M I SCHOTTENSTEIN HOMES INC, 10-K, 1998-03-27

M I SCHOTTENSTEIN HOMES INC
10-K, 1998-03-27
OPERATIVE BUILDERS

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

Commission File No. 1-12434

M/I SCHOTTENSTEIN HOMES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Ohio 31-1210837
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3 Easton Oval, Suite 500
Columbus, Ohio 43219
--------------------
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (614) 418-8000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of Each Exchange on
Title of Each Class Which Registered
---------------------------- ------------------------
Common Stock, par value $.01 New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None
----------------
(Title of Class)

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 _____.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

As of March 2, 1998, the aggregate market value of voting common stock
held by non-affiliates of the registrant (4,823,261 shares) was approximately
$108,825,000. The number of shares of common stock of M/I Schottenstein Homes,
Inc., outstanding on March 2, 1998 was 7,602,161.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1997 (Part I, II and IV) Portions of the registrant's Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders filed pursuant to Regulation 14A
(Part III)

<PAGE> 2

PART I

ITEM 1. BUSINESS

COMPANY

M/I Schottenstein Homes, Inc. was reincorporated in Ohio in 1993. Prior
to that date, the Company was a Delaware Corporation. M/I Schottenstein Homes,
Inc. was incorporated, through predecessor entities, in 1973 and commenced its
homebuilding activities in 1976. M/I Schottenstein Homes, Inc. and its
subsidiaries (the "Company") is one of the nation's leading homebuilders. The
Company constructs and sells single-family homes to the entry level, move-up and
empty nester buyer under the Horizon, M/I Homes and Showcase Homes tradenames.
In 1996, the latest year for which information is available, the Company was the
fourteenth largest U.S. single-family homebuilder (based on total revenue) as
ranked by Builder Magazine. The Company sells its homes in eleven geographic
markets including Columbus and Cincinnati, Ohio; Tampa, Orlando and Palm Beach
County, Florida; Charlotte and Raleigh, North Carolina; Indianapolis, Indiana;
Virginia, Maryland and, recently, Phoenix, Arizona. The Company currently offers
seven distinct lines of single-family homes ranging in base sales price from
approximately $80,000 to $860,000 with an average sales price in 1997 of
$183,000. During the year ended December 31, 1997, the Company delivered 3,152
homes and had revenues of $614.0 million and net income of $17.4 million, the
highest in the Company's history.

The Company is the leading homebuilder in the Columbus, Ohio market and
has been the number one builder of single-family detached homes in this market
for each of the past nine years. In addition, the Company is currently one of
the top ten homebuilders in each of its Ohio, Florida, Indiana and North
Carolina markets and believes it is well positioned to further penetrate these
and its other markets. The Company's growth strategy targets both product line
expansion and geographical diversification. With respect to geographical
diversification, the Company has expanded into new markets through the opening
of new divisions rather than through acquisitions. To complement its M/I Homes
($120,000 - $230,000 base sales price range) and Showcase Homes ($180,000 -
$340,000 base sales price range) lines, the affordably priced Horizon line
($95,000 - $145,000 base sales price range), which appeals to the first time
home buyer, was introduced to the Columbus market in 1993 and has been very
successful. The Company has expanded this entry level product into a majority of
its other markets.

The Company believes it distinguishes itself from competitors by
offering homes located in selective areas that have a higher level of design and
construction quality within a given price range and by providing superior
customer service. The Company also believes that by offering homes at a variety
of price points, it attracts a wide range of buyers, many of whom were previous
Horizon, M/I or Showcase homeowners. The Company supports its homebuilding
operations by providing mortgage financing services through M/I Financial, and
also provides title-related services through joint ventures.

The Company's business strategy emphasizes the following key
objectives:

Focus on profitability. The Company focuses on improving profitability
while maintaining the high quality of both its homes and its customer service.
The Company focuses on gross margins by stressing the features, benefits,
quality and design of its homes in the sale process and by minimizing
speculative building. The Company also value engineers its homes by working with
its subcontractors and suppliers to provide attractive home features while
minimizing raw material and construction costs.

Maintain conservative and selective land policies. The Company's
profitability is largely dependent on the quality of its subdivision locations;
therefore, the Company focuses on locating and controlling land in the most
desirable areas of its markets. The Company is very conservative in its land
acquisition policies and only purchases land already zoned and serviceable by
utilities. The Company seeks to control a three- to five-year supply of land in
each of its markets. The Company believes its expertise in developing land gives
the Company a competitive advantage in controlling attractive locations at
competitive costs, and, as a result, developed approximately 50% of its
communities as of December 31, 1997. At December 31, 1997, the company owned
6,835 lots and controlled an additional 9,187 lots pursuant to contracts.

Maintain or increase market position in current markets. The Company
has been the leading builder of single-family detached homes in the Columbus
market for the last nine years. The Company seeks to maintain its leading
position by continuing to provide high quality homes and superior customer
service. The Company believes there are

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significant opportunities to profitably expand in each of its other markets, by
increasing its product offerings, continuing to acquire land in desirable
locations and constructing and selling homes with the same commitment to
customer service that has accounted for the Company's historical success. In
addition, the Company continues to explore expanding into new markets through
either internal growth (such as the expansion into Phoenix, Arizona late in
1996) or acquisitions.

Provide superior customer service. The overriding Company philosophy is
to provide superior service to its customers. The Company offers a wide array of
functional and innovative designs and involves the customer in virtually every
phase of its operations from the selling process through construction, closing
and service after delivery. The Company's selling process focuses on the homes'
features, benefits, quality and design as opposed to merely price and square
footage. In certain markets, the Company utilizes design centers to enhance the
selling process and increase the sale of optional features which typically carry
higher margins. In addition, the Company assists many of its customers with
financing and provides attractive warranties. As a result, based on the
responses to the Company's customer questionnaire, for the seventh year in a
row, more than 95% of the Company's customers would recommend the Company to a
potential buyer.

Offer product breadth and innovative design. The Company devotes
significant resources to the research and design of its homes to better meet the
needs of its customers. The Company offers seven distinct product lines and more
than 300 different floor plans and elevations. In addition to providing
customers with a wide variety of choices, the Company believes it offers a
higher level of design and construction quality within a given price range. In
addition, the Company has introduced and utilized innovative design concepts,
such as themed communities, rear garages and rear alley access.

Maintain decentralized operations with experienced management. The
Company believes that each of its markets has unique characteristics and,
therefore, is managed locally with dedicated, on-site management personnel. The
Company's managers possess intimate knowledge of their particular market and are
encouraged to be entrepreneurial in order to best meet the needs of such market.
The Company's incentive compensation structure rewards each manager based on
financial performance, income growth and customer satisfaction.

SALES AND MARKETING

The Company markets and sells its homes under the Horizon, M/I and
Showcase tradenames. Home sales are conducted from on-site sales offices in
furnished model homes by the Company's own sales personnel. Each sales
consultant is trained and equipped to fully explain the features and benefits of
the Company's homes, to determine which home best suits each customer's needs,
to explain the construction process and to assist the customer in choosing the
best financing. Significant attention is paid to the training and re-training of
all sales personnel to assure the highest levels of professionalism and product
knowledge. Overall, the Company currently employs more than 136 sales
consultants and operates approximately 150 model homes.

The Company advertises in newspapers and magazines, by direct mail, on
billboards and on radio and television, although the particular marketing medium
used differs from division to division based upon marketing demographics and
other competitive factors. In addition, the Company welcomes independent broker
participation and, from time to time, utilizes various promotions and sales
incentives to attract interest from these brokers. The Company's commitment to
quality design and construction and reputation for customer service has resulted
in a strong referral base and a significant number of repeat buyers.

To enhance the selling process, the Company operates design centers in
the Cincinnati, Columbus, and most recently, Tampa markets. The design centers
are staffed with interior design specialists who assist customers in selecting
interior and exterior colors as well as standard options and upgrades. In its
other markets, the color selection and option/upgrade process is handled
directly by the Company's sales consultants. The Company also offers financing
to its customers through its wholly-owned subsidiary, M/I Financial, which now
has branches in all markets in which the Company operates except Virginia,
Maryland and Phoenix. M/I Financial originates loans primarily for purchasers of
the Company's homes. The loans are then sold, along with the majority of the
servicing rights, to outside mortgage lenders.

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The Company generally does not commence construction of its homes until
it obtains a sales contract and preliminary oral advice from the customer's
lender that financing will be approved. However, in certain markets, contracts
are sometimes accepted contingent upon the sale of an existing home and
construction is authorized through a certain stage prior to satisfaction of that
contingency. In addition, in all divisions, a limited, strictly controlled
number of "spec" homes (i.e., homes started in the absence of an executed
contract) are built in order to permit construction and delivery of homes on an
immediate-need basis and to provide presentation of new products. In determining
the number of spec homes to be started, the Company has traditionally adopted
what it believes to be a very conservative approach, with the unit number
determined after consultation with the respective region and division
presidents.

The Company's sales and marketing efforts are further enhanced by the
Company's inspection and warranty programs. Through these programs, the Company
offers a 2-year limited warranty on materials and workmanship and a 20-year
limited warranty against major structural defects. To increase the value of
these warranties, both are transferable in the event of the sale of the home.
Immediately prior to closing and three months after a home is delivered, the
Company inspects each home with the customer to determine if any repairs are
required. At the customer's written request, the Company will also provide a
free 1-year inspection and again make any necessary repairs. The Company also
passes along to its customers all warranties provided by manufacturers or
suppliers of components installed in each home. The Company's warranty expense
was approximately 1.0% of total costs and expenses for each of the years ended
December 31, 1997, 1996 and 1995.

DESIGN AND CONSTRUCTION

The Company devotes significant resources to the research, design and
development of its homes in order to better meet the needs of the various home
buyers in housing markets in which the Company operates. Virtually all of the
Company's floor plans and elevations are designed by an experienced, in-house
staff of qualified professionals using modern computer-aided design technology.
The Company offers more than 300 different floor plans and elevations which may
differ significantly from market to market.

The construction of each home is supervised by a construction
supervisor who reports to a production manager, both of whom are employees of
the Company. Customers are introduced to their construction supervisor prior to
commencement of home construction at a pre-construction "buyer/builder"
conference. In addition to introducing customers to their construction
supervisor, the purpose of this conference is to review with the customers the
home plans and all relevant construction details and to explain the construction
process and schedule to the customers. Every customer is given a hard hat at the
"buyer/builder" conference as an open invitation to visit the site at any time
during the course of construction. The Company wants customers to become
involved, to better understand the construction of their home and to see the
quality being built into their home. All of this is part of the Company's
philosophy to "put the customer first" and enhance the total homebuilding
experience.

Homes generally are constructed according to standardized designs and
meet applicable Federal Housing Authority ("FHA") and Veterans Administration
("VA") requirements. To allow maximum design flexibility, the Company limits the
use of pre-assembled building components and pre-fabricated structural
assemblies. The efficiency of the building process is enhanced by the Company's
use of standardized materials available from a variety of sources. The Company
has, from time to time, experienced construction delays due to shortages of
materials or subcontractors. Such construction delays may, in turn, delay the
delivery of homes, thereby extending the period of time between the signing of a
purchase contract with respect to a home and the receipt of revenue by the
Company; however, the Company cannot predict the extent to which shortages of
necessary materials or labor may occur in the future. The Company employs
independent subcontractors for the installation of site improvements and the
construction of its homes. Subcontractors are supervised by the Company's
on-site construction supervisors. All subcontractor work is performed pursuant
to written agreements with the Company. Such agreements are generally
short-term, with terms from six to twelve months, provide for a fixed price for
labor and materials and are structured to allow for price protection for the
Company's Backlog. The Company seeks to build in large volume to reduce the per
unit cost of the homes which it sells due to advantages achieved by lower unit
prices paid to subcontractors for labor and materials.

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MARKETS

The Company's operations are organized into geographic regions in order
to maximize management and operating efficiencies. Each geographic region is
comprised of one or more operating divisions in a particular major metropolitan
area. The Company's present divisional operating structure is as follows:

Year
Operations
Region Division Commenced
------ -------- ---------
Ohio........................... Columbus 1976
Columbus - Showcase 1988
Columbus - Horizon 1994
Cincinnati 1988

Indiana........................ Indianapolis 1988

Florida........................ Tampa 1981
Orlando 1984
Palm Beach County 1984

North Carolina................. Charlotte 1985
Raleigh 1986

Washington D.C. ............... Virginia 1991
Maryland 1991

Arizona........................ Phoenix 1996

Ohio and Indiana Region. The Company began its operations in the
Columbus, Ohio market in 1976 and expanded into both Cincinnati, Ohio and
Indianapolis, Indiana in 1988. These markets accounted for approximately 60% of
the Company's deliveries in 1997.

