SecProbe.io

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      January 14, 2005

Mail Stop 0409

Terry G. Roussel
President
Cornerstone Realty Fund, Inc.
4590 MacArthur Blvd., Suite 610
Newport Beach, California  92660

Re:	Cornerstone Realty Fund, Inc.
      Registration Statement on Form S-11 Filed December 14, 2004
      Registration No. 333-121238

Dear Mr. Roussel:

	We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

General

1. Supplementally, provide copies of market and industry data that
you cite or rely on in your filing.  These materials should be
appropriately marked, dated, and refer to the page number on which
they are cited.

2. Please supplementally provide us with copies of any graphics,
maps, photographs, and related captions or other artwork including
logos that you intend to use in the prospectus.  Such graphics and
pictorial representations should not be included in any
preliminary
prospectus distributed to prospective investors prior to our
review.

3. Please note that any sales literature that is to be used in
connection with this offering must be submitted to us
supplementally
prior to use, including sales literature intended for broker-
dealer
use only.  Please submit all written sales materials proposed to
be
transmitted to prospective investors, orally or in writing, with
your
next filing.  In this regard, note that sales materials must set
forth a balanced presentation of the risks and rewards to
investors
and should not contain any information or disclosure that is
inconsistent with or not also provided in the prospectus.  For
guidance, refer to Item 19.D of Industry Guide 5.

4. Refer to the disclosure concerning your share repurchase
program
on page 91.  Supplementally, please provide a detailed analysis
regarding the applicability of the tender offer rules to the share
repurchase program.  Refer to Rule 13e-4 and Regulation 14E of the
Exchange Act.

5. We note you use the term "Fund" as part of the corporation`s
name.
Please include disclosure on the cover page of the prospectus
clarifying that the corporation is not a mutual fund registered
under
the Investment Company Act of 1940.  We refer to the instructions
that accompany Item 501(b)(1) of Regulation S-K.

6. Please revise to include the information required by Item
502(b)
of Regulation S-K.

7. Please provide supplemental support for any comparative factual
assertions and for management`s belief in qualitative statements.
Clearly mark the location of the information you believe is
supportive of the statement referenced.  We note, for example,
your
statement on page 1 that Non-trade real estate companies have
historically demonstrated greater stability and lower overall
volatility than traded real estate companies.

8. Throughout the prospectus, please refrain from using the term
"dividends" since the payment of dividends implies the existence
of
current and accumulated earnings and profits.  Since the company
was
recently formed, there is no assurance it will have current or
accumulated earnings and profits.  Instead, please use the term
"distributions."

9. Please revise to include the information in Item 506 of
Regulation
S-K or tell us why you are not required to do so.

10. You indicate that prior to the effective date of this
prospectus,
your advisor and affiliates will have purchased 27,933 shares of
your
common stock for $200,000.  Supplementally, tell us which
exemption
you will rely upon for the sale of these unregistered securities
and
provide a brief description of the facts that support your use of
that exemption.  Further, supplementally provide us with your
analysis with respect to the potential for the integration of the
offer and sale of common stock to your advisor and affiliates and
the
public offering of common stock, including a discussion of any
relevant staff interpretations.  Please refer to Black Box
Incorporated (June 26, 1990) and Squadron, Ellenoff, Plesant &
Lehrer
(February 28, 1992).  We may have further comment.

11. Please provide the disclosure regarding promoters required by
Item 11 of Form S-11, including the information called for by Item
11(d) regarding the names of the promoters and indicate all
positions
and offices with the registrant now held or intended to be held by
each such promoter.  Alternatively, please tell us where you have
provided the disclosure naming your promoters.

Cover Page

12. The cover page risk factors should concisely highlight the
most
significant adverse effects related to the offering and should be
quantified to the extent possible.  Please revise to include the
following additional bullet-point risk factors on the cover page:
* risks associated with distribution payments, such as the risk
that
you may borrow funds, issue new securities or sell assets to make
distributions and the risk that distributions may be a return of
capital;
* limits on ownership, transferability and redemption of shares.

