March 27, 2000



United States
Securities and Exchange Commission
Washington, D.C.  20549


RE:   National Property Investors 7
      Form 10-KSB
      File No. 0-13454


To Whom it May Concern:

The  accompanying  Form 10-KSB for the year ended  December 31, 1999 describes a
change in the method of  accounting to  capitalize  exterior  painting and major
landscaping,   which  would  have  been  expensed  under  the  old  policy.  The
Partnership believes that this accounting principle change is preferable because
it  provides a better  matching  of  expenses  with the  related  benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.

Please do not hesitate to contact the undersigned with any questions or comments
that you might have.

Very truly yours,



Stephen Waters
Real Estate Controller


<PAGE>



                  Form 10-KSB--Annual or Transitional Report Under

                               Section 13 or 15(d)

                                   Form 10-KSB

(Mark  One)
[X]  ANNUAL  REPORT  UNDER  SECTION  13 OR  15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934
     [No Fee Required]

                    For the fiscal year ended December 31, 1999

[ ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
    OF 1934
    [No Fee Required]

                  For the transition period _________to _________

                         Commission file number 0-13454

                           NATIONAL PROPERTY INVESTORS 7
                   (Name of small business issuer in its charter)

         California                                              13-3230613
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                          55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                      (Address of principal executive offices)

                                 (864) 239-1000
                            Issuer's telephone number

           Securities registered under Section 12(b) of the Exchange Act:

                                      None

           Securities registered under Section 12(g) of the Exchange Act:

                      Units of Limited Partnership Interest

                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 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___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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-KSB or any  amendment to
this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year.  $7,486,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests as of December 31, 1999. No market exists for the limited  partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

<PAGE>

                                     PART I

Item 1.     Description of Business

National Property  Investors 7 (the "Partnership" or "Registrant") was organized
in October 1983 as a California  limited  partnership  under the Uniform Limited
Partnership  Laws  of  California.  NPI  Equity  Investments,  Inc.,  a  Florida
corporation,  became the  Partnership's  managing general partner (the "Managing
General  Partner" or "NPI  Equity") on December 20, 1991.  The Managing  General
Partner was a wholly owned  subsidiary  of Insignia  Properties  Trust  ("IPT").
Effective  February  26,  1999,  IPT was merged into  Apartment  Investment  and
Management  Company  ("AIMCO").  Therefore,  the Managing  General  Partner is a
wholly  owned  subsidiary  of AIMCO  (see  "Transfer  of  Control"  below).  The
partnership  agreement provides that the Partnership is to terminate on December
31, 2008, unless terminated prior to such date.

From February 1984 through February 1985, the Partnership offered, pursuant to a
Registration  Statement  filed  with the  Securities  and  Exchange  Commission,
100,000  limited  partnership  units  at  $500  per  unit  for an  aggregate  of
$50,000,000 and sold 60,517 units  providing net proceeds of $30,259,000.  Since
its initial offering,  the Registrant has not received, nor are limited partners
required to make,  additional  capital  contributions.  The net proceeds of this
offering were used to purchase seven income  producing  residential  real estate
properties.  The Partnership's  original property  portfolio was  geographically
diversified  with properties  acquired in six states.  One property was sold and
another was foreclosed on in 1994.  The Registrant  continues to own and operate
the remaining five properties (see "Item 2. Description of Properties").

There have been, and it is possible there may be other, Federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The Partnership  monitors its properties for evidence of pollutants,  toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental  testing has been performed which resulted in no material  adverse
conditions or liabilities. In no case has the Registrant received notice that it
is a potentially  responsible  party with respect to an  environmental  clean up
site.

Both  the  income  and  expenses  of  operating  the  properties  owned  by  the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar  properties  resulting from various
market  conditions,  increases/decreases  in unemployment or population  shifts,
changes in the availability of permanent mortgage  financing,  changes in zoning
laws,  or changes in patterns or needs of users.  In  addition,  there are risks
inherent in owning and operating residential  properties because such properties
are  susceptible to the impact of economic and other  conditions  outside of the
control of the Partnership.

The  Partnership  has no full time  employees.  The Managing  General Partner is
vested with full authority as to the general  management and  supervision of the
business and affairs of the  Partnership.  The limited partners have no right to
participate  in the  management  or conduct of such  business  and  affairs.  An
affiliate  of  the  Managing  General  Partner  provided  day-to-day  management
services to the Partnership's investment properties for the years ended December
31, 1999 and 1998.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Registrant's  properties.  The number and quality of competitive properties,
including  those which may be managed by an affiliate  of the  Managing  General
Partner,  in such market area could have a material  effect on the rental market
for the  apartments  at the  Registrant's  properties  and the rents that may be
charged  for  such  apartments.  While  the  Managing  General  Partner  and its
affiliates  own and/or  control a significant  number of apartment  units in the
United  States,  such  units  represent  an  insignificant  percentage  of total
apartment  units in the United  States and  competition  for the  apartments  is
local.

A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation"  included in "Item 6" of this Form
10-KSB.

Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia  Financial Group, Inc. and IPT merged into AIMCO, a
publicly  traded real estate  investment  trust,  with AIMCO being the surviving
corporation (the "Insignia Merger").  As a result, AIMCO acquired 100% ownership
interest in the Managing General Partner.  The Managing General Partner does not
believe  that this  transaction  has had or will have a  material  effect on the
affairs and operations of the Partnership.

Item 2.     Description of Properties:

The following table sets forth the Partnership's investment in properties:
<TABLE>
<CAPTION>

                                   Date of
Property                           Purchase       Type of Ownership          Use

<S>                                 <C>      <C>                         <C>
Fairway View II Apartments          11/84    Fee ownership subject to    Apartment
  Baton Rouge, Louisiana                     first mortgage              204 units

The Pines Apartments                04/85    Fee ownership subject to    Apartment
  Roanoke, Virginia                          first mortgage              216 units

Patchen Place Apartments            07/85    Fee ownership subject to    Apartment
  Lexington, Kentucky                        first mortgage              202 units

Northwood I & II Apartments         07/85    Fee ownership subject to    Apartment
  Pensacola, Florida                         first mortgage              320 units

South Point Apartments              03/86    Fee ownership subject to    Apartment
  Durham, North Carolina                     first mortgage              180 units
</TABLE>

<PAGE>

Schedule of Properties:

Set forth below for each of the  Partnership's  properties is the gross carrying
value, accumulated depreciation,  depreciable life, method of depreciation,  and
Federal tax basis.
<TABLE>
<CAPTION>

                        Carrying    Accumulated                            Federal
Properties               Value      Depreciation      Rate     Method     Tax Basis
                            (in thousands)                              (in thousands)

<S>                     <C>           <C>          <C>           <C>       <C>
Fairway View II         $10,604       $ 5,698      5-27.5 yrs    S/L       $ 2,155
The Pines                 8,212         5,074      5-27.5 yrs    S/L         1,763
Patchen Place             8,865         5,875      5-27.5 yrs    S/L         2,172
Northwoods I & II         9,866         5,667      5-27.5 yrs    S/L         2,331
South Point               9,468         5,271      5-27.5 yrs    S/L         2,706
        Total           $47,015       $27,585                              $11,127
</TABLE>

See  "Item  7.  Financial   Statements,   Note  A"  for  a  description  of  the
Partnership's  depreciation policy and "Item 7. Financial  Statements,  Note J -
Change in Accounting Principle".

Schedule of Properties Indebtedness:

The  following  table  sets  forth  certain  information  relating  to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>

                         Principal                                        Principal
                        Balance At                                         Balance
                       December 31,    Interest    Period    Maturity       Due At
Property                   1999          Rate     Amortized    Date      Maturity (2)
                      (in thousands)                                    (in thousands)

<S>                       <C>           <C>          <C>     <C>           <C>
Fairway View II           $ 4,200       7.33%        (1)     11/01/03      $ 4,200
The Pines                   4,225       7.97%      20 yrs    01/01/20           --
Patchen Place               3,000       7.33%        (1)     11/01/03        3,000
Northwoods I & II           5,000       7.33%        (1)     11/01/03        5,000
South Point                 4,600       7.33%        (1)     11/01/03        4,600
        Total             $21,025                                          $16,800
</TABLE>

(1)   Loan requires payments of interest only.

(2)   See "Item 7. Financial  Statements - Note C" for information  with respect
      to the  Registrant's  ability  to prepay  these  loans and other  specific
      details about the loans.

On December 13, 1999, the  Partnership  refinanced the mortgage  encumbering The
Pines  Apartments.   The  refinancing  replaced  indebtedness  of  approximately
$3,406,000 with a new mortgage in the amount of $4,225,000. The interest rate on
the new  mortgage is 7.97% as compared to 8.56% on the  previous  debt.  The new
loan requires  monthly  principal and interest  payments and is being  amortized
over 20 years.  Total capitalized loan costs were  approximately  $88,000 during
the year  ended  December  31,  1999.  For  financial  statement  purposes,  the
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $106,000  consisting of a prepayment penalty and the write-off of
unamortized loan costs.

