April 30, 1997

                   QUARTERLY REPORT TO THE LIMITED PARTNERS
			OF DSI REALTY INCOME FUND VII


DEAR LIMITED PARTNERS:

We are pleased to enclose the  Partnership's  unaudited financial statements 
for  the  period  ended  March  31,  1997.  The  following  is  Management's 
discussion  and  analysis  of  the  Partnership's  financial  condition  and 
results  of  its  operations.

For the  three month  periods  ended  March 31, 1997 and 1996, total revenues 
increased 1.3% from $465,356 to $471,316 and total expenses increased slightly
from $361,559 to $361,795.  As a result,  net  income  increased  5.5%  from
$103,907  for  the  three  month  period  ended  March 31, 1996, to  $109,521
for the same period in 1997.  Occupancy  levels for the  Partnership's  six
mini-storage facilities averaged 85.7%  for the  three  month  periods ended
March 31, 1997, and 80.7% for the same period in 1996.  Rental  revenue
increased primarily as a  result of higher occupancy levels.  The Partnership
is  continuing its  marketing effort to attract  and  keep  new  tenants in its
various  mini-storage  facilities.  Operating  expenses remained constant as
increases in yellow pages advertising costs, legal and professional and
salaries and wage expenses was offset by lower maintenance and repair costs.
General  and  administrative expenses remained constant. 

The General Partners will continue their  policy of  funding the  continuing
improvement and  maintenance of  Partnership  properties with cash generated 
from operations.  The Partnership's financial resources appear to be adequate
to meet its needs.  The  General  Partners  anticipate  distributions to the
Limited Partners to remain at the current level for the foreseeable future.

We are not enclosing a copy of the Partnership Form 10-Q as filed with the 
Securities  and  Exchange  Commission  since all the information set forth 
therein is contained  either in this  letter or in the  attached  financial 
statements.  However, if you wish to  receive a copy of said report, please 
send a  written  request to  DSI  Realty  Income  Fund  VII,  P.O.  Box 357, 
Long  Beach,  California  90801. 

                              Very truly yours,
 
                              DSI REALTY INCOME FUND VII
                              By: DSI Properties, Inc., as
                              General Partner



                              By  /s/ Robert J. Conway
                                  ____________________________
                                  ROBERT J. CONWAY, President