SecProbe.io

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Michael McTiernan
Charito A. Mittelman
August 26, 2005

                                           VIA FEDERAL EXPRESS
Michael McTiernan
Charito A. Mittelman
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Re:  AEI Income & Growth Fund 26 LLC
     Registration Statement on Form SB-2
     File May 26, 2005
     Registration No. 333-125266

Dear Mr. McTiernan and Ms. Mittelman:

     This letter is in response to your letter dated August 7,
2005 conveying comments on the above-referenced registration
statement.  We are not filing Amendment No. 2 at this time
because we continue to await final response from state securities
regulators in approximately four states and from the NASD.  Some
of the responses contained in this letter represent that changes
will be made in the prospectus disclosure in Amendment No. 2 to
the Registration Statement.  With respect to those responses, we
acknowledge that the Commission may reserve final comment until
Amendment No. 2 is filed.

     We have repeated your comments below followed by the
supplemental response of the registrant.

General

  1. In response to previous comment 1, please revise the
     registration fee table and prospectus cover page to disclose
     the number of units being registered under the distribution
     reinvestment plan.

     We acknowledge your suggestion that the distribution
     reinvestment plan is a "different offering" and that the
     number of units offered under that plan should be
     categorized separate and discussed separately on the cover
     page.  Please understand, however, that this is not the type
     of distribution reinvestment plan offered by REITS and
     commonly registered with your branch.  This is not a
     continuous offering that continues after the primary
     offering is terminated.

     In reality, the distribution reinvestment plan in this
     registration is not a different offering.  Although
     characterized as a "distribution reinvestment plan" at the
     insistence of state securities administrators so that it can
     be scrutinized for compliance with the NASAA Guidelines
     relating to such plans, it is in fact only a convenient
     manner of making additional investment in the primary
     offering after the purchaser has met the minimum investment
     requirement.

     Because this is a tax flow-through entity (unlike a REIT,
     which is a tax offset entity), it is extremely awkward, and
     requires revaluation and reallocation of capital accounts,
     to continue to offer units in a limited liability company or
     limited partnership after the initial offering period.
     Because this would require the application of considerable
     judgment, units are not offered through distribution
     reinvestment after the offering expires.

     The distributions during the initial offering period consist
     primarily of portfolio income on short-term investments and
     rental income for a short period of time. The amount of
     these distributions is small and the reinvestment is a very
     minor part of the capital raised by the company.  For the
     most recently completed offering, AEI Income & Growth Fund
     25 LLC, only $571,439 of the $42,539,763 raised was derived
     from cash that would have otherwise have been distributed.

     We believe that where the reinvestments are small and the
     ability to apply them to repurchase is a convenience offered
     to investors to allow them to compound earnings on the short-
     term investments, and where the use of these distributions
     to purchase units is restricted solely to the offering
     period, it would be more confusing than helpful to investors
     to separately describe the reinvestments as a "plan"
     prominently on the cover.

  2. We note your response to previous comment 3.  Please be
     advised that you are responsible for analyzing the
     applicability of the tender offer rules to your share
     repurchase plan and determining the availability of any
     exemption under Rule 13e-4 and regulation 14E.  We are not
     taking a position on the conclusions described in your
     response and urge you to consider all the elements of your
     share repurchase program in determining whether the program
     is consistent with relief granted by the Division of
     Corporation Finance in prior no action letters

     On behalf of the registrant, we acknowledge your response
     and the registrant's responsibility for compliance with Rule
     13E-4 and regulation 14E.

  3. We note your response to comment 10.  Please relocate the
     "Who May Invest" section to immediately after the cover page.
     Refer to Item 2 of Guide 5.

     In response to your comment, the "Who May Invest' section of
     the prospectus will be moved in amendment No. 2 to the
     Registration Statement to immediately follow the cover page
     (prior to the current table of contents).

  4. We note your response to comment 6.  We may have
     additional comments once we have received and reviewed
     copies of the referenced reports.

     Please accept our apologies for omitting these materials
     from prior correspondence.  The supportive materials were
     submitted by letter of the undersigned dated as of August
     10, 2005.