Rental Rates and Occupancy:

Average annual rental rates and occupancy for 1999 and 1998 for each property:

                                     Average Annual                   Average
                                      Rental Rate                    Occupancy
                                       (per unit)
Property                          1999            1998         1999         1998

Fairway View II                  $6,730          $6,843         95%          97%
The Pines                         6,936           6,830         97%          95%
Patchen Place                     6,811           6,821         93%          88%
Northwoods I & II                 6,279           6,098         94%          95%
South Point                       8,318           8,171         92%          90%

The Managing  General  Partner  attributes  the increase in occupancy at Patchen
Place  Apartments  to an  adjustment of the  property's  average  rental rate to
better reflect market conditions and increased marketing efforts.

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly competitive.  All of the properties are subject to competition from other
residential  apartment  complexes  in the area.  The  Managing  General  Partner
believes that all of the properties are adequately insured.  Each property is an
apartment  complex  which leases  units for lease terms of one year or less.  No
residential  tenant leases 10% or more of the available rental space. All of the
properties are in good physical  condition,  subject to normal  depreciation and
deterioration as is typical for assets of this type and age.

Real Estate Taxes and Rates:

Real estate taxes and rates in 1999 for each property were:

                                       1999            1999
                                      Billing          Rate
                                  (in thousands)
          Fairway View II              $ 53           9.89%
          The Pines                      69           1.13%
          Patchen Place                  50           0.98%
          Northwoods I & II             141           2.18%
          South Point                    96           1.61%

Capital Improvements:

Fairway View II

During the year ended December 31, 1999, the Partnership completed approximately
$171,000 of capital  improvements  at Fairway View II,  consisting  primarily of
major landscaping,  carpet and vinyl replacements,  and structural improvements.
These  improvements  were funded from Partnership  reserves.  The Partnership is
currently  evaluating  the capital  improvement  needs of the  property  for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $61,200.  Additional  improvements  may be considered  and will depend on the
physical  condition  of  the  property  as  well  as  replacement  reserves  and
anticipated cash flow generated by the property.

The Pines

During the year ended December 31, 1999, the Partnership completed approximately
$295,000 of capital  improvements at The Pines,  consisting  primarily of carpet
and  vinyl  replacement,  major  landscaping,   parking  lot  improvements,  and
appliances.  These  improvements  were  funded  from  operating  cash  flow  and
Partnership  reserves.  The  Partnership  is  currently  evaluating  the capital
improvement  needs of the property for the upcoming  year. The minimum amount to
be budgeted is expected to be $300 per unit or $64,800.  Additional improvements
may be considered  and will depend on the physical  condition of the property as
well  as  replacement  reserves  and  anticipated  cash  flow  generated  by the
property.

Patchen Place

During the year ended December 31, 1999, the Partnership completed approximately
$270,000 of capital  improvements  at Patchen  Place,  consisting  primarily  of
carpet  and  vinyl  replacement,  improvements  to  the  recreation  facilities,
electrical  upgrades,  light  fixtures,  and  parking  lot  improvements.  These
improvements  were funded from operating cash flow. The Partnership is currently
evaluating the capital  improvement needs of the property for the upcoming year.
The  minimum  amount to be  budgeted is expected to be $300 per unit or $60,600.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition of the property as well as replacement  reserves and anticipated  cash
flow generated by the property.

Northwoods I & II

During the year ended December 31, 1999, the Partnership completed approximately
$274,000 of capital  improvements at Northwoods I & II, consisting  primarily of
carpet and vinyl replacement,  exterior painting,  and structural  improvements.
These  improvements  were funded from  Partnership  reserves and operating  cash
flow. The Partnership is currently  evaluating the capital  improvement needs of
the  property  for the  upcoming  year.  The  minimum  amount to be  budgeted is
expected  to be  $300  per  unit  or  $96,000.  Additional  improvements  may be
considered and will depend on the physical  condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.

South Point

During the year ended December 31, 1999, the Partnership completed approximately
$176,000 of capital improvements at South Point Apartments, consisting primarily
of carpet and vinyl replacement,  exterior painting,  gutter  replacements,  and
structural  improvements.   These  improvements  were  funded  from  Partnership
reserves and operating  cash flow. The  Partnership is currently  evaluating the
capital  improvement  needs of the property for the upcoming  year.  The minimum
amount to be budgeted  is  expected  to be $300 per unit or $54,000.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as replacement  reserves and anticipated cash flow generated by
the property.

Item 3.     Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  the Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging  the  acquisition  by Insignia  Financial  Group,  Inc.
("Insignia")  and  entities  which  were,  at one time,  affiliates  of Insignia
("Insignia  Affiliates") of interests in certain general partner entities,  past
tender offers by Insignia  Affiliates to acquire limited  partnership units, the
management of partnerships  by Insignia  Affiliates and the Insignia Merger (see
"Item 7. Financial  Statements,  Note B - Transfer of Control").  The plaintiffs
seek monetary damages and equitable relief,  including  judicial  dissolution of
the  Partnership.  On June 25, 1998, the Managing General Partner filed a motion
seeking  dismissal  of the action.  In lieu of  responding  to the  motion,  the
plaintiffs have filed an amended  complaint.  The Managing General Partner filed
demurrers to the amended  complaint which were heard February 1999.  Pending the
ruling on such  demurrers,  settlement  negotiations  commenced.  On November 2,
1999,  the parties  executed and filed a  Stipulation  of  Settlement,  settling
claims,  subject to final court  approval,  on behalf of the Partnership and all
limited partners who own units as of November 3, 1999.  Preliminary  approval of
the  settlement  was obtained on November 3, 1999 from the Superior Court of the
State of  California,  County of San Mateo,  at which time the Court set a final
approval  hearing for December 10, 1999.  Prior to the December 10, 1999 hearing
the Court received various  objections to the settlement,  including a challenge
to the Court's preliminary  approval based upon the alleged lack of authority of
class  plaintiffs'  counsel to enter the  settlement.  On December 14, 1999, the
Managing General Partner and its affiliates  terminated the proposed settlement.
Certain  plaintiffs  have filed a motion to disqualify  some of the  plaintiffs'
counsel in the action.  The Managing  General  Partner does not anticipate  that
costs  associated with this case will be material to the  Partnership's  overall
operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Item 4.     Submission of Matters to a Vote of Security Holders

During the quarter ended  December 31, 1999, no matter was submitted to the vote
of the unit holders through the solicitation of proxies or otherwise.


                                     PART II

Item 5.     Market for the Partnership's Equity and Related Partner Matters

The  Partnership,  a publicly-held  limited  partnership,  offered up to 100,000
limited  partnership units and sold 60,517 limited partnership units aggregating
$30,259,000.  The  Partnership  currently  has 1,285 holders of record owning an
aggregate of 60,517  units.  Affiliates  of the Managing  General  Partner owned
38,152  units or 63.043% at December  31,  1999.  No public  trading  market has
developed  for the  Units,  and it is not  anticipated  that such a market  will
develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended  December 31, 1998 and 1999,  as well as for the  subsequent  period
from January 1, 2000 to March 14, 2000:

                                                Distributions
                                                           Per Limited
                                        Aggregate        Partnership Unit
                                      (in thousands)
       01/01/98 - 12/31/98             $ 3,257 (1)            $53.29
       01/01/99 - 12/31/99             $   300 (2)            $ 4.91
       01/01/00 - 03/14/00             $ 1,220 (3)            $19.96

(1)   Distribution  was made from cash from operations (see "Item 6" for further
      details).

(2)   Distribution  was made from  previously  undistributed  surplus funds from
      refinancing proceeds in prior years (see "Item 6" for further details).

(3)   Consists of $335,000 of cash from operations and $885,000 of cash from the
      refinance  proceeds  of The Pines  Apartments  (see  "Item 6" for  further
      details).

Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings,  and/or property sales.  The Registrant's  distribution  policy is
reviewed on a semi-annual  basis. There can be no assurance,  however,  that the
Partnership  will generate  sufficient  funds from  operations,  after  required
capital expenditures,  to permit additional distributions to its partners in the
year 2000 or  subsequent  periods.  See "Item 2.  Description  of  Properties  -
Capital   Improvements"   for  information   relating  to  anticipated   capital
expenditures at the properties.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers,  AIMCO and its  affiliates  currently
own 38,152 limited partnership units in the Partnership  representing 63.043% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership  for cash or in exchange for units in the operating  partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the  Registrant.  Under the Partnership  Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters.  When voting on matters,  AIMCO would in all likelihood vote
the Units it  acquired in a manner  favorable  to the  interest of the  Managing
General Partner because of their affiliation with the Managing General Partner.

Item 6.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-KSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-KSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

This item should be read in conjunction with the financial  statements and other
items contained elsewhere in this report.

