October 29,1999

		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 September 30,  1999.  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 September 30, 1999 and 1998, total revenues
decreased 1.2% from $557,846 to $551,139 and total expenses decreased 3.0% from
$388,467 to $376,699.  As a result, net income increased 3.0% from $169,379 for
the three-month period ended September 30, 1998, to $174,440 for the same period
in 1999.  Rental revenue decreased primarily as a result of lower occupancy
levels.  Occupancy levels for the Partnership's six mini-storage facilities
averaged 84.6% for the three-month period ended September 30, 1999 and 88.4%
for the same period in 1998.  The Partnership is continuing its marketing
efforts to attract and keep new tenants in its various mini-storage facilities.
Operating expenses decreased approximately $16,900 (4.8%) primarily as a result
of a decrease in maintenance and repair expense, partially offset by an
increase in security and alarm service expenses.  General and administrative
expenses increased approximately $5,200 (13.8%) primarily as a result of
relatively insignificant fluctuations in various expense accounts.

For the nine-month periods ended September 30, 1999, and 1998, total revenues
increased 2.7% from $1,617,793 to $1,660,684 and total expenses increased 1.7%
from $1,144,235 to $1,163,669.  As a result, net income increased 5.0% from
$473,558 for the nine months ended September 30, 1998, to $497,015 for the
same period in 1999.  Rental revenue increased primarily as a result of higher
unit rental rates during the nine-month period.  Operating expenses increased
approximately $16,100 (1.6%) primarily due to increases in miscellaneous
advertising, salaries and wages, property management fees, workers compensation
and security and alarm service expenses, partially offset by a decrease in
maintenance and repair expenses.  Property management fees, which are based
on rental income, increased as a result of the increase in rental revenue.
General and administrative expenses increased approximately $3,400 (2.2%) as
discussed above.

The General Partners will continue their  policy of  funding improvements 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.

The Year 2000 issue refers to the inability of certain computer systems to
recognize a date using "00" as the Year 2000.  The Partnership has implemented
a Year 2000 program, which has three phases:  (1) identification;
(2) remediation; and (3) testing and verification.  The Partnership, as well
as the property management company and the Partnership's warehouse facilities
have completed those phases.  Computer programs have been upgraded and tested
to function properly with respect to the dates in the Year 2000 and thereafter.
Year 2000 compliance costs are nominal and have been expensed in the regular
course of business.  The Partnership provides no assurance that third-party
suppliers and customers will be compliant.  Nevertheless, the Partnership does
not believe that the Year 2000 issue will have a material adverse effect on
its financial condition or results of operations.

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