 in 1994,
$425 in 1995, and $435 in 1996. The average  effective  annual rental per square
foot at Villa Marina for 1992,  1993,  1994,  1995,  and 1996 was $6.50,  $6.58,
$6.75, $6.91, and $7.07, respectively.

         The 18 two- and  three-story  buildings at Italian Village are concrete
masonry and wood-frame  construction on concrete slabs. The exteriors are stucco
on  concrete  masonry or painted  wood  siding and the roofs  consist of plywood
sheathing  and three tab  shingles.  The three  three-story  buildings  at Villa
Marina are wood-frame with painted  masonite  siding.  The roofs at Villa Marina
consist of plywood sheathing and three tab shingles.

         All apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually  controlled  heating and air conditioning unit. Each
kitchen  is  equipped  with a  refrigerator/freezer,  electric  range  and oven,
dishwasher  and garbage  disposal.  Selected  units at Italian  Village  feature
vaulted ceilings, skylights, wet bars and large

                                       -7-
balconies or decks.  Selected units at Villa Marina include fireplaces and large
balconies.  The owner of the Property  supplies  cold water,  sewer  service and
trash  removal.  The tenants are  responsible  for  electricity,  which includes
heating, air conditioning, hot water, cooking and lights.

         There are at least five  apartment  properties in the area that compete
with the Property.  As noted above, in 1996, the Company  purchased the Sterling
Chase  Apartments,  located  adjacent to Italian  Village and Villa Marina.  The
Company  intends to operate  all three  apartment  properties  as an  integrated
apartment community known as Heatherwood. The other properties that will compete
with  Heatherwood  offer similar  amenities  and  generally  have rents that are
comparable to those of the Property.  Based on a recent  telephone  survey,  the
Company  estimates  that  occupancy  in nearby  competing  projects now averages
approximately 93%.

         According to information provided by the seller,  physical occupancy at
Italian  Village and Villa Marina  averaged  approximately  93% in 1992,  94% in
1993,  94% in 1994,  94% in 1995,  and 96% in 1996.  On  August  20,  1997,  the
Property was 93% occupied.  The tenants of the Property are a mix of blue-collar
and white-collar workers, students and retired persons. Of the tenants for which
financial  information  was  available,  the tenants were  approximately  evenly
divided among the following four income levels:  below $20,000;  between $20,000
and $30,000;  between $30,000 and $40,000; and in excess of $40,000.  Management
of the Company  believes that the resident profile is somewhat below that of the
general market area.

         The following tables set forth 1996 real estate tax information for the
Property.

                                       -8-
ITALIAN VILLAGE

            ASSET               VALUE              TAX              TAX
                                                  RATE
Land                         $1,074,760.00      $1.2550         $13,488.24
Buildings                     3,560,490.00       1.2550          44,684.15
Other features                   44,980.00       1.2550             564.50
                                 ---------                          ------
   Total                     $4,680,230.00                      $58,736.89
                             =============                      ==========
        Solid Waste Fee:                                         $5,148.00
        TOTAL TAX:                                              $63,884.89
                                                                ==========

VILLA MARINA

            ASSET               VALUE              TAX              TAX
                                                  RATE
Land                           $337,680.00      $1.2550          $4,237.88
Buildings                       978,320.00       1.2550          12,277.92
Other features                   56,570.00       1.2550             709.95
                                 ---------                          ------
   Total                     $1,372,570.00                      $17,225.75
                             =============                      ==========
        Solid Waste Fee:                                         $1,617.00
        TOTAL TAX:                                              $18,842.75
                                                                ==========

         The  Company  believes  that the  Property  is and will  continue to be
adequately covered by property and liability insurance.

         Material  Factors  Considered in Assessing  the  Property.  The factors
considered  by the  Company  to be  relevant  in  evaluating  the  Property  for
acquisition by the Company included the following:

         1.  The Company believes that the Charlotte, North Carolina
area will experience continued strong economic development and
steady population increase, and that such development and

                                       -9-
increase will support stable  occupancy rates and reasonable  increases in rents
at the Property.

         2.  Based  upon an  engineering  report  and its own  inspections,  the
Company believes that the Property is in generally sound condition. In addition,
the Company  believes  that the  completion of its planned  significant  capital
improvements  will  reposition  the  Property  in  its  marketplace  and  permit
significant increases in rental rates to prevailing market levels.

         3.  The Property is conveniently located and proximate to
major employers and shopping.

         4. The Company is very familiar with the Charlotte  rental market.  The
Company already owns other apartment  complexes in the Charlotte area, which may
provide  certain  economies  and  efficiency in operation.  In  particular,  the
Company already owns an apartment community located immediately  adjacent to the
Property.  The Company  believes that the knowledge it has obtained  through the
prior  operation  of  the  adjacent  property  will  provide  advantages  in the
operation  of the new Property  and that the  operation of all of the  apartment
properties as an integrated  community will offer  operational,  advertising and
marketing advantages.

         The Company is not aware of any material  adverse  factors  relating to
the  Property  not set forth in this  report  that  would  cause  the  financial
information contained in this report not to be necessarily  indicative of future
operating results.

                                      -10-
ITEM 7.a.*

----------
* To be filed by amendment.  It is  impracticable to include herein the required
financial statements for Italian Village. The required financial statements will
be filed as an  amendment  to this report as soon as  possible,  but in no event
more than 60 days after the date of filing of this report.

                                      -11-
ITEM 7.b.*

----------
* To be filed by amendment.  It is  impracticable to include herein the required
financial statements for Villa Marina. The required financial statements will be
filed as an amendment  to this report as soon as possible,  but in no event more
than 60 days after the date of filing of this report.

                                      -12-
ITEM 7.c.*

----------
* To be filed by amendment.  It is  impracticable to include herein the required
pro forma financial  information.  The required pro forma financial  information
will be filed as an  amendment  to this  report as soon as  possible,  but in no
event more than 60 days after the date of filing of this report.

                                      -13-
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.

                                           Cornerstone Realty Income Trust, Inc.

Date: August 11, 1997                             By:/s/ Stanley J. Olander, Jr.
                                                     ---------------------------
                                                       Stanley J. Olander, Jr.,
                                                       Chief Financial Officer
                                                       of Cornerstone Realty
                                                       Income Trust, Inc.

                                      -14-
EXHIBIT INDEX

                         Cornerstone Realty Income Trust
                         Form 8-K dated August 28, 1997

EXHIBIT NUMBER      EXHIBIT                                          
--------------      -------                                          

         4.1        Line of Credit Agreement dated as of August
                    28, 1997 by and among the Company as
                    Borrower and First Union National Bank as
                    Agent for the Lenders

         4.2        $30,000,000 Note made payable by the
                    Company to the order of First Union
                    National Bank

         10.1       Purchase Contract for
                    Italian Village and Villa Marina Apartments

         23.1       Consent of Independent Auditors*

         23.2       Consent of Independent Auditors*

----------
* To be filed by amendment.

                                      -15-