  Estimated Use of Proceeds, page 13

  5. The amount of expenses disclosed in the table appear to be
     inconsistent with the amount disclosed in the compensation
     table on page 27.  Please revise to confirm.

     We acknowledge your comment and believe that the disclosure
     in the use of proceeds table may have become confusing when
     footnote disclosure was deleted to render the table
     consistent with the plain English rules.  Please know that
     the compensation table on page 27 of the prospectus
     discloses compensation to broker-dealers participating in
     the selling group as dealers, through AEI Securities Inc. as
     dealer-manager, totaling 10.5% of offering proceeds, but
     that only 10% of such compensation is fixed:  the .5% of
     proceeds due diligence expense reimbursement is
     "accountable" and is paid only upon invoice from a broker
     dealer.  It is therefore included in "other offering
     expenses" rather than in selling commission and
     nonaccountable expense reimbursements on page 13.

     In response to your comment, the prospectus will be revised
     in Amendment No. 2 to the Registration Statement to add a
     paragraph immediately following the use of proceeds table on
     page 13 that reads as follows:

            "Other offering expenses shown in the table above
       include an accountable expense reimbursement to
       participating dealers of up to .5% of offering proceeds,
       federal and state registration fees, accountant's fees
       and fees of counsel, printing costs, and personnel costs
       of the managing member for coordinating the admission of
       members, the processing of subscriptions, and other
       investor relations matters. Other offering costs also
       includes, to the extent that total other offering costs
       is less than 5% of offering proceeds, an organizational
       fee to the managing member equal to 1.5% of offering
       proceeds."

  Financial Statements

  6. Please continue to monitor the updating requirements of
     Rule 310(g) of Regulation S-B

     Your comment is acknowledged and the registrant will
     continue to monitor the effectiveness of the registration
     statement and the requirement to update financial
     information.

  7. Financial Statement Presentation, page 50.

       We have reviewed your response to comment 18.  Since the
       scope of EITF 04-5 is limited to entities that are not
       variable interest entities under FIN 46(R), please
       further expand your response to clarify your
       consideration of FIN 46(R).  Please also consider
       disclosing the basis of your consolidation policy and the
       early adoption of EITF 04-5 within your financial
       statements.

       We acknowledge your comment and appreciate the ability to
       speak with Mr. Flinn regarding this comment.  Please note
       that we do not believe the accounting literature related
       to variable interest entities is in any way inconsistent
       with SOP 78-9 and the accounting treatment afforded
       investments by AEI Fund Management XXI, Inc. as managing
       partner or managing member of real estate programs.
       Please know that each of the real estate programs listed
       under the caption  "Organization" in footnote 1 to the
       financial statements of AEI Fund Management XXI, Inc. was
       a publicly offered real estate program with a structure
       substantially identical to AEI Income & Growth Fund 26
       LLC.  Each program raised cash through a public offering
       of units of limited partnership, or limited liability
       company interest and invested that cash, without
       leverage, in commercial real estate triple net leased by
       recognized tenants in the restaurant or retail industry
       at the time of purchase under long-term leases.  None of
       the programs employed any leverage and the general
       partner/managing member guaranteed none of the
       obligations of the programs.  Each of the programs has a
       partnership or operating agreement that provides the
       equity holders with democracy rights (the right to vote)
       substantially similar to those provided shareholders in a
       corporation.  Limited partners or limited members have
       the right, by majority vote, among other things, (1) to
       amend the partnership or operating agreement; (2) to
       remove the managing partner or managing member and to
       elect a new managing member or managing partner; (3) to
       approve or disapprove a sale of substantially all of the
       assets of the program; and (4) to dissolve the program.

