April 30, 1996

		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,  1996.  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, 1996 and 1995, total revenues 
increased 6.2%  from $438,395 to $465,356 and  total expenses  increased 3.2% 
from $350,229 to $361,559.  As a result,  net  income  increased  17.7%  from
$88,166  for  the  three  month  period  ended  March 31, 1995, to  $103,797 
for the same period in 1996.  Occupancy  levels for the  Partnership's  six
mini-storage facilities averaged 80.7%  for the  three  month  periods ended
March 31, 1996, and 1995.  Rental  revenue  increased as a  result of higher 
unit rental rates.  The  Partnership is  continuing its  marketing effort to 
attract  and  keep  new  tenants  in  its  various  mini-storage  facilities. 
Operating  expenses  increased  approximately  $5,300  (1.8%)  primarily as a 
result  of  higher  repair and  maintenance  expenses,  partially  offset by 
lower yellow pages advertising costs.  General  and  administrative expenses 
increased  approximately  $6,000 (10.6%) primarily  as a  result of computer
upgrade  and  consulting  expenses. 

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