Columbus is the capital of Ohio, with federal, state and local
governments providing significant and stable employment. Columbus has been a
stable market with diverse economic and employment bases. In 1997, Columbus'
unemployment rate was approximately 3%, significantly below the national rate of
5.4%. Columbus is also the home of The Ohio State University, one of the largest
universities in the world, with an annual budget exceeding $1 billion. The
Company offers all product lines in Columbus, with base sales prices ranging
from approximately $95,000 to $340,000 through three operating divisions. The
Company is the leading homebuilder in Columbus, having built and delivered more
single-family detached homes in this market than any other homebuilder during
each of the last nine years. In 1997, the Company had approximately a 22% market
share in the Columbus market.

Cincinnati, like Columbus, is characterized by both a stable economic
environment and a diverse employment base. Employers include Proctor & Gamble,
Kroger and General Electric. Also, the Cincinnati International Airport serves
as a regional hub for Delta Airlines. The Company continues to expand its
Horizon product line in this market and focuses on more affordable communities.
In 1997, the Company was ranked the number two homebuilder in Cincinnati,
excluding the Northern Kentucky market in which the Company does not
participate.

Indianapolis is a growth market noted for its excellent transportation
system and relatively young population. 1997 was the sixth consecutive year of
record single-family housing permits, due in part to the low unemployment rate
of 3%. A large aircraft maintenance hub for United Airlines and a $62 million
express mail sorting facility for the U.S. Postal Service have recently begun
operations in Indianapolis. The Company continues to expand its Horizon product
line in this market by introducing 40 foot lots. The Company continues to focus
on premier locations with more affordable price points.

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Florida Region. The Company entered the Florida market in 1981, when it
opened its Tampa division. In 1984, the Company opened additional divisions in
Orlando and Palm Beach County. In 1997, home deliveries in this region
represented approximately 20% of the Company's total deliveries.

Tampa's housing market is strong, buoyed by financial services, tourism
and conventions. Business relocation has continued, especially in the banking,
insurance and telecommunications industries. Tampa's economy continues to grow;
1997 employment levels increased by 4%. Market-specific products, including the
Horizon series, have been very successful for the Company in Tampa.

In 1997, Orlando's economy grew at a healthy pace, with job growth
increasing by 5%. Growth was led by improved tourism (both domestic and
foreign), strong in-migration and business expansion/relocation due primarily to
lower business costs. Substantial employment growth in the tourism industry is
expected to continue.

Palm Beach County is one of the more affluent markets in the United
States. Recent job gains have been experienced in the construction, wholesale
trade and service sectors. Population growth in the 1990s has been at a rate of
twice the national average. The Company is concentrating on offering a good mix
of product, for both the first-time and move-up home buyer.

The North Carolina and Metropolitan Washington, D.C. Region. In 1985,
the Company entered Charlotte and a year later began building in Raleigh-Durham.
In 1991, the Company expanded into both Virginia and Maryland. In 1997, these
markets represented approximately 20% of the Company's total deliveries.

Charlotte, which is home to fast-growing firms in the banking industry,
continues to prosper as a financial center. The Company expects this market to
continue to gain administrative and back-office jobs as these firms pursue
growth outside the region. In addition, Charlotte is establishing itself as a
transportation hub with its manufacturing base. Due to this strong industry
presence and the addition of professional sports teams, Charlotte is ranked at
an above average level for long-term employment growth.

Raleigh-Durham is well situated to take advantage of the explosive
growth in high-tech firms with a well-educated workforce and the recently
completed North Carolina telecommunications highway. The Company expects the
housing market in this area to continue to exhibit strong growth.

The Company believes that the Washington, D.C. market will remain very
competitive. Historically, the Washington, D.C. region has been dominated by
Federal Government employment. However, there has been an increasing trend
toward private sector jobs, especially in the high-technology area. The
Company's current operations in the Washington, D.C. region are located
primarily in Fairfax, Prince William and Loudoun Counties in Virginia and Prince
Georges, Montgomery and Anne Arundel Counties in Maryland. The Company will
continue to focus on geographic, product and pricing niches in this market.

The Arizona Region. The Company entered the Phoenix market in November
1996. The Phoenix housing market is one of the most active in the United States,
generating over 25,000 permits annually in each of the last four years. Phoenix
is a national leader in employment growth and has a very diverse economy.
Additionally, in 1997, the Phoenix metropolitan area's unemployment rate was
2.4%. As commonly occurs in the homebuilding industry, it has been the Company's
experience that it incurs losses in a new market, as it expenses all start-up
costs. In 1997, the Company incurred a $1.4 million loss in its Phoenix
division.

PRODUCT LINES

The Company, on a regional basis, offers homes ranging in base sales
price from approximately $80,000 to $860,000 and ranging in square footage from
approximately 1,100 to 4,700 square feet. There are more than 300 different
floor plans and elevations across all product lines. By offering a wide range of
homes, the Company is able to attract first-time home buyers, move-up home
buyers and empty nesters. It is a Company goal to sell more than one home to our
customers.

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In the Columbus market, which is the Company's largest market, the
Company offers all of its seven distinct product lines. In addition, the Company
offers a select number of its product lines in its divisions outside of
Columbus. The base sales price range and average square footage for these
product lines in Columbus are shown below:

BASE SALES AVERAGE
PRODUCT LINE PRICE RANGE SQUARE FOOTAGE
------------ ----------- --------------
Horizon $95,000 - $145,000 1,400
M/I Homes
Heritage $120,000 - $170,000 1,500
Hallmark $145,000 - $210,000 2,000
Lakes of Powell $175,000 - $220,000 2,200
Regency $170,000 - $230,000 2,450
Showcase Homes
Signature $220,000 - $275,000 2,500
Hampsted $180,000 - $340,000 2,600
Classic $250,000 - $340,000 2,800

In addition, the Company offers a line of attached townhomes in the
Maryland and Virginia markets. These homes are marketed primarily to first-time
buyers and range from 1,600 to 2,300 square feet of living space. These homes
utilize wood frame construction and feature aluminum exteriors with brick
fronts. In Maryland, Virginia and Phoenix, the Company offers homes with up to
4,700 square feet of living space for base sales prices ranging up to $860,000.

In each of the Company's lines of homes, certain options are available
to the purchaser for an additional charge. Major options include fireplaces,
additional bathrooms, and higher quality carpeting, cabinets and appliances. The
options typically are more numerous and significant on the more expensive homes.
In offering its various products, the Company attempts to maintain substantially
the same ratio of revenue to costs and expenses for each of its product lines.

LAND DEVELOPMENT ACTIVITIES

The Company's land development activities and land holdings have
increased significantly in the past few years, and are expected to continue to
increase. The Company continues to purchase lots from outside developers under
option contracts, when possible, to limit the Company's risk; however, the
Company continues to evaluate all of its alternatives to satisfy its need for
lots in the most cost effective manner. The Company develops its own lots when
it can gain a competitive advantage by doing so or when shortages of qualified
land developers make it impractical to purchase the required lots from outside
sources. The Company seeks to limit its investment in undeveloped land and lots
to the amount reasonably expected to be sold in the next three to five years.
Although the Company purchases land and engages in land development activities
primarily for the purpose of furthering its own homebuilding activities, in
certain markets, the Company has developed land with the intention of selling a
portion of the lots to outside homebuilders.

To limit the risk involved in the development of raw land, the Company
has primarily acquired land through the use of contingent purchase contracts.
These contracts require the approval of the Company's land committee. These
contracts condition the Company's obligation to purchase land upon the Company's
review and approval of zoning, utilities, soil and subsurface conditions,
environmental and wetland conditions, levels of taxation, traffic patterns,
development costs, title matters and other property-related criteria. In
addition, careful attention is paid to the quality of the public school system.
Only after this thorough evaluation has been completed does the Company make a
commitment to purchase undeveloped land. To further reduce its risk when
evaluating the acquisition of raw land, the Company generally does not commence
development and engineering plans or surveys until all necessary zoning
approvals are obtained.

The Company from time to time enters into joint ventures, generally
with other homebuilders. At December 31, 1997, the Company had interests varying
from 33% to 50% in each of 16 joint ventures and 11 limited

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liability companies ("LLCs"). These joint ventures and LLCs develop land into
lots and, generally, the Company receives its percentage interest in the form of
a distribution of developed lots. The joint ventures and LLCs pay the managing
partner or manager certain fees for accounting, administrative and construction
supervision services performed by the managing partner or manager in addition to
its percentage interest as a partner in the profits of the joint venture or LLC.
The Company currently is responsible for the management of 6 of these 16 joint
ventures and 6 of the 11 LLCs. These joint ventures and LLCs are equity
financed, except where seller financing is available on attractive terms.

During the development of lots and land, the Company is required by
some municipalities and other governmental authorities to provide completion
bonds for sewer, streets and other improvements. The Company generally provides
letters of credit in lieu of these completion bonds. At December 31, 1997, $9.6
million of letters of credit were outstanding for these purposes, as well as
$10.2 million of completion bonds.

AVAILABLE LOTS AND LAND

The Company seeks to balance the economic risk of owning lots and land
with the necessity of having lots available for its homes. At December 31, 1997,
the Company had in inventory 1,947 developed lots and 1,896 lots under
development. The Company also owned raw land expected to be developed into
approximately 1,644 lots.

In addition, at December 31, 1997, the Company's interest in lots held
by its joint ventures and LLCs consisted of 41 developed lots and 392 lots under
development. The Company also owns interests in raw land held by its joint
ventures and LLCs zoned for 915 lots. It is anticipated that some of the lots
owned by the Company and the joint ventures and LLCs will be sold to others.

At December 31, 1997, the Company had options and purchase contracts,
which expire over the next 5 years, to acquire 3,008 developed lots and land to
be developed into approximately 6,179 lots, for a total of 9,187 lots, with an
aggregate current purchase price of approximately $166.4 million. Purchase of
these properties is contingent upon satisfaction of certain requirements by the
Company and the sellers, such as zoning approval. The majority of these lot
purchase agreements provide for periodic escalation of the purchase price which,
the Company believes, reflects the developers' carrying cost of the lots. The
following table sets forth the Company's land position in lots (including the
Company's interest in joint ventures) by region in which the Company operated at
December 31, 1997:

<TABLE>
<CAPTION>
OWNED LOTS
-------------------------------------
Under To Be Lots under
Region Developed Development Developed Option Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ohio and Indiana 1,096 743 1,881 6,767 10,487

Florida 461 136 286 1,278 2,161

Carolina 207 61 140 752 1,160

Washington, D.C. and Phoenix 224 1,348 252 390 2,214
--------------------------------------------------------------------------------------------

Total 1,988 2,288 2,559 9,187 16,022
============================================================================================

</TABLE>

FINANCIAL SERVICES

Through its wholly-owned subsidiary, M/I Financial, the Company offers
fixed and adjustable rate mortgage loans, primarily to buyers of the Company's
homes. M/I Financial has branches in all of the Company's housing markets, with
the exception of Virginia, Maryland and Arizona. Of the 2,917 Homes Delivered in
1997 in the markets in which M/I Financial operates, M/I Financial provided
financing for 2,365 of these homes representing approximately $340.6 million of
mortgage loans originated and sold. M/I Financial issues commitments to
customers and closes both conventional and government-insured loans in its own
name. However, in an effort to minimize the risk of financing activities, M/I
Financial generally sells the loans it originates to the secondary market which
provides the funding within

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several days thereafter. The Company retains a small servicing portfolio which
it currently sub-services with a financial institution.

At December 31, 1997, the Company was committed to fund $85.4 million
in mortgage loans to home buyers. Of this total, approximately $27.3 million
were adjustable rate loans and $58.1 million were fixed rate loan commitments.
The loans are granted at current market interest rates and the rate is
guaranteed through the transfer of the title of the home to the buyer. The
Company uses hedging methods to reduce its exposure to interest rate
fluctuations between the commitment date of the loan and the time the home
closes.