Results of Operations

The   Registrant's  net  income  for  the  year  ended  December  31,  1999  was
approximately  $514,000  compared to  approximately  $142,000 for the year ended
December 31, 1998 (see "Note D" of the financial statements for a reconciliation
of these amounts to the Registrant's  federal taxable  income).  The increase in
net income was due to an  increase  in total  revenues  and a decrease  in total
expenses  which  was  partially  offset by the  extraordinary  loss on the early
extinguishment  of the debt  encumbering  The Pines  Apartments  (see discussion
below).  Total revenues  increased due to an increase in rental income which was
partially  offset  by a  decrease  in  other  income.  Rental  income  increased
primarily due to increased occupancy at Patchen Place,  Southpoint and The Pines
Apartments, and increased average rental rates at Southpoint,  Northwoods I & II
and The Pines Apartments.  In addition,  concessions  decreased at Patchen Place
and  Northwoods I & II Apartments  and bad debt expense  decreased at Southpoint
and Northwoods I & II Apartments. The decrease in other income was primarily due
to a decrease in interest  income as a result of lower interest  bearing average
cash balances held by the Partnership during 1999.

Total  expenses  decreased due to a reduction in operating  expenses and general
and administrative expenses which were partially offset by increases in property
tax expense and depreciation expense. Operating expenses decreased primarily due
to decreased  maintenance  expenses resulting from a balcony replacement project
which was completed in 1998, and a decrease in corporate unit expense at Patchen
Place Apartments,  and a decrease in maintenance  salaries and contract yard and
ground work at Fairway View II. In addition,  insurance expense decreased at all
of the  Partnership's  properties due to a change in insurance  carriers in late
1998. General and administrative  expenses decreased  primarily due to fees paid
to the  Managing  General  Partner in  connection  with the  distributions  from
operations  made during 1998.  For the year ended  December 31, 1999, no similar
fees were paid  because  the  distribution  paid  during  this  period  was from
refinancing  proceeds.  In  addition,  reimbursements  to the  Managing  General
Partner for services decreased.  Included in general and administrative expenses
at both December 31, 1999 and 1998 are management reimbursements to the Managing
General Partner allowed under the Partnership  Agreement.  Costs associated with
the quarterly and annual  communications  with investors and regulatory agencies
and the annual audit  required by the  Partnership  Agreement are also included.
The  increase in property  tax expense is  primarily  due to a rate  increase at
Northwoods I & II  Apartments.  Depreciation  expense  increased due to property
improvements and replacements  completed during the last twelve months which are
now being depreciated.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior  painting and major landscaping on a prospective
basis.  The  Partnership  believes  that  this  accounting  principle  change is
preferable  because it provides a better  matching of expenses  with the related
benefit of the expenditures and it is consistent with industry  practice and the
policies of the Managing General  Partner.  The effect of the change in 1999 was
to increase net income by approximately  $179,000 ($2.92 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods,  is
not material.  The accounting  principle  change will not have an effect on cash
flow,  funds available for  distribution or fees payable to the Managing General
Partner and affiliates.

As part of the ongoing  business plan of the  Partnership,  the Managing General
Partner  monitors  the  rental  market  environment  of each  of its  investment
properties  to assess  the  feasibility  of  increasing  rents,  maintaining  or
increasing  occupancy  levels and protecting the  Partnership  from increases in
expense.  As part of this plan, the Managing General Partner attempts to protect
the  Registrant  from the burden of  inflation-related  increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due to
changing market  conditions,  which can result in the use of rental  concessions
and  rental  reductions  to  offset  softening  market  conditions,  there is no
guarantee that the Managing General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At  December  31,  1999,  the  Partnership  had  cash and  cash  equivalents  of
approximately $2,793,000 as compared to approximately $1,074,000 at December 31,
1998. Cash and cash equivalents  increased by approximately  $1,719,000 from the
Partnership's  year ended December 31, 1998 due to  approximately  $2,634,000 of
cash  provided  by  operating  activities  and  approximately  $308,000  of cash
provided  by  financing   activities,   which  more  than  offset  approximately
$1,223,000  of cash used in  investing  activities.  Cash  provided by financing
activities  consisted primarily of proceeds from the refinancing of the mortgage
encumbering The Pines  Apartments,  which was partially  offset by the payoff of
the previous debt encumbering The Pines  Apartments,  payments of principal made
on the mortgage encumbering The Pines Apartments, partner distributions, and the
payment of loan costs and a prepayment  penalty relating to the refinance of The
Pines  Apartments.  Cash used in  investing  activities  consisted  of  property
improvements  and  replacements  and to a lesser extent,  net deposits to escrow
accounts  maintained by the mortgage lender. The Partnership invests its working
capital reserves in money market accounts.

The Managing  General Partner has extended to the Partnership a $500,000 line of
credit.  The  Partnership  has no  outstanding  amounts  due under  this line of
credit. Based on present plans, the Managing General Partner does not anticipate
the need to borrow  against  the line of credit in the near  future.  Other than
cash and cash equivalents,  the line of credit is the Partnership's  only unused
source of liquidity.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the various  properties  to  adequately  maintain  the
physical  assets and other  operating needs of the Registrant and to comply with
Federal, state, and local legal and regulatory requirements.  The Partnership is
currently  evaluating  the capital  improvement  needs of the properties for the
upcoming  year.  The  minimum  amount  to be  budgeted  will be $300 per unit or
$336,600.  Additional  improvements  may be  considered  and will  depend on the
physical  condition  of the  properties  as well  as  replacement  reserves  and
anticipated  cash flow  generated  by the  properties.  The  additional  capital
improvements  will be incurred only if cash is available from operations or from
Partnership  reserves. To the extent that such budgeted capital improvements are
completed,  the Partnership's  distributable cash flow, if any, may be adversely
affected at least in the short term.

On December 13, 1999, the  Partnership  refinanced the mortgage  encumbering The
Pines  Apartments.   The  refinancing  replaced  indebtedness  of  approximately
$3,406,000 with a new mortgage in the amount of $4,225,000. The interest rate on
the new  mortgage is 7.97% as compared to 8.56% on the  previous  debt.  The new
loan requires  monthly  principal and interest  payments and is being  amortized
over 20 years.  Total capitalized loan costs were  approximately  $88,000 during
the year  ended  December  31,  1999.  For  financial  statement  purposes,  the
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $106,000  consisting of a prepayment penalty and the write-off of
unamortized loan costs.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness of approximately $4,225,000 encumbering The Pines is amortized over
20 years.  The mortgage  indebtedness  of $16,800,000  encumbering the remaining
properties is interest only with required balloon payments due November 1, 2003.
The Managing General Partner will attempt to refinance such indebtedness  and/or
sell the properties  prior to such maturity dates.  If the properties  cannot be
refinanced or sold for a sufficient  amount, the Registrant may risk losing such
properties through foreclosure.

Cash  distributions  from  refinancing  proceeds in prior years of approximately
$300,000  (approximately  $297,000 to the limited  partners or $4.91 per limited
partnership   unit)  were  paid  during  the  year  ended   December  31,  1999.
Distributions  of  approximately  $3,257,000  (approximately  $3,225,000  to the
limited  partners  or  $53.29  per  limited  partnership  unit)  were  made from
operations  during the year ended December 31, 1998.  Subsequent to December 31,
1999,  the  Partnership  declared  and  paid  a  distribution  of  approximately
$1,220,000  (approximately  $1,208,000  to the  limited  partners  or $19.96 per
limited partnership unit). This distribution consisted of approximately $335,000
(approximately $332,000 to the limited partners or $5.49 per limited partnership
unit) of cash from operations and approximately $885,000 (approximately $876,000
to the limited partners or $14.47 per limited partnership unit) of cash from the
refinancing  proceeds of The Pines Apartments and from  refinancing  proceeds in
prior  years.  Future cash  distributions  will depend on the levels of net cash
generated from  operations,  the availability of cash reserves and the timing of
debt   maturities,   refinancings,   and/or  property  sales.  The  Registrant's
distribution  policy  is  reviewed  on a  semi-annual  basis.  There  can  be no
assurance,  however,  that the Partnership  will generate  sufficient funds from
operations  after  required  capital   expenditures  to  permit  any  additional
distributions to its Partners in the year 2000 or subsequent periods.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers,  AIMCO and its  affiliates  currently
own 38,152 limited partnership units in the Partnership  representing 63.043% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership  for cash or in exchange for units in the operating  partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the  Registrant.  Under the Partnership  Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters.  When voting on matters,  AIMCO would in all likelihood vote
the Units it  acquired in a manner  favorable  to the  interest of the  Managing
General Partner because of their affiliation with the Managing General Partner.