       We do not believe that any of these investment programs
       is a variable interest entity.  We believe that it is
       indisputable that the total equity investment at risk in
       these programs far exceeds the expected losses from the
       entity and is ample to permit the entities to finance
       their operations.  In fact, these entities do not incur
       substantial operating expenses and uniformly generate
       rental income that far exceeds any operating expense,
       even absent borrowings. The 15 public programs that these
       entities and their affiliates have sponsored have
       generated net distributions in virtually every quarter of
       operations from rental income (or portfolio income in
       early stages).  Bank financing for the millions of
       dollars of unencumbered commercial properties owned by
       the programs is always available, but never used.
       Indeed, the balance sheets of these entities are cleaner
       and include proportionately more unencumbered and readily
       financeable assets than what we suggest most of the
       corporate entities that file with the Commission possess.
       All of the investments by all of the equity investors are
       for cash: neither the managing member or partner, nor any
       limited member or partner, contributes fees or services,
       or interests in another entity, for its equity
       investment.  None of the investments in the entity are
       financed by the entities or by AEI Fund Management XXI,
       Inc. Further, as outlined above, the investors have (1)
       substantial voting rights, (2) have placed at risk their
       entire investment in the entity with no guarantee or
       surety of return of investment, and (3) have the right to
       receive residual returns on their investment (there is no
       cap on the residual return of either the limited, or the
       managing, member or partners in these entities).

       Please know that AEI Fund Management XXI, Inc. did not
       early adopt EITF 2004-5.  AEI Fund Management XXI, Inc.
       has accounted for these investments on the equity method,
       and each of the affiliates that have sponsored public
       programs since 1984 have accounted for these investments
       on the equity method, since 1984.  The managing member
       believes this accounting is, and always has been, the
       method required under SOP 78-9.  The managing member also
       believes that EITF 2004-5 is simply supportive of this
       conclusion.  Indeed, the managing members believe the
       discussion of kick-out rights in EITF 2004-5 is wholly
       consistent with the discussion of voting privileges in
       paragraph 5(b) of FIN 46(R).  Finally, as discussed with
       Mr. Flinn, the managing members believe that the basis of
       the consolidation is presented as required--the footnote
       relating to financial statement presentation indicates
       that the company accounts for the investments on the
       equity method.  The managing member does not believe that
       a discussion of the individual attributes of the
       underlying programs to support a conclusion that these
       are not variable interest entities, or entities that
       possess "kickout rights," would be helpful to the reader
       and instead respectfully suggest that they would be
       confusing.

  Sales Literature

  Broker Fact Sheet

  8.  Since the Fund will not be listed and is not a REIT, the
      returns of the NAREIT Index are not an appropriate indicator
      of performance or volatility.  In addition, NAREIT Index
      returns are not an appropriate proxy for "real estate
      investments" generally.  Accordingly, please remove reference
      to NAREIT returns.

      In response to your comment, we are enclosing a revised
      "broker fact sheet" that has eliminated references to the
      NAREIT Index.  Instead, the fact sheet references statistics
      from National Counsel of Real Estate Investment Fiduciaries.
      Because this index references actual real estate
      investments, most of which are illiquid, held by real estate
      fiduciaries, the managing members believes this is an
      appropriate indicator of volatility in investments in real
      estate generally.  A copy of the supportive data for such
      statistics is submitted supplementally.

  Tombstone Advertisement

  9.  Please advise us how the various headlines and the legend
      comply with the requirements of Rule 134 of the Securities
      Act.

      The managing member has determined not to use the tombstone
      advertisements and hereby withdraws them as submitted
      materials

  Public Fund Composite Historical Distribution Summary

  10. Please provide us the data underlying the chart for each
      of the funds, including information on the source of
      distributions.  In addition, please advise us whether the
      information in the graph is derived from information included
      in the prior performance tables in the prospectus.  In
      addition, please include balancing summary risk factor
      disclosure.

      Please know that the distribution summary is a composite
      summary of total annual distributions from all public real
      estate programs sponsored by the managing member and its
      affiliates (15 total), excepting distributions that
      constitute a return of capital or that constitute final
      liquidating distributions upon final sale of properties.  As
      such, the table is not derived from, nor can it be
      specifically generated from, the prior performance tables
      included in the prospectus.  We are including as
      supplemental information, the data that underlies the
      tables.

      In response to you