One of the methods the Company uses to hedge the interest rate risk
relative to unclosed loans is to purchase commitments from outside investors to
acquire the loans at the interest rate at which the loan will be closed. The
cost of these purchase commitments is recorded as an asset and is expensed as
loans are closed under the related commitments. Any remaining unused balance is
expensed when the commitment expires or earlier, if the Company determines that
it will be unable to use the entire commitment prior to its expiration date. At
December 31, 1997, the Company had approximately $33.3 million of commitments to
deliver mortgage loans to outside investors.

Another method utilized by the Company to hedge its interest rate risk
is the use of forward sales of mortgage-backed securities whereby the Company
agrees to sell and later repurchase similar but not identical mortgage-backed
securities. Generally, the agreements are fixed-coupon agreements whereby the
interest rate and maturity date of both transactions are approximately the same
and are established to correspond with the closing of the fixed interest rate
mortgage loan commitments of the Company. The difference between the two values
of the mortgage-backed securities in the agreements at settlement provide a
hedge on the interest rate risk exposure in the mortgage loan commitments and is
included in the gain or loss on the sale of the loans to third party investors.
At December 31, 1997, these agreements matured within 90 to 120 days. Securities
under forward sales agreements averaged approximately $37.3 million during 1997
and the maximum amount outstanding at any month end during 1997 was $49.0
million, the balance at December 31, 1997. Hedging gains of $1.4 million were
deferred at year end as the mortgage loans and commitment contracts qualified
for hedge accounting.

To reduce the credit risk associated with accounting losses, which
would be recognized if the counterparties failed completely to perform as
contracted, the Company limits the entities that management can enter into a
commitment with to the primary dealers in the market. The risk of accounting
loss is the difference between the market rate at the time a counterparty fails
and the rate the Company committed to for the mortgage loans and any purchase
commitments recorded with the counterparty.

M/I Financial has been approved by the Department of Housing and Urban
Development and the VA to originate loans insured by the FHA and the VA,
respectively, and has been approved by the Federal Home Loan Mortgage
Corporation ("FHLMC") and by the Federal National Mortgage Association ("FNMA")
as a seller and servicer of mortgages sold to FHLMC and FNMA.

In 1996, the Company entered into a joint venture to provide title
insurance in the Indianapolis and Columbus markets. In 1997, a similar joint
venture was formed in the Tampa and Orlando markets. The Company plans to expand
its title-related services by entering the Cincinnati market in 1998.

COMPETITION

The homebuilding industry is highly competitive. The Company competes
in each of its local market areas with numerous national, regional and local
homebuilders, some of which have greater financial, marketing, land acquisition
and sales resources than the Company. Builders of new homes compete not only for
home buyers, but also for desirable properties, financing, raw materials and
skilled subcontractors. The Company also competes with the resale market for
existing homes which provides certain attractions for home buyers over building
a new home.

9
<PAGE> 10

REGULATION AND ENVIRONMENTAL MATTERS

The homebuilding industry, including the Company, is subject to various
local, state and federal (including FHA and VA) statutes, ordinances, rules and
regulations concerning zoning, building, design, construction, sales and similar
matters. Such regulation affects construction activities, including types of
construction materials which may be used, certain aspects of building design,
sales activities and other dealings with consumers. The Company also must obtain
certain licenses, permits and approvals from various governmental authorities
for its development activities. In many areas, the Company is subject to local
regulations which impose restrictive zoning and density requirements in order to
limit the number of houses within the boundaries of a particular locality. The
Company seeks to reduce the risk from restrictive zoning and density
requirements by the use of contingent land purchase contracts which require that
the land to be purchased by the Company meet various requirements, including
zoning.

The Company may be subject to periodic delays or may be precluded
entirely from developing projects due to building moratoriums, particularly in
Florida. Generally, such moratoriums relate to insufficient water or sewage
facilities or inadequate road capacity within specific market areas or
subdivisions. Moratoriums experienced by the Company have not been of long
duration and have not had a material effect on the Company's business.

Each of the states in which the Company operates has adopted a wide
variety of environmental protection laws. These laws generally regulate
developments of substantial size and which are in or near certain specified
geographic areas. Furthermore, these laws impose requirements for development
approvals which are more stringent than those which land developers would have
to meet outside of these geographic areas.

Increasingly stringent requirements may be imposed on homebuilders and
developers in the future which may have a significant impact on the Company and
the industry. Although the Company cannot predict the effect of these
requirements, such requirements could result in time-consuming and expensive
compliance programs. In addition, the continued effectiveness of licenses or
permits already granted or development approvals already obtained is dependent
upon many factors, some of which are beyond the Company's control.

EMPLOYEES

At March 2, 1998, the Company employed 758 people (including part-time
employees), of which 202 were employed in sales, 304 in construction and 252 in
management, administrative and clerical positions. The Company considers its
employee relations to be excellent. No employees are represented by a collective
bargaining agreement.

ITEM 2. PROPERTIES

The Company leases all of its offices, including the corporate and
division locations. The Company leases a portion of its office space from a
limited liability company in which the Company has a minority equity interest.
See Notes 2, 5 and 9 to the Consolidated Financial Statements.

Due to the nature of the Company's business, a substantial amount of
property is held as inventory in the ordinary course of business. See "Item 1.
Business - Available Lots and Land."

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in routine litigation incidental to its
business. Management does not believe that any of this litigation is material to
the financial statements of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1997, no matters were submitted to a vote
of security holders.

10
<PAGE> 11

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1997.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1997.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1997.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by
reference from the Company's Annual Report to Shareholders for the year ended
December 31, 1997.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no changes in or disagreements with accountants during
each of the two years ended December 31, 1997 and 1996.

11
<PAGE> 12

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1998
Annual Meeting of Shareholders.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1998
Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1998
Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by
reference to the Company's definitive proxy statement relating to the 1998
Annual Meeting of Shareholders.

12
<PAGE> 13

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements. The following financial statements of M/I
Schottenstein Homes, Inc. and its subsidiaries have been incorporated
herein by reference as set forth in Item 8 of Part II of this Annual
Report on Form 10-K:

Independent Auditors' Report

Consolidated Balance Sheets - December 31, 1997 and 1996

Consolidated Statements of Income - Years Ended December 31, 1997, 1996
and 1995

Consolidated Statements of Stockholders' Equity - Years Ended December
31, 1997, 1996 and 1995

Consolidated Statements of Cash Flows - Years Ended December 31, 1997,
1996 and 1995

Notes to Consolidated Financial Statements

2. Financial Statement Schedules. Page
----
Independent Auditors' Report on financial statement schedules...... 19

For the Years ended December 31, 1997, 1996 and 1995:
Schedule II - Valuation and Qualifying Accounts ................ 19

All other schedules have been omitted because the required information
is included in the financial statements or notes thereto, the amounts
involved are not significant, or the required matter is not present.

3. Exhibits.

The following exhibits required by Item 601 of Regulation S-K are filed
as part of this report. For convenience of reference, the exhibits are
listed according to the numbers appearing in the Exhibit Table to Item
601 of Regulation S-K.

Exhibit Number Description
- -------------- -----------
3.1 Amended and Restated Articles of Incorporation of
the Company, hereby incorporated by reference to
Exhibit 3.1 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993.

3.2 Regulations of the Company, hereby incorporated by
reference to Exhibit 3(l) of the Company's
Registration Statement on Form S-1, Commission File
No. 33-68564.

3.3 Amendment to the Code of Regulations of the Company,
hereby incorporated by reference to Exhibit 4.3 of the
Company's Registration Statement on Form S-8,
Commission File No. 33-76518.

4 Specimen of Stock Certificate, hereby incorporated
by reference to Exhibit 4 of the Company's
Registration Statement on Form S-1, Commission File
No. 33-68564.

13
<PAGE> 14

Exhibit Number Description
- -------------- -----------
10.1 Executive Deferred Compensation Plan, hereby
incorporated by reference to Exhibit 10(e) of the
Predecessor's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989.

10.2 Amendments to the Predecessor's Executive
Deferred Compensation Plan dated March 29, 1991 and
June 24, 1992, hereby incorporated by reference to
Exhibit 19(a) of the Predecessor's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992.

10.3 The Predecessor's Amended and Restated 401(K)
Profit Sharing Plan, consisting of a savings plan
adoption agreement, savings plan and savings plan
trust, hereby incorporated by reference to Exhibit
10(cc) of the Predecessor's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.

10.4 P.L. 1992 Limited Partnership Certificate and
Agreement of Limited Partnership dated March 25, 1992,
hereby incorporated by reference to Exhibit 10(vv) of
the Predecessor's Registration Statement on Form S-4,
Commission File No. 33-44914.

10.5 Cascades 1992 Limited Partnership Certificate and
Agreement of Limited Partnership dated July 20, 1992,
hereby incorporated by reference to Exhibit 10(cc) of
the Predecessor's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.

10.6 Second restated revolving credit loan and standby
letter of credit agreement by and among the Company;
Bank One, Columbus, N.A.; The Huntington National
Bank; The First National Bank of Chicago; National
City Bank of Columbus; The First National Bank of
Boston; The Fifth Third Bank of Columbus and Bank One,
Columbus, N.A., as agent for the banks, dated December
30, 1996, hereby incorporated by reference to Exhibit
10.12 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.

10.7 Consent to the creation of wholly-owned subsidiaries
of the Company and to the amendment of the note
purchase agreement pursuant to, and first amendment
to, second restated revolving credit loan and standby
letter of credit agreement by and among the Company;
Bank One, Columbus, N.A.; The Huntington National
Bank; The First National Bank of Chicago; National
City Bank of Columbus; The First National Bank of
Boston; The Fifth Third Bank of Columbus and Bank One,
Columbus, N.A., as agent for the banks, dated March
14, 1997, hereby incorporated by reference to Exhibit
10.13 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.

10.8 Second Amendment to second restated revolving
credit loan and standby letter of credit agreement by
and among the Company; Bank One, Columbus, N.A.; The
Huntington National Bank; The First National Bank of
Chicago; National City Bank of Columbus; The First
National Bank of Boston; The Fifth Third Bank of
Columbus and Bank One, Columbus, N.A. as agent for the
banks, dated May 7, 1997, hereby incorporated by
reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1997.

14
<PAGE> 15

Exhibit Number Description
- -------------- -----------
10.9 Third Amendment to second restated revolving
credit loan and standby letter of credit agreement by
and among the Company; Bank One, N.A.; The Huntington
National Bank; The First National Bank of Chicago;
National City Bank of Columbus; BankBoston, N.A.; The
Fifth Third Bank of Columbus and Bank One, N.A. as
agent for the banks, dated September 29, 1997, hereby
incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.

10.10 Consent to the creation of subsidiaries of M/I
Schottenstein Homes, Inc. pursuant to, and Fourth
Amendment to, second restated revolving credit loan
and standby letter of credit agreement by and among
the Company; Bank One, N.A.; The Huntington National
Bank; The First National Bank of Chicago; National
City Bank of Columbus; BankBoston, N.A.; The Fifth
Third Bank of Columbus and Bank One, N.A. as agent for
the banks, dated December 29, 1997. (Filed herewith.)

10.11 Promissory Note by and among the Company, M/I
Financial Corp. and Bank One, Columbus, N.A., dated
November 5, 1993, hereby incorporated by reference to
Exhibit 19(d) of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.

10.12 Revolving Credit Agreement by and among the Company,
M/I Financial Corp. and Bank One, Columbus, N.A. dated
July 19, 1996, hereby incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996.

10.13 Revolving Credit Agreement by and among the Company,
M/I Financial Corp. and Bank One, NA, dated
July 18, 1997, hereby incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997.

10.14 First Amendment to revolving credit agreement by
and among the Company, M/I Financial Corp. and Bank
One, NA, dated December 8, 1997. (Filed herewith.)

10.15 1993 Stock Incentive Plan of the Company, hereby
incorporated by reference to Exhibit 4.4 of the
Company's Registration Statement on Form S-8,
Commission File No. 33-76518.

10.16 Termination Agreement between the Company and parties
to the Melvin and Irving Schottenstein Family
Agreement, dated July 31, 1997, hereby incorporated by
reference to Exhibit 10.5 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1997.

10.17 Executive Employment Agreement by and between the
Company and Irving E. Schottenstein dated August 9,
1994, hereby incorporated by reference to Exhibit
10(c) of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994.