Year 2000 Compliance

General Description

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the Managing  General  Partner and its affiliates for management
and  administrative  services  ("Managing  Agent").  Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have  recognized  a date using "00" as the year 1900  rather than the year
2000.  This could have resulted in a system failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

Computer Hardware, Software and Operating Equipment

In 1999,  the Managing  Agent  completed  all phases of its Year 2000 program by
completing  the  replacement  and repair of any  hardware or software  system or
operating  equipment that was not yet Year 2000 compliant.  The Managing Agent's
hardware  and software  systems and its  operating  equipment  are now Year 2000
compliant.  No  material  failure or  erroneous  results  have  occurred  in the
Managing Agent's computer  applications  related to the failure to reference the
Year 2000 to date.

Third Parties

To  date,  the  Managing  Agent  is not  aware of any  significant  supplier  or
subcontractor  (external agent) or financial institution of the Partnership that
has a Year 2000 issue that  would  have a material  impact on the  Partnership's
results of operations,  liquidity or capital  resources.  However,  the Managing
Agent  has no means of  ensuring  or  determining  the Year 2000  compliance  of
external  agents.  At this time, the Managing Agent does not believe that a Year
2000 issue of any  non-compliant  external agent will have a material  impact on
the Partnership's financial position or results of operations.

Costs

The total cost of the Managing Agent's Year 2000 project was approximately  $3.2
million and was funded from operating cash flows.

Risks Associated with the Year 2000

The Managing  Agent  completed all necessary  phases of its Year 2000 program in
1999,  and did not  experience  system or  equipment  malfunctions  related to a
failure to reference the Year 2000. The Managing  Agent or  Partnership  has not
been  materially  adversely  affected by  disruptions  in the economy  generally
resulting from the Year 2000 issue.

At this  time,  the  Managing  Agent  does not  believe  that the  Partnership's
businesses,  results of  operations  or financial  condition  will be materially
adversely affected by the Year 2000 issue.

Contingency Plans Associated with the Year 2000

The  Managing  Agent has not had to implement  contingency  plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.

ITEM 7.     FINANCIAL STATEMENTS

NATIONAL PROPERTY INVESTORS 7

LIST OF FINANCIAL STATEMENTS

      Report of Ernst & Young LLP, Independent Auditors

      Balance Sheet - December 31, 1999

      Statements of Operations - Years ended December 31, 1999 and 1998

      Statements  of  Changes  in  Partners'  (Deficit)  Capital  - Years  ended
      December 31, 1999 and 1998

      Statements of Cash Flows - Years ended December 31, 1999 and 1998

      Notes to Financial Statements


<PAGE>


                 Report of Ernst & Young LLP, Independent Auditors

The Partners
National Property Investors 7


We have audited the accompanying  balance sheet of National Property Investors 7
as of December 31, 1999, and the related  statements of  operations,  changes in
partners'  (deficit)  capital  and cash  flows  for each of the two years in the
period  ended   December  31,  1999.   These   financial   statements   are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made  by the  Partnership's  management,  as  well  as  evaluating  the  overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of National Property Investors 7
at December 31, 1999,  and the results of its  operations and its cash flows for
each of the two years in the period ended December 31, 1999, in conformity  with
accounting principles generally accepted in the United States.

As discussed in Note J to the financial statements,  the Partnership changed its
method of  accounting  to  capitalize  the cost of exterior  painting  and major
landscaping effective January 1, 1999.

                                                            /s/ERNST & YOUNG LLP

Greenville, South Carolina
February 25, 2000


<PAGE>




                           NATIONAL PROPERTY INVESTORS 7

                                  BALANCE SHEET
                      (in thousands, except per unit data)

                                December 31, 1999
<TABLE>
<CAPTION>

Assets
<S>                                                                          <C>
   Cash and cash equivalents                                                 $ 2,793
   Receivables and deposits                                                      337
   Restricted escrows                                                            447
   Other assets                                                                  506
   Investment properties (Notes C and F):
      Land                                                    $ 3,738
      Buildings and related personal property                   43,277
                                                                47,015

      Less accumulated depreciation                            (27,585)       19,430

                                                                            $ 23,513

Liabilities and Partners' (Deficit) Capital
Liabilities
      Accounts payable                                                       $   166
      Tenant security deposit liabilities                                        107
      Accrued property taxes                                                      67
      Other liabilities                                                          301
      Mortgage notes payable (Note C)                                         21,025

Partners' (Deficit) Capital
   General partner                                             $ (284)
   Limited partners (60,517 units issued and
      outstanding)                                               2,131         1,847

                                                                            $ 23,513
</TABLE>

                 See Accompanying Notes to Financial Statements

<PAGE>

                           NATIONAL PROPERTY INVESTORS 7

                            STATEMENTS OF OPERATIONS
                      (in thousands, except per unit data)

<TABLE>
<CAPTION>

                                                               Years Ended December 31,
                                                                    1999         1998
Revenues:
<S>                                                               <C>          <C>
   Rental income                                                  $ 7,180      $ 6,937
   Other income                                                       306          382
       Total revenues                                               7,486        7,319

Expenses:
   Operating                                                        2,732        2,952
   General and administrative                                         295          486
   Depreciation                                                     1,789        1,717
   Interest                                                         1,626        1,636
   Property taxes                                                     424          386
      Total expenses                                                6,866        7,177

Income before extraordinary item                                      620          142

Extraordinary loss on early extinguishment of debt (Note C)          (106)          --

Net income (Note D)                                                 $ 514        $ 142

Net income allocated to general partner (1%)                        $   5          $ 1

Net income allocated to limited partners (99%)                        509          141

                                                                    $ 514        $ 142

Per limited partnership unit:
   Income before extraordinary item                               $ 10.14       $ 2.33
   Extraordinary loss on early extinguishment of debt               (1.73)          --

   Net income                                                      $ 8.41       $ 2.33

Distributions per limited partnership unit                         $ 4.91      $ 53.29
</TABLE>

                 See Accompanying Notes to Financial Statements


<PAGE>


                           NATIONAL PROPERTY INVESTORS 7

                STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                        (in thousands, except per unit data)

<TABLE>
<CAPTION>

                                        Limited
                                       Partnership    General    Limited
                                          Units       Partner    Partners     Total

<S>                                       <C>           <C>       <C>        <C>
Original capital contributions            60,517        $ 1       $30,259    $30,260

Partners' (deficit) capital at
  December 31, 1997                       60,517       $ (255)    $ 5,003    $ 4,748

Distribution to partners                      --          (32)     (3,225)    (3,257)

Net income for the year ended
  December 31, 1998                           --            1         141        142

Partners' (deficit) capital at
  December 31, 1998                       60,517         (286)      1,919      1,633

Distribution to partners                      --           (3)       (297)      (300)

Net income for the year ended
  December 31, 1999                           --            5         509        514

Partners' (deficit) capital at
  December 31, 1999                       60,517       $ (284)    $ 2,131    $ 1,847
</TABLE>

                 See Accompanying Notes to Financial Statements

<PAGE>


                           NATIONAL PROPERTY INVESTORS 7

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                             Years Ended December 31,
                                                                 1999         1998
Cash flows from operating activities:
<S>                                                              <C>          <C>
  Net income                                                     $ 514        $ 142
  Adjustments to reconcile net income to net
   cash provided by operating activities:
   Depreciation                                                   1,789        1,717
   Amortization of loan costs                                       110          113
   Extraordinary loss on early extinguishment of debt               106           --
   Change in accounts:
      Receivables and deposits                                      135          (50)
      Other assets                                                  (43)          31
      Accounts payable                                              109          (31)
      Tenant security deposit liabilities                           (22)           1
      Accrued property taxes                                       (113)         124
      Other liabilities                                              49          (17)

          Net cash provided by operating activities               2,634        2,030

Cash flows from investing activities:
  Property improvements and replacements                         (1,186)        (403)
  Net (deposits to) withdrawals from restricted escrows             (37)         242

          Net cash used in investing activities                  (1,223)        (161)

Cash flows from financing activities:
  Payments on mortgage note payable                                 (40)         (38)
  Payoff of mortgage note payable                                (3,406)          --
  Proceeds from mortgage note payable                             4,225           --
  Prepayment penalty                                                (83)          --
  Loan costs paid                                                   (88)          --
  Distributions to partners                                        (300)      (3,257)

          Net cash provided by (used in) financing
            activities                                              308       (3,295)

Net increase (decrease) in cash and cash equivalents              1,719       (1,426)

Cash and cash equivalents at beginning of year                    1,074        2,500

Cash and cash equivalents at end of year                        $ 2,793      $ 1,074

Supplemental disclosure of cash flow information:
  Cash paid for interest                                        $ 1,541      $ 1,528
</TABLE>

                 See Accompanying Notes to Financial Statements


<PAGE>

                           NATIONAL PROPERTY INVESTORS 7

                          Notes to Financial Statements

                                December 31, 1999

Note A - Organization and Significant Accounting Policies

Organization:  National Property Investors 7 (the "Partnership" or "Registrant")
is a  California  limited  partnership  organized in October 1983 to acquire and
operate  residential  apartment  complexes.  The Partnership's  managing general
partner is NPI Equity  Investments,  Inc. ("NPI Equity" or the "Managing General
Partner"). NPI Equity was a wholly owned subsidiary of Insignia Properties Trust
("IPT").  On February 26, 1999,  IPT was merged into  Apartment  Investment  and
Management  Company  ("AIMCO").  Therefore,  the Managing  General  Partner is a
wholly  owned  subsidiary  of AIMCO (see "Note B - Transfer  of  Control").  The
directors and officers of the Managing  General  Partner also serve as executive
officers of AIMCO. The Partnership  Agreement provides that the Partnership will
terminate on December  31, 2008,  unless  terminated  prior to such date.  As of
December 31, 1999, the Partnership operates five residential apartment complexes
located throughout the southeastern United States.