13. Please revise the seventh bullet point to include the
percentage
and associated dollar value that will be given to affiliates.

14. Please revise the cover page to state the percentage of
offering
proceeds that will be available for investments after payment of
fees
and expenses associated with the offering.

15. Please revise to delete the term "Pacific Cornerstone Capital,
Inc." at the bottom of this page. Please note that the current
placement of "Pacific Cornerstone Capital Inc." implies that this
is
a firm commitment underwritten offering.  In this regard, we note
your statement in the last paragraph.  See Item 501(b)(8) of
Regulation S-K.

16. Please revise to indicate the maximum percentage of gross
offering proceeds that you will pay for dealer manager fees and
commissions.

Questions and Answers About this Offering

17. Please be aware that we view the Question and Answer section
and
the summary section of the prospectus to be one section.  Your Q&A
section should not repeat any information that appears in the
summary, and vice versa.  To the extent there is repetitive text
in
these sections, please revise to eliminate the repetition.  We
note,
for example, that both sections contain information regarding
material terms of the offering, investment objectives, and your
special dividend.  Further, as written together, the Q&A and the
summary sections are lengthy and do not provide investors with a
clear, concise and coherent "snapshot" description of the most
significant aspects of the offering.  We note that much of the
summary is repeated in the body of the prospectus. Please revise
to
provide a brief overview of the salient aspects of the
transaction.
See Securities Act Release 33-6900 and Section 3 of Industry Guide
5.

18. We note that your Q&A includes a discussion of the advantages
of
investing in your company.  Please balance this disclosure with a
summary of the most significant risks associated with your company
and this offering.

19. What is a REIT?  Please remove the second bullet point, since
not
all REITs hold a large, diversified real estate portfolio.

20. Do you currently own any properties?   Please revise your
answer
or revised summary section to include a reference to the term
"blind
pool" offering.

21. Where will the properties you acquire be located?  We note
that
you generally seek to acquire properties in locations with
historically high levels of tenant demand.  Please expand your
disclosure to identify those geographic areas.

22. Will you use temporary acquisition debt financing to purchase
properties?  We note that during the offering period you may use
temporary debt financing to facilitate your acquisitions.  Please
revise to indicate whether you have any firm commitments for
financing from any financial institutions or other lenders.

23. Will you acquire properties in joint ventures?
Supplementally,
please tell us whether you may also hold properties through
tenant-
in-common interests.  If so, please expand your Q&A to briefly
describe the nature of such holdings.  Provide additional
disclosure
in the description of your investment objectives, beginning on
page
60.

24. How will you determine the amount of dividends to be paid?
Please revise the disclosure to clarify that 90% of your taxable
income may exceed your cash available for distribution.  Describe
how
you will fund those distributions in order to maintain your status
as
a REIT.  Clearly state that distributions paid in excess of
available
cash will constitute a return of capital.

25. Will you have a stock repurchase program?  Please revise to
indicate whether the investors will be subject to any fees in
connection with the stock repurchase program.

Prospectus Summary, page 12

	The Offering, page 12

26. You indicate that if you do not sell $1,000,000 of stock by a
certain date, you will terminate the offering and return all
subscribers` funds, plus interest.  Please clarify the time frame
within which you will return payment to investors.  Refer to the
requirements for transmitting payments under Rule 15c2-4.

27. Please revise to provide a comparison in percentages of the
securities being offered to the public and those issued or to be
issued to affiliated persons.

Our Advisor, page 13

28. Please revise to disclose that your officers and directors are
also officers and directors of the advisor.

      Investment Objectives, page 13

29. Clarify whether you will purchase vacant properties or only
properties with tenants already under contract.

Conflict of Interests, page 14

30. Please revise to quantify all fees and compensation.

Risk Factors, page 17

31. Many of your risk factor subheadings state a fact, or describe
some aspect of your business, rather than state a risk.  These
risk
factors convey the cause of concern, but not the effect.  This
requires the reader to infer the risk.  Please revise your
captions
to accurately convey the risks that relate to the facts you
present.
For example, but not limited to:

* Because this is an unspecified property offering...;

* The availability and timing of cash dividends is uncertain;

* We may borrow money for dividends to meet the REIT...;

* We may acquire properties from affiliates of our advisor in
transactions in which the price will not be the result of arm`s-
length negotiations; and

* You have limited control over changes in our policies and
operations.