15
<PAGE> 16

Exhibit Number Description
- -------------- -----------
10.18 Company's 1996 President and Chief Executive
Officer Bonus Program, hereby incorporated by
reference to Exhibit 10.45 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

10.19 Company's 1996 Corporate Executive Vice
President Bonus Program, hereby incorporated by
reference to Exhibit 10.46 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

10.20 Company's 1996 Senior Vice President and Chief
Financial Officer Bonus Program, hereby incorporated
by reference to Exhibit 10.47 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

10.21 Company's 1997 President and Senior Executive
Vice President Bonus Program, hereby incorporated by
reference to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1997.

10.22 Company's 1997 Senior Vice President and Chief
Financial Officer Bonus Program, hereby incorporated
by reference to Exhibit 10.3 of the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997.

10.23 Investment Home Compensation Plan dated September 1,
1995, hereby incorporated by reference to Exhibit 10.2
of the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.

10.24 Limited Liability Company Agreement of Northeast
Office Venture, Limited Liability Company dated
November 17, 1995, hereby incorporated by reference to
Exhibit 10.51 of the Company's Annual Report on Form
10-K for the year ended December 31, 1995.

10.25 Lease Agreement by and between the Company and
Northeast Office Venture, Limited Liability Company
dated November 17, 1995, hereby incorporated by
reference to Exhibit 10.52 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

10.26 Credit Agreement between the Company and BankBoston,
N.A., the other parties which may become lenders and
BankBoston, N.A. as agent, dated August 29, 1997,
hereby incorporated by reference to Exhibit 10.2 of
the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.

10.27 Company's Director Deferred Compensation Plan,
hereby incorporated by reference to Exhibit 10.4 of
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.

16
<PAGE> 17

Exhibit Number Description
- -------------- -----------
10.28 Collateral Assignment Split-Dollar Agreement by
and among the Company and Robert H. Schottenstein, and
Janice K. Schottenstein, as Trustee of the Robert H.
Schottenstein 1996 Insurance Trust, dated September
24, 1997. (Filed herewith.)

10.29 Collateral Assignment Split-Dollar Agreement by
and among the Company and Steven Schottenstein, and
Irving E. Schottenstein, as Trustee of the Steven
Schottenstein 1994 Trust, dated September 24, 1997.
(Filed herewith.)

10.30 Collateral Assignment Split-Dollar Agreement by
and among the Company and Kerrii B. Anderson, and
Douglas T. Anderson, as Trustee of the Kerrii B.
Anderson 1997 Irrevocable Life Insurance Trust, dated
September 24, 1997. (Filed herewith.)

13 Annual Report to Shareholders for the year ended
December 31, 1997. (Filed herewith.)

21 Subsidiaries of Company. (Filed herewith.)

23 Consent of Deloitte & Touche LLP. (Filed herewith.)

24 Powers of Attorney. (Filed herewith.)

27 Financial Data Schedule

- ---------------

(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.

(d) Financial Statement Schedule - See Item 14(a)(2).

17
<PAGE> 18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in Columbus, Ohio on
this 26th day of March, 1998.

M/I SCHOTTENSTEIN HOMES, INC.
(Registrant)

By: /s/ ROBERT H. SCHOTTENSTEIN
----------------------------
Robert H. Schottenstein
President and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on this 26th of March, 1998.

NAME AND TITLE NAME AND TITLE
-------------- --------------
IRVING E. SCHOTTENSTEIN* /s/ ROBERT H. SCHOTTENSTEIN
- ------------------------ ----------------------------
Irving E. Schottenstein Robert H. Schottenstein
Chairman of the Board and President and Director
Chief Executive Officer
(Principal Executive Officer)

STEVEN SCHOTTENSTEIN* /s/ KERRII B. ANDERSON
- --------------------- -----------------------
Steven Schottenstein Kerrii B. Anderson
Senior Executive Vice President Senior Vice President, Chief Financial
and Director Officer, Assistant Secretary and Director
(Principal Financial and Accounting Officer)

FRIEDRICH K. M. BOHM* JEFFREY H. MIRO*
- ---------------------- ----------------
Friedrich K. M. Bohm Jeffrey H. Miro
Director Director

LEWIS R. SMOOT, SR.* NORMAN L. TRAEGER*
- -------------------- ------------------
Lewis R. Smoot, Sr. Norman L. Traeger
Director Director

* The above-named Directors and Officers of the Registrant execute this report
by Robert H. Schottenstein and Kerrii B. Anderson, their Attorneys-in-Fact,
pursuant to powers of attorney executed by the above-named Directors and filed
with the Securities and Exchange Commission as Exhibit 24 to the report.

By: /s/ ROBERT H. SCHOTTENSTEIN
----------------------------
Robert H. Schottenstein,
Attorney-in-Fact

By: /s/ KERRII B. ANDERSON
-----------------------
Kerrii B. Anderson,
Attorney-in-Fact

18
<PAGE> 19

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
M/I Schottenstein Homes, Inc.
Columbus, Ohio

We have audited the consolidated financial statements of M/I Schottenstein
Homes, Inc. and its subsidiaries as of December 31, 1997 and 1996, and for each
of the three years in the period ended December 31, 1997, and have issued our
report thereon dated February 27, 1998; such financial statements and reports
are included in your 1997 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedule of M/I Schottenstein Homes, Inc. and its subsidiaries, listed
in Item 14. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/ DELOITTE & TOUCHE LLP
- --------------------------
Deloitte & Touche LLP

Columbus, Ohio
February 27, 1998

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
- -----------------------------------------------
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Year Expenses Deductions Year
- ----------- ------- -------- ---------- ----
<S> <C> <C> <C> <C>
Valuation allowance deducted from asset
account - single-family lots, land and
land development costs:

Year ended
December 31, 1997 $ 2,350,000 $ 4,135,000 $ 2,485,000 $4,000,000
=========== =========== =========== ==========

Year ended
December 31, 1996 $ 975,000 $ 1,375,000 $ 0 $ 2,350,000
=========== =========== =========== ===========

Year ended
December 31, 1995 $ 0 $ 975,000 $ 0 $ 975,000
=========== =========== =========== ===========

</TABLE>

19
<PAGE> 20

<TABLE>
<CAPTION>
EXHIBIT INDEX

Exhibit Number Description Page No.
- -------------- ----------- --------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of
the Company, hereby incorporated by reference to
Exhibit 3.1 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993.

3.2 Regulations of the Company, hereby incorporated by
reference to Exhibit 3(l) of the Company's
Registration Statement on Form S-1, Commission File
No. 33-68564.

3.3 Amendment to the Code of Regulations of the
Company, hereby incorporated by reference to Exhibit
4.3 of the Company's Registration Statement on Form
S-8, Commission File No. 33-76518.

4 Specimen of Stock Certificate, hereby incorporated
by reference to Exhibit 4 of the Company's
Registration Statement on Form S-1, Commission File
No. 33-68564.

10.1 Executive Deferred Compensation Plan, hereby
incorporated by reference to Exhibit 10(e) of the
Predecessor's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989.

</TABLE>

20
<PAGE> 21

<TABLE>
<CAPTION>
Exhibit Number Description Page No.
- -------------- ----------- --------
<S> <C> <C>
10.6 Second restated revolving credit loan and standby
letter of credit agreement by and among the Company;
Bank One, Columbus, N.A.; The Huntington National
Bank; The First National Bank of Chicago; National
City Bank of Columbus; The First National Bank of
Boston; The Fifth Third Bank of Columbus and Bank One,
Columbus, N.A., as agent for the banks, dated December
30, 1996, hereby incorporated by reference to Exhibit
10.12 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.

10.7 Consent to the creation of wholly-owned
subsidiaries of the Company and to the amendment of
the note purchase agreement pursuant to, and first
amendment to, second restated revolving credit loan
and standby letter of credit agreement by and among
the Company; Bank One, Columbus, N.A.; The Huntington
National Bank; The First National Bank of Chicago;
National City Bank of Columbus; The First National
Bank of Boston; The Fifth Third Bank of Columbus and
Bank One, Columbus, N.A., as agent for the banks,
dated March 14, 1997, hereby incorporated by reference
to Exhibit 10.13 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.

10.8 Second Amendment to second restated revolving
credit loan and standby letter of credit agreement by
and among the Company; Bank One, Columbus, N.A.; The
Huntington National Bank; The First National Bank of
Chicago; National City Bank of Columbus; The First
National Bank of Boston; The Fifth Third Bank of
Columbus and Bank One, Columbus, N.A. as agent for the
bank, dated May 7, 1997, hereby incorporated by
reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1997.

10.9 Third Amendment to second restated revolving
credit loan and standby letter of credit agreement by
and among the Company; Bank One, N.A.; The Huntington
National Bank; The First National Bank of Chicago;
National City Bank of Columbus; BankBoston, N.A.; The
Fifth Third Bank of Columbus and Bank One, N.A. as
agent for the banks, dated September 29, 1997, hereby
incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.

</TABLE>

21
<PAGE> 22

<TABLE>
<CAPTION>
Exhibit Number Description Page No.
- -------------- ----------- --------
<S> <C> <C>
10.11 Promissory Note by and among the Company, M/I
Financial Corp. and Bank One, Columbus, N.A., dated
November 5, 1993, hereby incorporated by reference to
Exhibit 19(d) of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.

10.13 Revolving Credit Agreement by and among the
Company, M/I Financial Corp. and Bank One, NA, dated
July 18, 1997, hereby incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997.

10.14 First Amendment to revolving credit agreement by
and among the Company, M/I Financial Corp. and Bank
One, NA, dated December 8, 1997. (Filed herewith.)

10.15 1993 Stock Incentive Plan of the Company, hereby
incorporated by reference to Exhibit 4.4 of the
Company's Registration Statement on Form S-8,
Commission File No. 33-76518.

10.16 Termination Agreement between the Company and
parties to the Melvin and Irving Schottenstein Family
Agreement, dated July 31, 1997, hereby incorporated by
reference to Exhibit 10.5 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1997.

10.18 Company's 1996 President and Chief Executive
Officer Bonus Program, hereby incorporated by
reference to Exhibit 10.45 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

</TABLE>

22
<PAGE> 23

<TABLE>
<CAPTION>
Exhibit Number Description Page No.
- -------------- ----------- --------
<S> <C> <C>
10.20 Company's 1996 Senior Vice President and Chief
Financial Officer Bonus Program, hereby incorporated
by reference to Exhibit 10.47 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1995.

10.21 Company's 1997 President and Senior Executive Vice
President Bonus Program, hereby incorporated by
reference to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1997.

10.27 Company's Director Deferred Compensation Plan,
hereby incorporated by reference to Exhibit 10.4 of
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.

10.28 Collateral Assignment Split-Dollar Agreement by and
among the Company and Robert H. Schottenstein, and
Janice K. Schottenstein, as Trustee of the Robert H.
Schottenstein 1996 Insurance Trust, dated September
24, 1997. (Filed herewith.)

</TABLE>

23
<PAGE> 24

<TABLE>
<CAPTION>
Exhibit Number Description Page No.
- -------------- ----------- --------
<S> <C> <C>
10.29 Collateral Assignment Split-Dollar Agreement by and
among the Company and Steven Schottenstein, and Irving
E. Schottenstein, as Trustee of the Steven
Schottenstein 1994 Trust, dated September 24, 1997.
(Filed herewith.)

10.30 Collateral Assignment Split-Dollar Agreement by and
among the Company and Kerrii B. Anderson, and Douglas
T. Anderson, as Trustee of the Kerrii B. Anderson 1997
Irrevocable Life Insurance Trust, dated September 24,
1997. (Filed herewith.)