Allocation of Profits,  Gains,  and Losses:  Profits,  gains,  and losses of the
Partnership are allocated between the general and limited partners in accordance
with the provisions of the Partnership Agreement.

Profits,  not including  gains from property  dispositions,  are allocated as if
they were distributions of net cash from operations.

Any gain from property  dispositions  attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property  over  the  Partnership's  adjusted  basis  in the  property  shall  be
allocated to each partner  having a negative  capital  account  balance,  to the
extent of such negative  balance.  The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent  amount of distributable net
proceeds and shall be  allocated  to the general  partner to the extent that the
general  partner  would have received  distributable  net proceeds in connection
therewith; the balance shall be allocated to the limited partners.  However, the
interest of the general partner will be equal to at least 1% of each gain at all
times during the existence of the Partnership.

All  losses,  including  losses  attributable  to  property  dispositions,   are
allocated 99% to the limited partners and 1% to the general partner.

Accordingly,  net income as shown in the statements of operations and changes in
partner's  (deficit) capital for 1999 and 1998 were allocated 99% to the limited
partners and 1% to the general partner.  Net income per limited partnership unit
for each such year was  computed  as 99% of net income  divided by 60,517  units
outstanding.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks and money market accounts.  At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing  General  Partner's  policy is to offer rental  concessions  during
periods of declining  occupancy or in response to heavy  competition  from other
similar complexes in the area.  Concessions are charged against rental income as
incurred.

Tenant  Security  Deposits:  The  Partnership  requires  security  deposits from
lessees  for the  duration  of the  lease  and such  deposits  are  included  in
receivables  and  deposits.  Deposits  are  refunded  when the  tenant  vacates,
provided  the  tenant  has not  damaged  its space and is  current on its rental
payments.

Restricted Escrows:

      Replacement  Reserve:  A replacement  reserve  account is  maintained  for
      Fairway  View  II  Apartments,   Patchen  Place   Apartments,   Southpoint
      Apartments, and Northwoods I & II Apartments. Each property has a required
      monthly   payment   into  its  account  to  cover  the  costs  of  capital
      improvements and  replacements.  The balance of these accounts at December
      31, 1999, is approximately $398,000 which includes interest.

      Capital  Account:  A capital  reserve account was established in 1999 with
      the  refinancing  proceeds  for The Pines  Apartments.  These  funds  were
      established  to cover  necessary  repairs  and  replacements  of  existing
      improvements. The balance at December 31, 1999 is approximately $33,000.

Loan Costs: Loan costs of approximately $728,000, less accumulated  amortization
of approximately  $292,000, are included in other assets and are being amortized
on a straight-line basis over the lives of the related loans.

Investment Properties: Investment properties consist of five apartment complexes
and are  stated  at cost.  Acquisition  fees are  capitalized  as a cost of real
estate. In accordance with Statement of Financial  Accounting Standards ("SFAS")
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets  to be  Disposed  Of",  the  Partnership  records  impairment  losses  on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired  and the  undiscounted  cash flows  estimated to be
generated by those assets are less than the carrying amounts of those assets. No
adjustments  for  impairment of value were recorded in the years ended  December
31, 1999 or 1998.

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  properties and related personal property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used (1)
for real property over 15 years for additions  prior to March 16, 1984, 18 years
for  additions  after  March 15,  1984 and before May 9, 1985,  and 19 years for
additions  after May 8, 1985,  and before  January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986,  for  additions  after  December 31, 1986,  the modified
accelerated  cost recovery method is used for  depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (see "Note J").

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of  Financial  Instruments",  as amended  by SFAS No.  119,  "Disclosures  about
Derivative  Financial  Instruments  and Fair  Value of  Financial  Instruments",
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate  fair  value.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the  carrying  amount of its  financial  instruments  (except for long term
debt)  approximates  their fair value due to the short  term  maturity  of these
instruments.  The  fair  value  of  the  Partnership's  long  term  debt,  after
discounting the scheduled loan payments to maturity,  approximates  its carrying
balance.

Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related  Information"  established  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers (see "Note H" for disclosure).

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising  costs of  approximately  $91,000  and  $83,000  for the years ended
December 31, 1999 and 1998,  respectively,  were charged to operating expense as
incurred.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia  Financial Group, Inc. and IPT merged into AIMCO, a
publicly  traded real  estate  investment  trust with AIMCO being the  surviving
corporation (the "Insignia Merger").  As a result, AIMCO acquired 100% ownership
interest in the Managing General Partner.  The Managing General Partner does not
believe  that this  transaction  has had or will have a  material  effect on the
affairs and operations of the Partnership.

Note C - Mortgage Notes Payable

The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>

                        Principal     Monthly                              Principal
                       Balance At     Payment      Stated                   Balance
                      December 31,   Including    Interest    Maturity      Due At
Property                  1999        Interest      Rate        Date       Maturity
                            (in thousands)                              (in thousands)

<S>                      <C>            <C>         <C>       <C>   <C>     <C>
Fairway View II          $ 4,200        $  26       7.33%     11/01/03      $ 4,200
The Pines                  4,225           35       7.97%     01/01/20           --
Patchen Place              3,000           18       7.33%     11/01/03        3,000
Northwoods I & II          5,000           31       7.33%     11/01/03        5,000
South Point                4,600           28       7.33%     11/01/03        4,600
        Total            $21,025        $ 138                               $16,800
</TABLE>

The mortgage  notes  payable are  non-recourse  and are secured by pledge of the
respective  apartment  properties  and by pledge of revenues from the respective
apartment properties.  The notes require prepayment penalties if repaid prior to
maturity and prohibit resale of the properties subject to existing indebtedness.

The mortgages encumbering Fairway View II Apartments,  Patchen Place Apartments,
Northwoods I & II Apartments,  and South Point Apartments require  interest-only
payments.

On December 13, 1999, the  Partnership  refinanced the mortgage  encumbering The
Pines  Apartments.   The  refinancing  replaced  indebtedness  of  approximately
$3,406,000 with a new mortgage in the amount of $4,225,000. The interest rate on
the new  mortgage is 7.97% as compared to 8.56% on the  previous  debt.  The new
loan requires  monthly  principal and interest  payments and is being  amortized
over 20 years.  Total capitalized loan costs were  approximately  $88,000 during
the year  ended  December  31,  1999.  For  financial  statement  purposes,  the
Partnership   recognized  a  loss  on  the  early   extinguishment  of  debt  of
approximately  $106,000  consisting of a prepayment penalty and the write-off of
unamortized loan costs.

Scheduled  principal  payments  of the  mortgage  notes  payable  subsequent  to
December 31, 1999 are as follows (in thousands):

                               2000               $  82
                               2001                  97
                               2002                 104
                               2003              16,913
                               2004                 122
                            Thereafter            3,707
                               Total            $21,025

Note D - Income Taxes

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly,  no provision for income taxes is made in the financial  statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.

The  following is a  reconciliation  of reported net income and Federal  taxable
income (in thousands, except unit data):

                                              1999         1998
Net income as reported                        $ 514        $ 142
Add (deduct):
   Depreciation differences                      42           56
   Other                                         32           93

Federal taxable income                        $ 588        $ 291

Federal taxable income per limited
   partnership unit                          $ 9.62       $ 4.76


The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets (in thousands):

                                                   1999

Net assets as reported                            $ 1,847
Land and buildings                                 (1,503)
Accumulated depreciation                           (6,800)
Syndication and distribution costs                  3,555
Prepaid rent                                          127
Other                                                 114

Net liabilities - Federal tax basis               $(2,660)

Note E - Transactions with Affiliated Parties

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for payments to
affiliates for services and as  reimbursement  of certain  expenses  incurred by
affiliates on behalf of the Partnership.

The following  payments were made to the Managing General Partner and affiliates
during the years ended December 31, 1999 and 1998:

                                                         1999       1998
                                                         (in thousands)
Property management fees (included in operating
  expenses)                                              $380       $369
Reimbursement for services of affiliates
  (included in investment properties and operating
  and general administrative expenses)                    180        188
Non-accountable reimbursement (included in general
  and administrative expenses)                             --         91
Partnership management fee (included in general
  and administrative expenses)                             --        137

During the years ended  December 31, 1999 and 1998,  affiliates  of the Managing
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Partnership's  properties  as  compensation  for providing  property  management
services.  The Registrant  paid to such  affiliates  approximately  $380,000 and
$369,000 for the years ended December 31, 1999 and 1998, respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $180,000 and
$188,000 for the years ended December 31, 1999 and 1998, respectively.

