October 31, 2000

		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,  2000.  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, 2000 and 1999, total revenues
increased 11.7% from $551,139 to $615,553 and total expenses increased 21.5%
from $376,699 to $457,784.  As a result, net income decreased 9.6% from
$174,440 for the three-month period ended September 30, 1999, to $157,769 for
the same period in 2000.  Rental revenue increased primarily as a result of
higher occupancy and unit rental rates.  Occupancy levels for the Partnership's
six mini-storage facilities averaged 90.8% for the three-month period ended
September 30, 2000 and 84.6% for the same period in 1999.  The Partnership is
continuing its marketing efforts to attract and keep new tenants in its various
mini-storage facilities.  Operating expenses increased approximately $85,300
(25.5%) primarily as a result of increases in yellow pages advertising costs,
maintenance and repair expense, property management fees, office supplies
expense and salaries and wages.  Property management fees, which are based on
rental income, increased as a result of the increase in rental revenue. General
and administrative expenses decreased approximately $4,200 (9.8%) primarily
as a result of a decrease in equipment and computer lease expense.

For the nine-month periods ended September 30, 2000, and 1999, total revenues
increased 5.1% from $1,660,684 to $1,745,190 and total expenses increased 7.3%
from $1,163,669 to $1,248,259.  As a result, net income decreased slightly from
$497,015 for the nine months ended September 30, 1999, to $496,931 for the same
period in 2000.  Rental revenue increased primarily as a result of higher
occupacy and unit rental rates.  Operating expenses increased approximately
$83,000 (8.3%) primarily due to increases in yellow pages advertising costs,
maintenance and repair, property management fees, office supplies, salaries
and wages and workers compensation insurance expenses. The increase in property
management fees was discussed above.  General and administrative expenses
remained relatively constant.

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.

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