13 Annual Report to Shareholders for the year ended
December 31, 1997. (Filed herewith.)

21 Subsidiaries of Company. (Filed herewith.)

23 Consent of Deloitte & Touche LLP. (Filed herewith.)

24 Powers of Attorney. (Filed herewith.)

27 Financial Data Schedule

</TABLE>

<PAGE> 1
Exhibit 10.10

CONSENT TO THE CREATION OF SUBSIDIARIES OF M/I SCHOTTENSTEIN
HOMES, INC. PURSUANT TO, AND FOURTH AMENDMENT TO, SECOND RESTATED
REVOLVING CREDIT LOAN AND STANDBY LETTER OF CREDIT AGREEMENT

This Consent to the Creation of Subsidiaries of M/I
Schottenstein Homes, Inc. Pursuant to, and Fourth Amendment to, Second Restated
Revolving Credit Loan And Standby Letter Of Credit Agreement (this "Amendment")
is made to be effective as of December 29, 1997, by and among M/I SCHOTTENSTEIN
HOMES, INC., an Ohio corporation ("Borrower"), BANK ONE, NA, a national banking
association, formerly known as Bank One, Columbus, N.A., a national banking
association ("Bank One"), THE HUNTINGTON NATIONAL BANK, a national banking
association ("HNB"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("First Chicago"), NATIONAL CITY BANK OF COLUMBUS, a national
banking association ("NCB"), BANKBOSTON, N.A., a national banking association,
formerly known as The First National Bank of Boston, a national banking
association ("BOB"), THE FIFTH THIRD BANK OF COLUMBUS, an Ohio banking
corporation ("Fifth Third") (Bank One, HNB, First Chicago, NCB, BOB and Fifth
Third is each a "Bank" and, collectively, "Banks"), and BANK ONE, NA, a national
banking association, formerly known as Bank One, Columbus, N.A., a national
banking association, as agent for Banks ("Agent"). For valuable consideration,
the receipt of which is hereby acknowledged, Borrower, Banks and Agent, each
intending to be legally bound, hereby recite and agree as follows:

BACKGROUND INFORMATION

A. Borrower, Bank One, HNB, First Chicago, NCB, BOB, Fifth
Third and Agent are parties to a certain Second Restated Revolving Credit Loan
and Standby Letter of Credit Agreement effective as of December 30, 1996, as
amended by the First Amendment thereto effective as of March 14, 1997, the
Second Amendment thereto effective as of May 7, 1997 and the Third Amendment
thereto effective as of September 29, 1997 (the "Credit Agreement").

B. Borrower wants to form new limited liability companies (the
"LLCs") in connection with the development of a 522-acre tract of land located
in Prince William County, Virginia, near Manassas, Virginia, which tract is
referred to from time to time as "Bellwood" and is the subject of that certain
letter agreement between Borrower and Banks dated October
<PAGE> 2

15, 1997 and in connection with the development of a tract of land located in
Maryland.

C. Borrower, Banks and Agent want to amend the Credit
Agreement by modifying the definition of "Subsidiary" to encompass the LLCs, as
a result of which modification subsection 7.16 of the Credit Agreement will
require the prior written consent of the Required Banks to the formation of the
LLCs.

D. Subject to the terms and conditions of this Amendment and
of the Credit Agreement, the Banks want to consent to the formation of the LLCs.

E. Borrower, Banks and Agent want to amend the Credit
Agreement by providing for the LLCs and by modifying subsection 7.9, Limitation
on Investments, paragraph (g), which limits the investments by M/I Financial
Corp. in second mortgage loans for the purchase of residential real property.

AGREEMENT

1. Subject to the terms and conditions of this Amendment and
of the Credit Agreement, as amended hereby, Bank, Agent and Borrower each hereby
(a) consents to, and waives any Default solely as a result of, the formation by
Borrower of, as new Subsidiaries of Borrower, Lot 5 - 1997, L.L.C., a Virginia
limited liability company, Bellwood L.L.C., a Virginia limited liability
company, Manor Road - 1997, L.L.C., a Virginia limited liability company and
Chevy Chase Villas, L.L.C., a Virginia limited liability company.

2. Subsection 1.1, Defined Terms of the Credit Agreement is
hereby amended by deleting the definitions of each of "Construction Bonds,"
"Customer Deposits," "Eligible Developed Lots Sold," "Eligible Developed Lots
Unsold," "Eligible Model Houses," "Guaranties" and "Subsidiary" in their
entireties and replacing them, respectively, with the following:

"Construction Bonds" shall mean bonds issued by surety bond
companies for the benefit of, and as required by,
municipalities or other political subdivisions to secure the
performance by Borrower or any Subsidiary of its obligations
relating to lot improvements and subdivision development and
completion.

"Customer Deposits" shall mean cash deposits made by customers
of Borrower or any

2
<PAGE> 3

Subsidiary in connection with the execution of purchase
contracts, which deposits shall be shown as liabilities on
Borrower's consolidated financial statements.

"Eligible Developed Lots Sold" shall mean all Developed Lots
which Borrower or any Subsidiary has recorded as sold in
accordance with its usual accounting practices to any Person
other than an Affiliate or Subsidiary of Borrower. The value
of Eligible Developed Lots Sold shall be calculated in
accordance with GAAP and shall include all associated costs
required to be capitalized under GAAP, but shall be reduced by
the then outstanding aggregate amount of Indebtedness secured
by any Eligible Developed Lots Sold and permitted by
subsection 7.1(d) hereof.

"Eligible Developed Lots Unsold" shall mean all Developed Lots
which Borrower or any Subsidiary has not recorded as sold in
accordance with its usual accounting practices, or which
Borrower or any Subsidiary has recorded as sold to an
Affiliate or Subsidiary of Borrower. The value of Eligible
Developed Lots Unsold shall be calculated in accordance with
GAAP and shall include all associated costs required to be
capitalized under GAAP, but shall be reduced by the then
outstanding aggregate amount of Indebtedness secured by any
Eligible Developed Lots Unsold and permitted by subsection
7.1(d) hereof.

"Eligible Model Houses" shall mean (a) all completed detached
or attached single family houses (including townhouse
condominiums and condominiums) which are being used by
Borrower or any Subsidiary as sales models, and the lots on
which such houses are located and (b) detached or attached
(including townhouse condominiums and condominiums) single
family houses for which there has been a Start of Construction
which upon completion will be used by Borrower or any
Subsidiary as sales models, and the lots on which such houses
are located. The value of Eligible Model Houses shall be
calculated in accordance with GAAP

3
<PAGE> 4

and shall include all associated costs required to be
capitalized under GAAP except for the costs of any
furnishings, but shall be reduced by the then outstanding
aggregate amount of Indebtedness secured by any Eligible
Model Houses and permitted by subsection 7.1(d) hereof;
provided, however, that (a) the aggregate value of attached
(including townhouse condominiums and condominiums) single
family homes constituting Eligible Model Houses shall not
exceed $3,000,000, and (b) the aggregate value of all
Eligible Model Houses shall not exceed $30,000,000.

"Guaranties" (individually, "Guaranty") shall mean the
guaranties of the Indebtedness evidenced by this Agreement and
by all documents contemplated by this Agreement, including
without limitation the Notes, as this Agreement and such
documents may be amended or restated from time to time, which
guaranties are substantially in the form of Exhibit A attached
to this Agreement, executed by each of Borrower's Subsidiaries
(which are M/I Financial Corp., 601RS, Inc., M/I Homes, Inc.,
M/I Homes Construction, Inc., Bellwood L.L.C., Lot 5 - 1997,
L.L.C., Manor Road - 1997, L.L.C. and Chevy Chase Villas,
L.L.C.) in favor of the respective Banks and to which Agent
shall also be a party, and any guaranties in favor of Agent
and the respective Banks executed by (a) each other permitted
Subsidiary, if any, of Borrower and/or (b) the M/I Ancillary
Businesses that are wholly-owned by the Borrower or by any
Subsidiary.

"Subsidiary" shall mean as to any Person, a corporation,
limited liability company or other entity of which shares of
stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such corporation, limited liability company
or other entity are at the time owned, or the management of
which is otherwise controlled, directly, or indirectly

4
<PAGE> 5

through one or more intermediaries, or both, by such Person,
and with respect to Borrower shall include all Subsidiaries
of Subsidiaries of Borrower.

3. Subsection 1.1, Defined Terms, of the Credit Agreement is
hereby further amended by adding the following definitions thereto:

"Bellwood L.L.C." shall mean Bellwood L.L.C., a Virginia
limited liability company and a Subsidiary of Borrower, which
is owned 99% by Lot 5 - 1997, L.L.C. and 1% by KSI Services,
Inc., a Virginia corporation.

"Chevy Chase Villas, L.L.C." shall mean Chevy Chase Villas,
L.L.C., a Virginia limited liability company and a Subsidiary
of Borrower, which is owned 99% by Manor Road - 1997, L.L.C.
and 1% by KSI Services, Inc., a Virginia corporation.

"Lot 5 - 1997, L.L.C." shall mean Lot 5 - 1997, L.L.C., a
Virginia limited liability company and a wholly-owned
Subsidiary of Borrower.

"Manor Road - 1997, L.L.C." shall mean Manor Road - 1997,
L.L.C., a Virginia limited liability company and a
wholly-owned Subsidiary of Borrower.

4. Subsection 7.1, Limitation on Indebtedness, of the Credit
Agreement is hereby amended by deleting paragraph (i) in its entirety and
replacing it with the following paragraph (i):

(i) Indebtedness of any wholly-owned Subsidiary of Borrower,
or Indebtedness of Bellwood L.L.C. or Chevy Chase Villas,
L.L.C., with respect to loans from Borrower or from any other
Subsidiaries of Borrower; provided that each such Subsidiary
shall have delivered to each of the Banks, prior to the making
of any such loans, its respective Guaranty conforming to the
requirements of this Agreement; provided further that any such
Indebtedness of Bellwood L.L.C. shall not in the aggregate
exceed $3,500,000; and provided further that any such
Indebtedness

5
<PAGE> 6

of Lot 5- 1997, L.L.C. shall not in the aggregate exceed
$25,000,000; and

5. Subsection 7.2, Limitation on Liens, of the Credit
Agreement is hereby amended by deleting paragraph (g) in its entirety and
replacing it with the following paragraph (g):

(g) (i) deposits to secure the performance of: bids;
trade contracts (other than for borrowed money or the purchase
price of property or services); leases; statutory and other
obligations required by law; surety, appeal and performance
bonds (including Construction Bonds); and other obligations of
a like nature incurred in the ordinary course of business; and
(ii) Liens in favor of surety bond companies pursuant to
indemnity agreements to secure the reimbursement obligations
of Borrower or any Subsidiary on Construction Bonds, provided
(A) the Liens securing Construction Bonds shall be limited to
the assets of, as appropriate, Borrower or such Subsidiary at,
and the rights of, as appropriate, Borrower or such Subsidiary
arising out of, the projects that are the subject of the
Construction Bonds, (B) the Liens shall not attach to any real
estate, and (C) the aggregate amount of such Liens at any time
shall not exceed the dollar amount of Construction Bonds then
outstanding, and in any event shall not exceed the amount of
reimbursement obligations on Construction Bonds permitted to
Borrower pursuant to subsection 7.3(a) hereof;

6. Subsection 7.6, Limitation on Dividends, of the Credit
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following subsection 7.6:

7.6 Limitation on Dividends and Distributions. Make
any distributions or declare any dividends (other than
dividends payable solely in common stock of Borrower) on, or
make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption,
retirement or other acquisition of any shares of any class of
stock of Borrower, whether now or

6
<PAGE> 7

hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Borrower or any of its
Subsidiaries (each of the foregoing a "Stockholder
Payment"), except (a) so long as no Default or Event of
Default has occurred and is continuing or would result
therefrom, Borrower and any of its Subsidiaries may make
Stockholder Payments in a total amount that, when added to
all other Stockholder Payments permitted by this Agreement,
does not exceed the sum of (i) twenty-five percent (25%) of
cumulative Consolidated Earnings (taking into account
losses, if any) of Borrower subsequent to December 31, 1994
plus (ii) $5,000,000; and (b) any Subsidiary of Borrower may
declare and pay dividends or make distributions, and such
dividends or distributions shall not be considered
Stockholder Payments. In determining compliance with the
foregoing, Borrower shall be in compliance if, as of the
last day of the calendar month immediately preceding the
month in which any such Stockholder Payments are made, the
cumulative Stockholder Payments previously made plus the
Stockholder Payments made during the current month would not
in the aggregate exceed the amount permitted by clause (a),
above.