In addition, in connection with the refinancing of the mortgage loan encumbering
The Pines Apartments the Partnership paid approximately $42,000 in loan costs to
an affiliate  during the year ended  December 31, 1999.  No such loan costs were
paid in 1998. These loan costs are included in other assets and are amortized as
interest expense over the terms of the loan.

For services relating to the  administration of the Partnership and operation of
Partnership  properties,  the  Managing  General  Partner is entitled to receive
payment for  non-accountable  expenses up to a maximum of $150,000 per year from
distributions from operations,  based upon the number of Partnership units sold,
subject  to  certain   limitations.   The  Managing   General  Partner  received
approximately  $91,000 in  reimbursements  for the year ended December 31, 1998.
The Managing General Partner was not entitled to receive a similar reimbursement
during the year ended December 31, 1999 because there were no distributions from
operations.

For managing the affairs of the Partnership, the Managing General Partner of the
Partnership  is entitled to receive a  partnership  management  fee.  The fee is
equal to 4% of the  Partnership's  adjusted cash from operations,  as defined in
the Partnership  Agreement,  in any year, provided that 50% of the fee shall not
be paid until the Partnership has distributed to the limited  partners  adjusted
cash from operations in such year which is equal to 5% of the limited  partners'
adjusted invested capital, as defined,  on a non-cumulative  basis. In addition,
50% of the fee shall not be paid until the  Partnership  has  distributed to the
limited partners adjusted cash from operations in such year which is equal to 8%
of the limited partners'  adjusted  invested capital on a non-cumulative  basis.
The fee shall be paid when adjusted cash from  operations is  distributed to the
limited partners.  The Managing General Partner was paid approximately  $137,000
during the year ended  December  31, 1998 for such fees.  The  Managing  General
Partner  was not  entitled  to receive a similar  reimbursement  during the year
ended December 31, 1999 because there were no distributions from operations.

Upon sale of the  Partnership's  properties,  NPI Equity  will be entitled to an
incentive  compensation  fee equal to a declining  percentage of the  difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity,  if any,  will be  dependent  upon the year in which the property is
sold.  Payment of the incentive  compensation fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised  investment in the Partnership at February
1, 1992; and (b) distributions from all sources (capital transactions as well as
cash  flow)  of an  amount  equal to six  percent  (6%)  per  annum  cumulative,
non-compounded,  on their present  appraised  investment in the  Partnership  at
February 1, 1992.

The Managing General Partner has extended to the Partnership a line of credit of
up to $500,000.  Loans under the line of credit will have a term of 365 days, be
unsecured  and bear  interest at the rate of 2% per annum in excess of the prime
rate  announced  from time to time by Chemical  Bank,  N.A. The maturity date of
such  borrowing  will be  accelerated  in the event of:  (i) the  removal of the
Managing  General  Partner  (whether  or  not  For  Cause);  (ii)  the  sale  or
refinancing of a property by the  Partnership;  or (iii) the  liquidation of the
Partnership. At the present time, the Partnership has no outstanding amounts due
under this line of credit.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers,  AIMCO and its  affiliates  currently
own 38,152 limited partnership units in the Partnership  representing 63.043% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership  for cash or in exchange for units in the operating  partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the  Registrant.  Under the Partnership  Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters.  When voting on matters,  AIMCO would in all likelihood vote
the Units it  acquired in a manner  favorable  to the  interest of the  Managing
General Partner because of their affiliation with the Managing General Partner.

<PAGE>

Note F - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>

                                              Initial Cost
                                             To Partnership
                                             (in thousands)
                                                      Buildings           Cost
                                                     and Related       Capitalized
                                                       Personal       Subsequent to
Description             Encumbrances       Land        Property        Acquisition
                       (in thousands)                                (in thousands)

<S>                       <C>            <C>           <C>                <C>
Fairway View II           $ 4,200        $ 1,086       $ 8,788            $  730
The Pines                   4,225            579         6,521             1,112
Patchen Place               3,000            706         6,409             1,750
Northwoods I & II           5,000            478         7,919             1,469
South Point                 4,600            859         7,686               923
Totals                    $21,025        $ 3,708       $37,323           $ 5,984
</TABLE>

<TABLE>
<CAPTION>

                      Gross Amount at Which
                             Carried
                      At December 31, 1999
                         (in thousands)
                            Buildings
                           And Related
                            Personal            Accumulated     Year of      Date    Depreciable
Description         Land    Property    Total   Depreciation  Construction Acquired  Life-Years
                                               (in thousands)
<S>                <C>       <C>       <C>        <C>             <C>        <C>       <C>
Fairway View II    $ 1,094   $ 9,510   $10,604    $ 5,698         1981       11/84     5-27.5
The Pines              584     7,628     8,212      5,074         1978       04/85     5-27.5
Patchen Place          714     8,151     8,865      5,875         1971       07/85     5-27.5
Northwoods I & II      483     9,383     9,866      5,667         1981       07/85     5-27.5
South Point            863     8,605     9,468      5,271         1980       03/86     5-27.5
Total              $ 3,738   $43,277   $47,015    $27,585
</TABLE>

<PAGE>

Reconciliation of "Real Estate and Accumulated Depreciation":

                                               Years Ended December 31,
                                                   1999         1998
                                                    (in thousands)
Investment Properties
Balance at beginning of year                      $45,829      $45,426
   Property improvements                            1,186          403
Balance at end of year                            $47,015      $45,829

Accumulated Depreciation
Balance at beginning of year                      $25,796      $24,079
   Additions charged to expense                     1,789        1,717
Balance at end of year                            $27,585      $25,796

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  1999 and 1998,  is  approximately  $45,512,000  and  $44,319,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is  approximately  $34,385,000  and  $32,638,000,
respectively.

Note G - Distributions

A distribution of approximately $300,000  (approximately $297,000 to the limited
partners or $4.91 per limited  partnership  unit) from  refinancing  proceeds in
prior  years was paid  during  the year  ended  December  31,  1999.  Total cash
distributed  from  operations  was   approximately   $3,257,000   (approximately
$3,225,000 to the limited partners or $53.29 per limited  partnership  unit) for
the year  ended  December  31,  1998.  Subsequent  to  December  31,  1999,  the
Partnership  declared  and  paid  a  distribution  of  approximately  $1,220,000
(approximately  $1,208,000  to  the  limited  partners  or  $19.96  per  limited
partnership unit) consisting of approximately $335,000  (approximately  $332,000
to the  limited  partners or $5.49 per  limited  partnership  unit) of cash from
operations and  approximately  $885,000  (approximately  $876,000 to the limited
partners  or $14.47 per  limited  partnership  unit) of cash from the  refinance
proceeds of The Pines Apartments.

Note H - Segment Reporting

The  Partnership  has  one  reportable  segment:   residential  properties.  The
Partnership's  residential property segment consists of five apartment complexes
located in the Southeast.  The Partnership  rents apartment units to tenants for
terms that are typically twelve months or less.

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation.  The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.

The Partnership's reportable segment is investment properties that offer similar
products and  services.  Although each of the  investment  properties is managed
separately,  they have been aggregated into one segment as they provide services
with similar types of products and customers.

Segment  information  for the years ended December 31, 1999 and 1998 is shown in
the  tables  below (in  thousands).  The  "Other"  column  includes  partnership
administration  related  items and  income  and  expense  not  allocated  to the
reportable segment.
<TABLE>
<CAPTION>

                       1999                         Residential    Other      Totals

<S>                                                   <C>           <C>      <C>
Rental income                                         $ 7,180       $ --     $ 7,180
Other income                                              293          13        306
Interest expense                                        1,626          --      1,626
Depreciation                                            1,789          --      1,789
General and administrative expense                         --         295        295
Extraordinary loss on early extinguishment
  of debt                                                (106)         --       (106)
Segment profit (loss)                                    796         (282)       514
Total assets                                           21,954       1,559     23,513
Capital expenditures for investment properties          1,186          --      1,186
</TABLE>

<TABLE>
<CAPTION>

                       1998                         Residential    Other      Totals

<S>                                                   <C>           <C>      <C>
Rental income                                         $ 6,937       $ --     $ 6,937
Other income                                              297          85        382
Interest expense                                        1,636          --      1,636
Depreciation                                            1,717          --      1,717
General and administrative expense                         --         486        486
Segment profit (loss)                                     543        (401)       142
Total assets                                           22,093         404     22,497
Capital expenditures for investment properties            403          --        403
</TABLE>