32. Please avoid using generic conclusions such as "adversely
affected" and "negatively affected" when describing the risks`
effects.   Replace this, and similar language, with specific
disclosure of how you, your business, financial condition and
results
of operations would be affected by the facts you describe.

33. Some of your risk factors fail to specifically state the risks
that may flow from the facts and circumstances you describe.  For
example, under We may purchase properties from persons with whom
our
advisor or its affiliates have prior business relationships..., on
page 20 you fail to state the risks that will result from facts
you
describe.   Please review and revise each of your risk factors to
state the specific risk that will result from the facts you
describe.
Explain how the risk affects Cornerstone Realty or the securities
being offered.

34. To the extent possible, avoid generic risk factors.  For
example,
the risk described on page 28 that states "Real estate taxes may
increase resulting in our income being reduced" could apply to any
company because any company with real estate could be affected by
an
increase in property taxes.  If you wish to retain this risk
factor,
you must clearly explain how the specific risks apply to your
company.  Alternatively, delete these risks.

	Investment Risks, page 17

There is no public trading market for our stock, page 17

35. Please delete all mitigating language from risk factors such
as
"Although in the future, we may consider opportunities to
establish a
public securities market for our stock..."

36. Please revise to quantify the ownership restrictions imposed
by
your charter.

We may also borrow money for dividends to meet the REIT minimum
distribution requirement, page 19

37. Please revise to disclose that distributions in excess of
available cash will constitute a return of capital to
stockholders.
Provide similar disclosure in the summary.

      Our ability to retain key personnel..., page 19

38. We note that you depend to a significant degree upon
contributions of key personnel of your advisor.  Please revise
your
disclosure to identify the key personnel.

Risk Related to Conflict of Interest, page 19

Our advisor will face conflicts of interest relating to the
purchase
and leasing of properties, page 19

39. Please revise to quantify and briefly describe the "other
programs" sponsored by your advisor or its affiliates that are
currently raising offering proceeds.  Provide a more detailed
discussion in the conflict of interest section of your prospectus.

      We may acquire properties from affiliates of our
advisor...page
19

40. We note your statement that if the price of your properties
costs
you in excess of the cost and expenses to affiliates, then
substantial justification for such excess will exist.  To provide
depth to your risk factor, please revise to include an example of
such substantial justification.

41. Please revise to disclose whether you will use an independent
third party appraiser when acquiring property.

      Our adviser, its affiliates and our officers will face
competing demands..., page 20

42. Please revise to quantify the amount of time that your adviser
and its affiliates will dedicate to Cornerstone Realty.

Our adviser and its affiliates, including our officers and some of
our directors, will face conflicts of interest caused by
compensation
arrangements..., page 21

43. Some of the factors you have listed in the bullet points under
this risk factor appear to be risks that you have already
addressed
elsewhere in the risk factors section.  Please revise to delete
all
redundancies.  Also, consider combining this risk factor with the
similar risk factor on page 20.

      Risks Related to This Offering and Our Corporate Structure,
page 22

	The payment of the subordinated performance fee due upon
termination..., page 23

44. In order to give depth to your disclosure, revise to quantify
the
subordinated performance fee.

Your investment return may be reduced if we are required to
register
as an investment company..., page 24

45. Please revise your disclosure to explain why you believe you
may
be required to register as an investment company under the
Investment
Company Act of 1940.  Alternatively, delete this risk factor.

You may not be able to sell your stock under the proposed stock
repurchase program, page 25

46. You indicate that you will not adopt the proposed stock
repurchase program until completion of this offering unless you
receive an exemption from the SEC.  Please revise to provide a
description of the relief sought from the SEC.  Also, indicate
whether you have applied to the SEC for such relief.  If not, tell
us