7. Subsection 7.7, Limitation on Certain Real Property
Expenditures, of the Credit Agreement is hereby amended by deleting it in its
entirety and replacing it with the following subsection 7.7:

7.7 Limitation on Certain Real Property Expenditures.
Purchase or acquire any Eligible Raw Land and Land Under
Development by the expenditure of cash, the incurrence of
Indebtedness, as a result of Investment in Joint Venture(s),
or otherwise, if as a result of such purchase or acquisition
the aggregate cost of all the foregoing then owned by Borrower
and its Subsidiaries (including their pro rata share of any
undeveloped land that constitutes part of an Investment in
Joint Venture) shall exceed (a) as to undeveloped land only,
$55,000,000; and (b) as to the sum of undeveloped land and
land under

7
<PAGE> 8

development, $100,000,000; provided further, that the
aggregate cost of any individual tract of land acquired by
Borrower or any of its Subsidiaries, or their pro rata share
of any tract that constitutes part of an Investment in Joint
Venture may not exceed $2,000,000 except for land holdings set
forth on Exhibit G attached hereto and except for Bellwood (as
hereinafter defined); and, provided further, that the
aggregate cost (net of any cash received from the sale of land
or lots) to Borrower and all of its Subsidiaries with respect
to the purchase or acquisition and the development of the
522-acre tract of land located in Prince William County,
Virginia near Manassas, Virginia, which tract is referred to
from time to time, and herein, as "Bellwood," shall not at any
time exceed $25,000,000. For purposes of this subsection 7.7,
the cost of undeveloped land and land under development shall
be determined in accordance with GAAP. Further, for purposes
of this subsection 7.7, any tract of land shall cease to be
classified as undeveloped land after (i) commencement of the
development of such tract into residential lots in good faith
and provided the development thereof is completed over a
period of not more than one year, or (ii) such tract is the
subject of a valid, noncontingent contract of sale with a
person who is not an Affiliate or Subsidiary and who is
satisfactory to the Required Banks in their sole discretion,
provided the sale contemplated by such contract is to be
completed not more than two years after the date of the
contract. In the event the development of any tract is
discontinued for a period of 60 days or longer or not
completed within one year, such tract shall automatically be
deemed to be undeveloped land.

8. Subsection 7.9, Limitation on Investments, of the Credit
Agreement is hereby amended by deleting paragraphs (d) and (g) in their
entireties and replacing them with the following paragraphs (d) and (g):

(d) any investments in M/I Financial Corp., 601RS,
Inc., M/I Homes, Inc., M/I

8
<PAGE> 9

Homes Construction, Inc., Lot 5 - 1997, L.L.C., Bellwood
L.L.C., Manor Road - 1997, L.L.C. or Chevy Chase Villas,
L.L.C. or any other Subsidiary created with the consent of the
Required Banks hereafter; provided that the aggregate cost
(net of any repayments, distributions or dividends) of
investments by Borrower and all of the Subsidiaries in
Bellwood L.L.C. shall not at any time exceed $25,000,000; and
provided further that the aggregate cost (net of any
repayments, distributions or dividends) of investments by
Borrower and all of the Subsidiaries in Lot 5 - 1997, L.L.C.
shall not at any time exceed $25,000,000;

(g) second mortgage loans made in the ordinary course
of M/I Financial Corp.'s business to natural persons for the
purchase of residential real property, provided that such
second mortgage loans (i) shall be made only in connection
with a specific financing program to natural persons who have
a first mortgage loan from M/I Financial Corp. with respect to
the same real property, and (ii) shall not in the aggregate
exceed $4,000,000 at any one time outstanding;

9. The Credit Agreement is hereby amended by deleting the
existing Exhibit G - Certain Land Holdings in its entirety and replacing it
with, and fully incorporating by this reference therein, amended Exhibit G
thereto, which amended Exhibit G is attached hereto.

10. In order to induce Banks and Agent to enter into this
Amendment, Borrower hereby represents and warrants to each Bank and to Agent
that on the date hereof:

(a) it has the corporate power and authority to make,
deliver and perform this Amendment and to borrow under the
Credit Agreement as amended by this Amendment and has taken
all corporate action necessary to be taken by it to authorize
the borrowings on the terms and conditions of the Credit
Agreement as amended by this Amendment and to authorize the
execution, delivery and performance of the Credit Agreement as
amended by this Amendment;

9
<PAGE> 10

(b) each of the Subsidiaries (i) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate
power and authority to conduct the business in which it is
currently engaged, (iii) is qualified as a foreign corporation
under the laws of any jurisdiction where the failure to so
qualify would have a material adverse effect on the business
of Borrower and its Subsidiaries taken as a whole, and (iv) is
in compliance with all Requirements of Law except to the
extent that the failure to comply therewith would not, in the
aggregate, have a material adverse effect on the business,
operations, property or financial or other condition of
Borrower and its Subsidiaries taken as a whole and would not
materially adversely affect the ability of Borrower to perform
its obligations under this Agreement and the Notes.

(c) the execution, delivery and performance of the
Guaranty by each of Lot 5 - 1997, L.L.C., Bellwood L.L.C.,
Manor Road - 1997, L.L.C. and Chevy Chase Villas, L.L.C. will
not violate any Requirement of Law or Contractual Obligation
of such Subsidiary and do not and will not result in, or
require, the creation or imposition of any Lien on any of its
properties or revenues pursuant to any Requirement of Law or
Contractual Obligation.

(d) Schedule 3 attached hereto contains the name,
principal place of business, all other places of business and
percentage of ownership of all of the Subsidiaries of
Borrower.

11. The Credit Agreement is hereby amended by deleting the
existing Schedule 3 (Subsidiaries) thereto in its entirety and replacing it
with, and fully incorporating by reference therein, amended Schedule 3 thereto,
which amended Schedule 3 is attached hereto.

12. The Credit Agreement, including without limitation
Borrower's representations, warranties and covenants, as amended by this
Amendment, shall remain in full force and effect in

10
<PAGE> 11

accordance with its terms as amended hereby, and upon the effective date of this
Amendment, the terms "Agreement" and "this Agreement" shall mean the Credit
Agreement as amended by this Amendment.

13. The obligations of Agent and Banks pursuant to this
Amendment are subject to the satisfaction of the following conditions precedent
prior to the effective date of this Amendment:

(a) Guaranties. Each Bank shall have received from
each of Lot 5 - 1997, L.L.C., Bellwood L.L.C., Manor Road -
1997, L.L.C. and Chevy Chase Villas, L.L.C. its respective
Guaranty, to which Agent shall also be a party, conforming to
the requirements of the Credit Agreement and delivered by a
duly authorized officer of each of Lot 5 - 1997, L.L.C.,
Bellwood L.L.C., Manor Road - 1997, L.L.C. and Chevy Chase
Villas, L.L.C.

(b) Guarantor's Consent and Reaffirmation of
Guaranties. Each Bank and Agent shall have received from each
of M/I Financial Corp., 601RS, Inc., M/I Homes, Inc. and M/I
Homes Construction, Inc. an executed copy of its respective
Guarantor's Consent and Reaffirmation of Guaranties (in form
and substance satisfactory to Agent).

(c) Proceedings of Borrower. Each Bank and Agent
shall have received a copy of the resolutions (in form and
substance satisfactory to Agent) of the Executive Committee of
the Board of Directors of Borrower authorizing the execution,
delivery and performance of this Amendment, certified by the
Secretary or the Assistant Secretary of Borrower as of the
date hereof. Such certificate shall state that the resolutions
set forth therein have not been amended, modified, revoked or
rescinded as of the effective date of this Amendment.

(d) Proceedings of Subsidiaries of Borrower. Each
Bank and Agent shall have received a copy of the resolutions
(in form and substance satisfactory to each Bank and Agent) of
(i) M/I Schottenstein Homes, Inc.,

11
<PAGE> 12

as the sole shareholder of each of M/I Financial Corp., 601RS,
Inc., M/I Homes, Inc. and M/I Homes Construction, Inc., and as
the sole member of Lot 5 - 1997, L.L.C. and Manor Road - 1997,
L.L.C.; (ii) Lot 5 - 1997, L.L.C. and KSI Services, Inc., as
the sole members of Bellwood L.L.C.; and (iii) Manor Road -
1997, L.L.C. and KSI Services, Inc., as the sole members of
Chevy Chase Villas, L.L.C., each resolution authorizing the
execution, delivery and performance of (y) by Lot 5 - 1997,
L.L.C., Bellwood L.L.C., Manor Road - 1997, L.L.C. and Chevy
Chase Villas, L.L.C., the respective Guaranties of each, and
(z) by M/I Financial Corp., 601RS, Inc., M/I Homes, Inc., and
M/I Homes Construction, Inc., Guarantor's Consent and
Reaffirmation of Guaranties, all certified by the Secretary or
Assistant Secretary of each respective Subsidiary of Borrower
as of the date hereof. Such certificate shall state that the
resolutions set forth therein have not been amended, modified,
revoked or rescinded as of the effective date of this
Amendment.

(e) Incumbency Certificates of Subsidiaries. Each
Bank and Agent shall have received a certificate of the
Manager, or other appropriate person, of each of Lot 5 - 1997,
L.L.C., Bellwood L.L.C., Manor Road - 1997, L.L.C. and Chevy
Chase Villas, L.L.C., dated the date hereof, as to the
incumbency and signatures of the Manager, or other appropriate
person(s), of each executing its respective Guaranty.

(f) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing under
the Credit Agreement as of the effective date of this
Amendment.

14. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This Amendment shall become effective upon receipt by Agent and each
Bank of executed counterparts of this Amendment by each of Borrower, Agent and
the Required Banks.

12
<PAGE> 13

15. This Amendment shall be governed by, and construed in
accordance with, the local laws of the State of Ohio.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

13
<PAGE> 14

IN WITNESS WHEREOF, Borrower, Banks and Agent have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.

M/I SCHOTTENSTEIN HOMES, INC.

By /s/ ROBERT H. SCHOTTENSTEIN
-----------------------------------------
Robert H. Schottenstein
Title: President and Assistant Secretary

BANK ONE, NA,
as Agent and as a Bank

By /s/ THOMAS D. IGOE
------------------------------------------
Thomas D. Igoe
Title: Senior Vice President

THE HUNTINGTON NATIONAL BANK

By /s/ R.H. FRIEND
------------------------------------------
R.H. Friend
Title: Vice President

THE FIRST NATIONAL BANK OF CHICAGO

By /s/ GREGORY A. GILBERT
------------------------------------------
Gregory A. Gilbert
Title: Vice President

NATIONAL CITY BANK OF COLUMBUS

By /s/ RALPH A. KAPAROS
------------------------------------------
Ralph A. Kaparos
Title: Senior Vice President

14
<PAGE> 15

BANKBOSTON, N.A.

By /s/ KEVIN C. HAKE
------------------------------------------
Kevin C. Hake
Title: Director

THE FIFTH THIRD BANK OF COLUMBUS

By /s/ MARK E. RANSOM
------------------------------------------
Mark E. Ransom
Title: Vice President

15
<PAGE> 16

GUARANTOR'S CONSENT AND REAFFIRMATION OF GUARANTIES

The undersigned Guarantor hereby (a) acknowledges that it has
read the foregoing Consent to the Creation of Subsidiaries of M/I Schottenstein
Homes, Inc. Pursuant to, and Fourth Amendment to, Second Restated Revolving
Credit Loan and Standby Letter of Credit Agreement, effective as of September
29, 1997 (the "Fourth Amendment"), and (b) agrees that the undersigned
Guarantor's Guaranty dated as of December 30, 1996 of the obligations of M/I
Schottenstein Homes, Inc. pursuant to the Second Restated Revolving Credit Loan
and Standby Letter of Credit Agreement, as amended by the First Amendment
thereto effective as of March 14, 1997, the Second Amendment thereto effective
as of May 7, 1997, the Third Amendment thereto effective as of September 29,
1997 and the Fourth Amendment, and all representations, warranties and covenants
in such Guaranty, continue in full force and effect notwithstanding the Fourth
Amendment.

M/I FINANCIAL CORP.

By: /s/ PAUL S. ROSEN
------------------------------------------
Paul. S. Rosen
Title: President

16
<PAGE> 17

GUARANTOR'S CONSENT AND REAFFIRMATION OF GUARANTIES

Each of the undersigned Guarantors hereby (a) acknowledges
that it has read the foregoing Consent to the Creation of Subsidiaries of M/I
Schottenstein Homes, Inc. Pursuant to, and Fourth Amendment to, Second Restated
Revolving Credit Loan and Standby Letter of Credit Agreement, effective as of
September 29, 1997 (the "Fourth Amendment"), and (b) agrees that each of the
undersigned Guarantor's Guaranties dated as of March 14, 1997 of the obligations
of M/I Schottenstein Homes, Inc. pursuant to the Second Restated Revolving
Credit Loan and Standby Letter of Credit Agreement, as amended by the First
Amendment thereto effective as of March 14, 1997, the Second Amendment thereto
effective as of May 7, 1997, the Third Amendment thereto effective as of
September 29, 1997 and the Fourth Amendment, and all representations, warranties
and covenants in each of such Guaranties, continue in full force and effect
notwithstanding the Fourth Amendment.