Note I - Legal Proceedings

In March 1998, several putative unit holders of limited partnership units of the
Partnership  commenced an action  entitled  Rosalie  Nuanes,  et al. v. Insignia
Financial  Group,  Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs  named as defendants,  among others,
the  Partnership,  the Managing  General Partner and several of their affiliated
partnerships  and corporate  entities.  The action  purports to assert claims on
behalf of a class of limited  partners and derivatively on behalf of a number of
limited  partnerships  (including  the  Partnership)  which are named as nominal
defendants,  challenging  the  acquisition  by Insignia  Financial  Group,  Inc.
("Insignia")  and  entities  which  were,  at one time,  affiliates  of Insignia
("Insignia  Affiliates") of interests in certain general partner entities,  past
tender offers by Insignia  Affiliates to acquire limited  partnership units, the
management of partnerships  by Insignia  Affiliates and the Insignia Merger (see
"Note B - Transfer  of  Control").  The  plaintiffs  seek  monetary  damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998,  the Managing  General  Partner  filed a motion  seeking  dismissal of the
action.  In lieu of  responding  to the  motion,  the  plaintiffs  have filed an
amended  complaint.  The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.  Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a  Stipulation  of  Settlement,  settling  claims,  subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999.  Preliminary  approval of the  settlement  was  obtained on
November 3, 1999 from the Superior Court of the State of  California,  County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999.  Prior to the  December  10,  1999  hearing  the  Court  received  various
objections to the settlement,  including a challenge to the Court's  preliminary
approval based upon the alleged lack of authority of class  plaintiffs'  counsel
to enter the settlement.  On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to  disqualify  some of the  plaintiffs'  counsel  in the  action.  The
Managing  General  Partner does not anticipate  that costs  associated with this
case will be material to the Partnership's overall operations.

The  Partnership is unaware of any other pending or outstanding  litigation that
is not of a routine nature arising in the ordinary course of business.

Note J - Change in Accounting Principle

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior  painting and major landscaping on a prospective
basis.  The  Partnership  believes  that  this  accounting  principle  change is
preferable  because it provides a better  matching of expenses  with the related
benefit of the expenditures and it is consistent with industry  practice and the
policies of the Managing General  Partner.  The effect of the change in 1999 was
to increase net income by approximately  $179,000 ($2.92 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods,  is
not material.  The accounting  principle  change will not have an effect on cash
flow,  funds available for  distribution or fees payable to the Managing General
Partner and affiliates.

<PAGE>

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

          None.

<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

National  Property  Investors 7 (the  "Partnership" or the  "Registrant") has no
officers or directors.  The managing  general  partner of the Partnership is NPI
Equity Investments,  Inc. ("NPI Equity" or the "Managing General Partner").  The
present  executive  officers and directors of the Managing  General  Partner are
listed below:

         Name                 Age    Position

         Patrick J. Foye       42    Executive Vice President and Director

         Martha L. Long        40    Senior Vice President and Controller

Patrick J. Foye has been  Executive  Vice President and Director of the Managing
General  Partner  since October 1, 1998.  Mr. Foye has served as Executive  Vice
President  of AIMCO  since May 1998.  Prior to  joining  AIMCO,  Mr.  Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was  Managing  Partner  of the  firm's  Brussels,  Budapest  and Moscow
offices from 1992  through  1994.  Mr. Foye is also Deputy  Chairman of the Long
Island  Power   Authority  and  serves  as  a  member  of  the  New  York  State
Privatization  Council.  He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.

Martha L. Long has been Senior Vice  President  and  Controller  of the Managing
General  Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia  Financial  Group,  Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997,  retaining that title until October 1998.  From 1988
to June 1994,  Ms. Long was Senior Vice  President and  Controller for The First
Savings Bank, FSB in Greenville, South Carolina.

Based solely upon a review of Forms 3 and 4 and amendments  thereto furnished to
the Registrant  under Rule 16a-3(e) during the  Registrant's  most recent fiscal
year and Form 5 and amendments  thereto furnished to the Registrant with respect
to its most recent  fiscal year,  the  Registrant  is not aware of any director,
officer,  beneficial  owner of more than ten  percent  of the  units of  limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms,  reports required by Section 16(a) of the Exchange
Act during the most recent  fiscal year or prior fiscal years except as follows:
AIMCO Properties,  L.P. and its joint filers failed to timely file a Form 3 with
respect to its  acquisition  of Units and AIMCO and its joint  filers  failed to
timely file a Form 4 with respect to its acquisition of Units.

Item 10.    Executive Compensation

Neither the director nor officers  received any  remuneration  from the Managing
General Partner during the year ended December 31, 1999.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below,  no person or entity was known by the  Partnership  to be
the beneficial  owners of more than 5% of the Limited  Partnership  Units of the
Partnership, as of December 31, 1999.

                                       Amount and Nature
        Name of Beneficial Owner      of Beneficial Owner     % of Class

        Insignia Properties, LP             25,399             41.970%
          (an affiliate of AIMCO)
        AIMCO Properties LP                 12,753             21.073%
          (an affiliate of AIMCO)

Insignia  Properties LP is indirectly  ultimately  owned by AIMCO.  Its business
address is 55 Beattie Place, Greenville, South Carolina 29602.

AIMCO Properties LP is indirectly  ultimately  controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.

No director or officer of the Managing General Partner owns any units.

Item 12.    Certain Relationships and Related Transactions

The  Partnership  has no employees  and is  dependent  on the  Managing  General
Partner  and  its  affiliates  for  the  management  and  administration  of all
Partnership  activities.  The  Partnership  Agreement  provides  for payments to
affiliates for services and as  reimbursement  of certain  expenses  incurred by
affiliates on behalf of the Partnership.

The following  payments were made to the Managing General Partner and affiliates
during the years ended December 31, 1999 and 1998:

                                                         1999       1998
                                                         (in thousands)
Property management fees                                 $380       $369
Reimbursement for services of affiliates                  180        188
Non-accountable reimbursement                              --         91
Partnership management fee                                 --        137

During the years ended  December 31, 1999 and 1998,  affiliates  of the Managing
General  Partner were  entitled to receive 5% of gross  receipts from all of the
Partnership's  properties  as  compensation  for providing  property  management
services.  The Registrant  paid to such  affiliates  approximately  $380,000 and
$369,000 for the years ended December 31, 1999 and 1998, respectively.

An  affiliate  of  the  Managing  General  Partner  received   reimbursement  of
accountable  administrative  expenses  amounting to  approximately  $180,000 and
$188,000 for the years ended December 31, 1999 and 1998, respectively.

In addition, in connection with the refinancing of the mortgage loan encumbering
The Pines Apartments the Partnership paid approximately $42,000 in loan costs to
an affiliate  during the year ended  December 31, 1999.  No such loan costs were
paid in 1998. These loan costs are included in other assets and are amortized as
interest expense over the terms of the loan.

For services relating to the  administration of the Partnership and operation of
Partnership  properties,  the  Managing  General  Partner is entitled to receive
payment for  non-accountable  expenses up to a maximum of $150,000 per year from
distributions from operations,  based upon the number of Partnership units sold,
subject  to  certain   limitations.   The  Managing   General  Partner  received
approximately  $91,000 in  reimbursements  for the year ended December 31, 1998.
The Managing General Partner was not entitled to receive a similar reimbursement
during the year ended December 31, 1999 because there were no distributions from
operations.

For managing the affairs of the Partnership, the Managing General Partner of the
Partnership  is entitled to receive a  partnership  management  fee.  The fee is
equal to 4% of the  Partnership's  adjusted cash from operations,  as defined in
the Partnership  Agreement,  in any year, provided that 50% of the fee shall not
be paid until the Partnership has distributed to the limited  partners  adjusted
cash from operations in such year which is equal to 5% of the limited  partners'
adjusted invested capital, as defined,  on a non-cumulative  basis. In addition,
50% of the fee shall not be paid until the  Partnership  has  distributed to the
limited partners adjusted cash from operations in such year which is equal to 8%
of the limited partners'  adjusted  invested capital on a non-cumulative  basis.
The fee shall be paid when adjusted cash from  operations is  distributed to the
limited partners.  The Managing General Partner was paid approximately  $137,000
during the year ended  December  31, 1998 for such fees.  The  Managing  General
Partner  was not  entitled  to receive a similar  reimbursement  during the year
ended December 31, 1999 because there were no distributions from operations.

Upon sale of the  Partnership's  properties,  NPI Equity  will be entitled to an
incentive  compensation  fee equal to a declining  percentage of the  difference
between the total amount distributed to limited partners and the appraised value
of their investment at February 1, 1992. The percentage amount to be realized by
NPI Equity,  if any,  will be  dependent  upon the year in which the property is
sold.  Payment of the incentive  compensation fee is subordinated to the receipt
by the limited partners, of: (a) distributions from capital transaction proceeds
of an amount equal to their appraised  investment in the Partnership at February
1, 1992; and (b) distributions from all sources (capital transactions as well as
cash  flow)  of an  amount  equal to six  percent  (6%)  per  annum  cumulative,
non-compounded,  on their present  appraised  investment in the  Partnership  at
February 1, 1992.