601RS, INC.
M/I HOMES, INC.
M/I HOMES CONSTRUCTION, INC.

By: /s/ ROBERT H. SCHOTTENSTEIN
------------------------------------------
Robert H. Schottenstein
President and Assistant Secretary of 601RS, Inc.;
Vice Chairman of M/I Homes, Inc.; and
Vice Chairman of M/I Homes Construction, Inc.

<PAGE> 1
EXHIBIT 10.14

FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT

This First Amendment to Revolving Credit Agreement is made to
be effective as of December 8, 1997 ("this Amendment"), by and among M/I
FINANCIAL CORP., an Ohio corporation ("Financial"), M/I SCHOTTENSTEIN HOMES,
INC., an Ohio corporation ("M/I Homes") (Financial and M/I Homes are hereinafter
referred to collectively as the "Borrowers"), and BANK ONE, NA, a national
banking association (the "Bank"). For valuable consideration, the receipt of
which is hereby acknowledged, Borrowers and Banks, intending to be legally
bound, hereby recite and agree as follows:

RECITALS

A. Borrowers and the Bank are parties to a Revolving Credit
Agreement made to be effective as of July 18, 1997 (the "Credit Agreement").

B. Borrowers and Bank wish to amend the Credit Agreement by
modifying the interest rate for Eurodollar Rate Loans as set forth in subsection
2.2, Note, and by modifying subsection 6.5, Limitation on Investments.

AGREEMENT

1. Subsection 2.2, Note, of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:

2.2 Note. The Loans made by the Bank pursuant hereto shall be
evidenced by a promissory note of the Borrowers, substantially
in the form of Exhibit A attached hereto and made a part
hereof (the "Note"), payable to the order of the Bank and
evidencing the obligation of the Borrowers to pay the
aggregate unpaid principal amount of the Loans made by the
Bank, with interest thereon at a rate per annum equal to (i)
in the case of Prime Rate Loans, the Prime Rate in effect from
time to time minus one-quarter of one percent (1/4%) and (ii)
in the case of Eurodollar Rate Loans if permitted hereunder at
such time, the Eurodollar Rate determined
<PAGE> 2

for each such loan plus one and 60/100 percent (1.60%),
subject with respect to each of the aforesaid interest rates
to the default interest rate provisions of subsection 2.6(c)
hereof. Interest shall be payable in arrears and shall be due
on the last day of each month, beginning with August 31, 1997,
and continuing on the last day of each month thereafter, and
on the last day of the Commitment Period. If not sooner paid,
the entire principal amount of the Loans outstanding and any
remaining unpaid interest on the Loans shall be due and
payable on the last day of the Commitment Period. The Bank is
hereby authorized to record electronically or otherwise the
date and amount of each Loan disbursement made by the Bank and
the date and amount of each payment or prepayment of principal
thereof, and any such recordation shall constitute conclusive
evidence, absent manifest error, of the accuracy of the
information so recorded; provided, however, the failure of the
Bank to make any such recordation(s) shall not affect the
obligation of Borrowers to repay outstanding principal,
interest, or any other amount due hereunder or under the Note
in accordance with the terms hereof and thereof. The Note
shall (a) be dated as of the date hereof, (b) be stated to
mature on the last day of the Commitment Period, and (c) bear
interest from and including the date thereof on the unpaid
principal amount thereof from time to time outstanding at a
rate per annum equal to (i) in the case of Prime Rate Loans,
the Prime Rate in effect from time to time minus one-quarter
of one percent (1/4%) and (ii) in the case of Eurodollar Rate
Loans, the Eurodollar Rate determined for each such loan plus
one and 60/100 percent (1.60%) subject with respect to each of
the aforesaid interest rates to the default interest rate
provisions of subsection 2.6(c) hereof.

2. Subsection 6.5, Limitation on Investments, of the Credit Agreement
is hereby amended by deleting it in its entirety and replacing it with the
following:

6.5 Limitation on Investments. Make or
commit to make any advance, loan,

2
<PAGE> 3

extension of credit or capital contribution to, or purchase
of, any stock, bonds, notes, debentures or other securities
of, or make any other investment in, any Person (all such
transactions being herein called "investments") except for (i)
first mortgage loans made in the ordinary course of
Financial's business to natural persons for the purchase of
residential real property, (ii) second mortgage loans made in
the ordinary course of Financial's business to natural persons
for the purchase of residential real property, provided that
such second mortgage loans (A) shall be made only in
connection with a specific financing program to natural
persons who have a first mortgage loan from Financial with
respect to the same real property, and (B) shall not exceed
$4,000,000 in aggregate at any one time outstanding, (iii)
first mortgage loans made in the ordinary course of
Financial's business to natural persons for the purpose of
re-financing an existing first mortgage loan, provided that
the amount of such re-financing mortgage loans shall not
exceed $5,000,000 in aggregate at any one time outstanding,
(iv) investments in Cash Equivalents, (v) investments in
Fannie Mae stock to the extent required for Financial to sell
mortgages to Fannie Mae, but the amount of such investments in
Fannie Mae stock shall in no event exceed $100,000, (vi)
investments in the ordinary course of Financial's business in
standard instruments hedging against interest rate risk
incurred in the origination and sale of mortgage loans, in
each case matching a hedging instrument or instruments to
specific mortgages or specific groups of mortgages, but in no
event including investments in futures contracts, options
contracts or other derivative investment vehicles acquired as
independent investments, and (vii) loans and advances to M/I
Homes.

3. Each of the Borrowers hereby represents and warrants to Bank that it
has the corporate power and authority to make, deliver and perform this
Amendment and to borrow under the Credit Agreement as amended by this Amendment
and has taken all corporate action necessary to be taken by it to authorize the
borrowings on the terms and conditions of the Credit Agreement as amended by
this

3
<PAGE> 4

Amendment and to authorize the execution, delivery and performance of the Credit
Agreement as amended by this Amendment.

4. The Credit Agreement, including without limitation each Borrower's
representations, warranties and covenants, as amended by this Amendment shall
remain in full force and effect in accordance with its terms as amended hereby,
and upon the effective date of this Amendment, the terms "Agreement" and "this
Agreement" shall mean the Credit Agreement as amended by this Amendment.

5. The obligations of the Bank pursuant to this Amendment are subject
to the satisfaction of the following conditions precedent prior to the effective
date of this Amendment:

(a) Corporate Proceedings of Borrowers. Bank shall
have received a copy of the resolution (in form and substance
satisfactory to Bank) of (i) the Board of Directors or the
Executive Committee of the Board of Directors of M/I Homes and
(ii) the Sole Shareholder of Financial, in each case
authorizing the execution, delivery and performance of this
Amendment certified by the Secretary or the Assistant
Secretary of each Borrower as of the date hereof. Such
certificate shall state that the resolution set forth therein
has not been amended, modified, revoked or rescinded as of
effective date of this Amendment.

(b) No Default or Event of Default. No Default or
Event of Default shall have occurred and be continuing under
the Credit Agreement as of the effective date of this
Amendment.

6. This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. This
Amendment shall become effective upon receipt by Bank of executed counterparts
of this Amendment by each of the parties hereto.

7. This Amendment shall be governed by, and construed in accordance
with, the local laws of the State of Ohio.

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.

4
<PAGE> 5

BANK ONE, NA M/I FINANCIAL CORP.

By /s/ THOMAS D. IGOE By /s/ PAUL S. ROSEN
---------------------------- ------------------------------
Thomas D. Igoe Paul S. Rosen
Title: Senior Vice President Title: President

M/I SCHOTTENSTEIN HOMES, INC.

By /s/ ROBERT H. SCHOTTENSTEIN
------------------------------
Robert H. Schottenstein
Title: President and
Assistant Secretary

5
<PAGE> 6

CERTIFICATE

I, Paul S. Coppel, do hereby certify that (i) I am the duly elected,
qualified and acting Secretary of M/I Financial Corp. (the "Corporation"), (ii)
the resolutions attached hereto and marked as Exhibit A were duly adopted by the
Sole Shareholder of the Corporation in a written action executed by the
President of the Sole Shareholder and dated December 8, 1997 in accordance with
the Regulations of the Corporation and applicable law, and (iii) said
resolutions are in full force and effect without amendment or modifications as
of the date hereof.

/s/ PAUL S. COPPEL
-----------------------------------
Paul S. Coppel, Secretary
M/I Financial Corp.
Dated: December 8, 1997

<PAGE> 1

COLLATERAL ASSIGNMENT

SPLIT-DOLLAR AGREEMENT

DATED: SEPTEMBER 24, 1997

<PAGE> 2

COLLATERAL ASSIGNMENT
SPLIT-DOLLAR AGREEMENT

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
Background Information..............................................................................- Page 1 -

1. Purchase of the Policy; Conformity to this Agreement............................................- Page 1 -

2. Ownership and Possession of the Policy..........................................................- Page 2 -

3. Payment of Premiums.............................................................................- Page 2 -

4. Employer's Interest.............................................................................- Page 2 -

5. Collateral Assignment of the Policy.............................................................- Page 2 -

6. Borrowing from the Policy.......................................................................- Page 3 -

7. Surrender or Cancellation of the Policy.........................................................- Page 3 -

8. Death of the Employee...........................................................................- Page 3 -

9. Termination of Agreement........................................................................- Page 4 -

10. Disposition of Policy Upon Termination of Agreement.............................................- Page 4 -

11. Prohibition Against Transfer of Interests.......................................................- Page 5 -

12. Amendment and Waiver............................................................................- Page 5 -

13. Successors and Assigns..........................................................................- Page 5 -

14. Notices.........................................................................................- Page 6 -

15. Survival........................................................................................- Page 6 -

16. No Guaranty of Employment.......................................................................- Page 6 -

17. Cooperation.....................................................................................- Page 6 -

18. No Strict Construction..........................................................................- Page 6 -

19. Severability....................................................................................- Page 6 -

20. Third Party Beneficiary.........................................................................- Page 6 -

21. Exoneration of Insurer..........................................................................- Page 6 -

22. ERISA Compliance................................................................................- Page 7 -

23. Governing Law...................................................................................- Page 7 -

24. Headings........................................................................................- Page 7 -

</TABLE>

- i -

<PAGE> 3

COLLATERAL ASSIGNMENT
SPLIT-DOLLAR AGREEMENT

This Agreement is made and entered into as of the 24th day of
September, 1997, by and among M/I Schottenstein Homes, Inc., an Ohio corporation
(the "Employer"), Robert H. Schottenstein (the "Employee"), and Janice K.
Schottenstein, as Trustee of the Robert H. Schottenstein 1996 Insurance Trust
(the "Trustee").

BACKGROUND INFORMATION
----------------------

A. The Employee is a capable, efficient and valued employee of the Employer.

B. The Employee wishes to provide life insurance protection for the
benefit of his family -- under the policy of insurance which is
described in Exhibit A hereto. Such life insurance policy, together
with any replacement of it or modification to it, is referred to herein
as the "Policy." The company which issues the Policy is referred to
herein as the "Insurer."

C. The Employer is willing, on the terms and conditions set forth in this
Agreement, to pay a portion of the premiums due on the Policy.

D. The Trustee shall be the owner of the Policy and, as such, shall
possess all incidents of ownership in and to the Policy. The Employee
shall have no incident of ownership in or to the Policy.

E. The Employer wishes to have the Policy collaterally assigned by the
Trustee in order to secure the payment of all amounts which will, in
the future, be due and payable to the Employer under this Agreement.

F. This Agreement is intended to be a "split-dollar" arrangement, as
described in Revenue Ruling 64-328 (issued by the Internal Revenue
Service).

AGREEMENT
---------

NOW, THEREFORE, in consideration of the mutual promises contained
below, the parties agree to the foregoing and as follows:

-Page 1-
<PAGE> 4

1. PURCHASE OF THE POLICY; CONFORMITY TO THIS AGREEMENT. With the
consent of the Employee, the Trustee has purchased, or has arranged to purchase,
the Policy from the Insurer. The parties (i) have taken, or will take, all
necessary action to cause the Insurer to issue the Policy and (ii) shall take
any further action which may be necessary to cause the Policy to conform to the
provisions of this Agreement. The parties agree that the Policy shall be subject
to (i) the terms of this Agreement and (ii) any collateral assignment filed with
the Insurer relating to the Policy.

2. OWNERSHIP AND POSSESSION OF THE POLICY. The Trustee (i) shall be the
sole and absolute owner of the Policy and (ii) may, except as otherwise provided
herein, exercise all ownership rights granted under the terms of the Policy.
However, the Employer shall have possession of the Policy.

3. PAYMENT OF PREMIUMS. The following provisions shall govern the
payment of premiums with respect to the Policy --

a. EMPLOYER PAYMENT OF PREMIUMS. On or before the due date of
each Policy premium, or within any grace period, the Employer shall (i)
pay the full amount of the premium to the Insurer and (ii) promptly
furnish evidence to the Employee and the Trustee of its timely payment
of such premium.

b. TRUSTEE REIMBURSEMENT OF COMPUTED ECONOMIC BENEFIT. The
Trustee shall promptly reimburse the Employer for a portion of each
premium paid by the Employer. The amount of such reimbursement shall
equal the economic benefit to the Trustee attributable to the life
insurance protection, on the Employee's life, that is provided under
this Agreement. The value of such economic benefit shall be calculated
using the lesser of (i) the rates known as "P.S. 58" rates or (ii) the
Insurer's published premium rates for an individual 1-year term life
insurance policy available to all standard risks -- in either case,
based on the Employee's age at the due date of the premium payment.

c. WAIVER OF PREMIUM (OR POLICY COSTS) RIDER. At the Trustee's
option (and if allowed by the Insurer), the Policy may provide for the
waiver of premium (or waiver of specified policy costs) in the event of
the Employee's disability. However, unless the Employer and the Trustee
otherwise agree (in advance and in writing), the Trustee shall
reimburse the Employer for any additional cost associated with such
waiver.

4. EMPLOYER'S INTEREST. As used in this Agreement, (i) the "Employer's
Gross Interest" in the Policy shall mean the aggregate amount of all premiums
paid by the Employer with respect to the Policy minus the aggregate amount of
all reimbursements of

-Page 2-
<PAGE> 5

such premium payments by the Trustee, and (ii) the "Employer's Net Interest" in
the Policy shall mean shall mean the Employer's Gross Interest minus the
outstanding balance (if any) of all Policy loans made to the Employer (including
all accrued and unpaid interest thereon).

5. COLLATERAL ASSIGNMENT OF THE POLICY. To secure the Employer's Net
Interest in the Policy, the Trustee hereby assigns the Policy to the Employer as
collateral. This Agreement, and the collateral assignment effected hereby,
specifically limits the rights of the Employer in the Policy to the recovery of
the Employer's Gross Interest. This collateral assignment of the Policy to the
Employer shall not be terminated, altered or amended by the Trustee without the
express written consent of the Employer, which consent may be withheld in the
Employer's sole and absolute discretion. The Insurer is authorized to accept
this Agreement as the Trustee's collateral assignment of the Policy to the
Employer. The Trustee and the Employee agree, upon reasonable request by the
Employer, to execute all other documents that may be necessary or desirable to
perfect this collateral assignment of the Policy.

6. BORROWING FROM THE POLICY. The Employer and the Trustee may borrow
from the Policy (as provided therein), subject to the following limitations --

a. BORROWING BY THE EMPLOYER. The outstanding amount of any
such borrowing by the Employer (including all accrued and unpaid
interest thereon) shall not exceed the Employer's Gross Interest in the
Policy. The Trustee shall execute and file any forms required by the
Insurer to permit the Employer to borrow from the Policy in accordance
with this provision.

b. BORROWING BY THE TRUSTEE. The Trustee shall not borrow from
the Policy without the prior written consent of the Employer, which
consent may be withheld in the Employer's sole and absolute discretion.
In addition, the outstanding amount of any such borrowing by the
Trustee (including all accrued and unpaid interest thereon) shall not
prevent the Employer from borrowing the maximum amount permitted
pursuant to the preceding provision.

7. SURRENDER OR CANCELLATION OF THE POLICY. If the Policy is
surrendered or canceled for any reason (other than the death of the Employee),
any net proceeds resulting from such surrender or cancellation (after reduction
by all applicable surrender or cancellation charges) shall be distributed as
follows --

a. EMPLOYER'S INTEREST. The Employer shall have the
unqualified right to receive a portion of such net proceeds equal to
the Employer's Net Interest; provided, however, in no event shall the
amount payable to the Employer exceed

-Page 3-
<PAGE> 6

the entire amount of such net proceeds.

b. TRUSTEE'S INTEREST. The remaining net proceeds (if any)
shall be paid to the Trustee.

8. DEATH OF THE EMPLOYEE. Upon the death of the Employee --

a. PROOF OF CLAIM. The Trustee and Employer shall promptly
take all action (including, without limitation, the filing of an
appropriate proof of claim) which may be necessary or desirable in
order to obtain the net death benefit provided under the Policy.
b. EMPLOYER'S INTEREST. The Employer shall have the
unqualified right to receive a portion of such net death benefit equal
to the Employer's Net Interest; provided, however, in no event shall
the amount payable to the Employer exceed the entire amount of such net
death benefit.

c. TRUSTEE'S INTEREST. The balance (if any) of the net death
benefit provided under the Policy shall be paid to the beneficiary or
beneficiaries designated by the Trustee, in the manner and amounts
provided in the beneficiary designation provision of the Policy.

d. POLICY BENEFICIARY DESIGNATION. The Employer and the
Trustee agree that the beneficiary designation provision of the Policy
shall conform to the foregoing provisions of this Agreement.

9. TERMINATION OF AGREEMENT. This Agreement shall terminate under the
following circumstances --

a. TERMINATION WITHOUT NOTICE. This Agreement shall terminate
without notice upon the occurrence of any of the following events:

O The total cessation of the business of the Employer; or

O The bankruptcy, receivership or dissolution of the Employer; or

O The written agreement of the Trustee and the Employer.

b. OPTIONAL TERMINATION BY THE TRUSTEE. The Trustee may
terminate this Agreement by giving at least ten (10) days written
notice to the Employer; provided, however, such notice may not be given
while the Employee is employed by the Employer. Such termination shall
be effective as of the date specified in the

-Page 4-
<PAGE> 7

notice but not sooner than ten (10) days after such notice is received
by the Employer.

c. OPTIONAL TERMINATION BY THE EMPLOYER. In the event that the
Employee's employment by the Employer is terminated for any reason
other than retirement, death or permanent disability of the Employee,
the Employer may terminate this Agreement by giving at least ten (10)
days written notice to the Trustee. Such termination shall be effective
as of the date specified in the notice but not sooner than ten (10)
days after such notice is received by the Trustee.

10. DISPOSITION OF POLICY UPON TERMINATION OF AGREEMENT. Upon any
termination of this Agreement --

a. TRUSTEE'S OPTION TO ACQUIRE SOLE OWNERSHIP. For sixty (60)
days after such termination, the Trustee shall have the option of
obtaining the release of the collateral assignment of the Policy to the
Employer. To obtain such release, the Trustee shall pay to the Employer
an amount equal to the Employer's Net Interest. Upon receipt of such
amount, the Employer shall release the collateral assignment of the
Policy by the execution and delivery of an appropriate instrument of
release. The Trustee may borrow against the Policy to finance the
payment of the Employer's Net Interest to the Employer, and the
Employer shall consent to any such borrowing.

b. TRANSFER OF POLICY TO THE EMPLOYER. If the Trustee fails to
exercise such option within such sixty (60) day period, the Trustee
shall, upon request by the Employer, promptly execute any documents
which are necessary or desirable to transfer ownership of the Policy to
the Employer. Thereafter, neither the Trustee nor its beneficiaries,
successors or assigns shall have any further interest in or to the
Policy (either under the terms thereof or under this Agreement).

11. PROHIBITION AGAINST TRANSFER OF INTERESTS.

a. TRANSFERS BY THE TRUSTEE. Except as otherwise provided in
this Agreement, the Trustee shall not sell, assign, transfer, borrow
against, surrender or cancel the Policy (or any portion thereof or
interest therein) without the express written consent of the Employer,
which consent may be withheld in the Employer's sole and absolute
discretion.

b. TRANSFERS BY THE EMPLOYER. Except as otherwise provided in
this Agreement, the Employer shall not sell, assign, transfer, or
borrow against any portion of its interest in the Policy without the
express written consent of the

-Page 5-
<PAGE> 8

Trustee, which consent may be withheld in the Trustee's sole and
absolute discretion.

12. AMENDMENT AND WAIVER. This Agreement may not be amended except by a
written instrument signed by the Employer and the Trustee, or their respective
successors or assigns, and may not be terminated except as provided herein. The
failure of any party to strictly enforce any provision of this Agreement shall
not affect the right of such party to thereafter enforce the same, or any other,
provision of this Agreement in accordance with its terms.

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of (i) the Employer, its successors and assigns, (ii) the
Employee, his heirs, successors and assigns, and (iii) the Trustee, its
beneficiaries, successors and assigns.

14. NOTICES. Any notice, consent or demand required or permitted to be
given under this Agreement shall be (i) in writing and (ii) signed by the party
giving or making the same. If such notice, consent or demand is mailed to a
party, it shall be sent by United States certified mail, postage prepaid,
addressed to such party's last known address as shown on the records of the
Employer. The date of such mailing shall be deemed the date of notice, consent
or demand.

15. SURVIVAL. The rights and obligations of the parties shall survive
the termination of this Agreement and the Employee's death to the extent that
any performance is required.

16. NO GUARANTY OF EMPLOYMENT. The Employee shall have no guarantee or
right to employment by reason of this Agreement.

17. COOPERATION. The parties agree to take such actions as are
desirable to allow the rights and duties specified in this Agreement to be
brought into effect. The parties each agree to execute and deliver all documents
which may be desirable to bring into effect the intent of this Agreement or to
carry out its provisions.

18. NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.

19. SEVERABILITY. Whenever possible, each provision of the Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision shall be held to be prohibited by, or
invalid under, applicable law, such provision

-Page 6-
<PAGE> 9

shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

20. THIRD PARTY BENEFICIARY. The Employee shall be considered a third
party beneficiary of the rights granted to the Trustee under this Agreement and
shall be entitled to enforce those rights directly against the Employer without
joinder of the Trustee.

21. EXONERATION OF INSURER. The Insurer shall be fully discharged from
its obligations under the Policy by payment of all Policy death benefits to the
beneficiary or beneficiaries named in the Policy subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a party to
this Agreement or any amendment hereof. No provision of this Agreement, nor of
any amendment hereof, shall in any way be construed as enlarging, changing,
varying, or in any other way affecting the obligations of the Insurer as
expressly provided in the Policy except insofar as the provisions hereof are
made a part of the Policy by any collateral assignment filed with the Insurer in
connection with this Agreement.

22. ERISA COMPLIANCE. The Employer is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives of this Agreement. The Employer shall make
all determinations concerning rights to benefits under this Agreement. Any
decision by the Employer denying a claim for benefits under this Agreement shall
be stated in writing and delivered or mailed to the claimant. Such decision
shall set forth the specific reasons for the denial, written to the best of the
Employer's ability in a manner that may be understood without legal or actuarial
counsel. In addition, the Employer shall afford a reasonable opportunity to the
claimant for a full and fair review of the decision denying such claim.

23. GOVERNING LAW. This Agreement, and the rights of the parties, shall
be governed by, and construed in accordance with, the laws of Ohio.

24. HEADINGS. The headings in this Agreement are for convenience only
and shall be ignored in the construction of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

-Page 7-
<PAGE> 10

M/I SCHOTTENSTEIN HOMES, INC.,
an Ohio corporation

By:
---------------------------------- ----------------------------------------
ROBERT H. SCHOTTENSTEIN (the "Employee")

Its:
---------------------------------- ----------------------------------------
JANICE K. SCHOTTENSTEIN, as Trustee of
the Robert H. Schottenstein 1996
Insurance Trust (the "Trustee")

-Page 8-
<PAGE> 11

EXHIBIT A
---------

INSURER POLICY NO.
------- ----------
Robert H. Schottenstein SV50186001

-Page 9-