The Managing General Partner has extended to the Partnership a line of credit of
up to $500,000.  Loans under the line of credit will have a term of 365 days, be
unsecured  and bear  interest at the rate of 2% per annum in excess of the prime
rate  announced  from time to time by Chemical  Bank,  N.A. The maturity date of
such  borrowing  will be  accelerated  in the event of:  (i) the  removal of the
Managing  General  Partner  (whether  or  not  For  Cause);  (ii)  the  sale  or
refinancing of a property by the  Partnership;  or (iii) the  liquidation of the
Partnership. At the present time, the Partnership has no outstanding amounts due
under this line of credit.

Several tender offers were made by various parties,  including affiliates of the
Managing General Partner,  during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers,  AIMCO and its  affiliates  currently
own 38,152 limited partnership units in the Partnership  representing 63.043% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership  for cash or in exchange for units in the operating  partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the  Registrant.  Under the Partnership  Agreement,  unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters.  When voting on matters,  AIMCO would in all likelihood vote
the Units it  acquired in a manner  favorable  to the  interest of the  Managing
General Partner because of their affiliation with the Managing General Partner.

<PAGE>

Item 13.    Exhibits and Reports on Form 8-K

     (a) Exhibits:

         Exhibit 18, Independent  Accountants'  Preferability Letter for Change
         in Accounting Principle, is filed as an exhibit to this report.

         Exhibit 27,  Financial Data  Schedule,  is filed as an exhibit to this
         report.

     (b) Reports on Form 8-K filed in the fourth quarter of calendar year 1999:

         None.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    NATIONAL PROPERTY INVESTORS 7

                                    By:   NPI EQUITY INVESTMENTS, INC.
                                          Managing General Partner

                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President

                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President
                                          and Controller

                                    Date:


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 and on the date indicated.

/s/Patrick J. Foye      Executive Vice President      Date:
Patrick J. Foye         and Director

/s/Martha L. Long       Senior Vice President         Date:
Martha L. Long          and Controller

<PAGE>

                                  EXHIBIT INDEX

Exhibit Number    Description of Exhibit

2.5  Master  Indemnity  Agreement  dated as of August 17, 1995,  incorporated by
     reference to Exhibit 2.5 to Form 8-K filed by Insignia with the  Securities
     and Exchange Commission on September 1, 1995.

2.6  Agreement  and Plan of Merger,  dated as of October 1, 1998, by and between
     AIMCO and IPT  (incorporated  by  reference  to Exhibit  2.1 filed with the
     Registrant's Current Report on Form 8-K dated October 1, 1998).

3.4  (a) Agreement of Limited Partnership,  incorporated by reference to Exhibit
     A to the Prospectus of the Registrant dated July 5, 1978,  contained in the
     Registrant's Registration Statement on Form S-11 (Reg. No. 2-599991).

(b)  Amendments  to  the  Agreement  of  Limited  Partnership,  incorporated  by
     reference to the Definitive  Proxy Statement of the Partnership  dated July
     2, 1981.

(c)  Amendments  to  the  Agreement  of  Limited  Partnership,  incorporated  by
     reference to Definitive  Proxy statement of the Partnership  dated April 3,
     1991.

(d)  Amendments  to  the  Agreements  of  Limited  Partnership  incorporated  by
     reference,  to the Statement  Furnished in Connection With the Solicitation
     of Consents of the Registrant dated August 28, 1992.

10.1 (a) Purchase  Agreement  dated as of November 20, 1990,  by and between the
     Managing  General  Partner  and the Prior  Managing  General  Partner,  IRI
     Properties  Capital Corp.  and RPMC,  incorporated  by reference to Exhibit
     10(a) to the  Registrant's  Current  Report on Form 8-K dated  November 20,
     1990. (10)

(b)  Amendments  to Purchase  Agreement  dated as of November 20,  1990,  by and
     between  the  Managing  General  Partner  and the  Prior  Managing  General
     Partner,  IRI Properties Capital Corp. and RPMC,  incorporated by reference
     to Exhibit 10(a) to the Registrant's  Current Report on Form 8-K dated June
     21, 1991. (11)

(c)  Property  Management  Agreement  dated June 21,  1991,  by and  between the
     Registrant and NPI Management  incorporated by reference to Exhibit 10.4 to
     the Registrant's Annual Report on Form 10-K for the year ended December 31,
     1991. (10)

10.8 Multifamily  Note  and  Addendum,  dated  January  4,  1994,  made  by  the
     Registrant for the benefit of Hanover Capital Mortgage  Corporation,  as it
     pertains to The Pines Apartments. (11)

<PAGE>
10.9 Multifamily Deed of Trust,  Assignment of Rents and Security  Agreement and
     Rider,  dated January 4, 1994,  between the Registrant and Hanover  Capital
     Mortgage Corporation, as it pertains to The Pines Apartments. (11)

10.11Multifamily  Note secured by a Mortgage or Deed of Trust dated  November 1,
     1996,  between National Property  Investors 7 and Lehman Brothers Holdings,
     Inc.,  d/b/a Lehman Capital,  a Division of Lehman Brothers  Holdings Inc.,
     relating to Northwoods Apartments. (12)

10.12Multifamily  Note secured by a Mortgage or Deed of Trust dated  November 1,
     1996,  between National Property  Investors 7 and Lehman Brothers Holdings,
     Inc.,  d/b/a Lehman Capital,  a Division of Lehman Brothers  Holdings Inc.,
     relating to South Point Apartments. (12)

10.13Multifamily  Note secured by a Mortgage or Deed of Trust dated  November 1,
     1996,  between National Property  Investors 7 and Lehman Brothers Holdings,
     Inc.,  d/b/a Lehman Capital,  a Division of Lehman Brothers  Holdings Inc.,
     relating to Patchen Place Apartments. (12)

10.14Multifamily  Note secured by a Mortgage or Deed of Trust dated  November 1,
     1996,  between National Property  Investors 7 and Lehman Brothers Holdings,
     Inc.,  d/b/a Lehman Capital,  a Division of Lehman Brothers  Holdings Inc.,
     relating to Fairway View II Apartments. (12)

10.15Multifamily Note dated December 9, 1999, by and between  National  Property
     Investors 7, a California limited  partnership and GMAC Commercial Mortgage
     Corporation, a California corporation. (13)

16   Letter dated November 10, 1998, from the  Registrant's  former  independent
     accountant  regarding  its  concurrence  with  the  statements  made by the
     Registrant, incorporated by reference to Exhibit 16 filed with Registrant's
     Current Report on Form 8-K dated November 10, 1998.

18   Independent  Accountants'  Preferability  Letter for  Change in  Accounting
     Principle.

27   Financial Data Schedule.

(1)  Incorporated by reference to Exhibit 2 to the  Registrant's  Current Report
     on Form 8-K dated August 17, 1995.

(2)  Incorporated  by  reference  to Exhibit  2.1 to Form 8-K filed by  Insignia
     Financial  Group,  Inc.  with the  Securities  and Exchange  Commission  on
     September 1, 1995.

(3)  Incorporated  by  reference  to Exhibit  2.2 to Form 8-K filed by  Insignia
     Financial  Group,  Inc.  with the  Securities  and Exchange  Commission  on
     September 1, 1995.

(4)  Incorporated  by  reference  to Exhibit  2.4 to Form 8-K filed by  Insignia
     Financial  Group,  Inc.  with the  Securities  and Exchange  Commission  on
     September 1, 1995.

(5)  Incorporated  by  reference  to Exhibit  2.5 to Form 8-K filed by  Insignia
     Financial  Group,  Inc.  with the  Securities  and Exchange  Commission  on
     September 1, 1995.

(6)  Incorporated  by reference to Exhibit A to the Prospectus of the Registrant
     dated  February  10,  1984  contained  in  the  Registrant's   Registration
     Statement on Form S-11 (Reg. No. 2-87725).

(7)  Incorporated  by  reference  to  the  Definitive  Proxy  Statement  of  the
     Registrant dated April 3, 1991.

(8)  Incorporated by reference to the Statement Furnished in Connection with the
     Solicitation of Consents of the Registrant dated August 28, 1992.

(9)  Incorporated  by reference to the  Registrant's  Current Report on Form 8-K
     dated November 15, 1984.

(10) Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the year  ended  December  31,  1991.  Identical  agreements  have been
     entered into for each of the Registrant's  properties.  The only difference
     in the  agreements is that the  applicable  property name has been inserted
     into the agreement.

(11) Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the period ended December 31, 1993.

(12) Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the period ended December 31, 1996.

(13) Incorporated by reference to the Registrant's  Annual Report on Form 10-KSB
     for the period ended December 31, 1999.

<PAGE>

                                                                      Exhibit 18



February 7, 2000


Mr. Patrick J. Foye
Executive Vice President
NPI Equity Investments, Inc.
Managing General Partner of National Property Investors 7
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602

Dear Mr. Foye:

Note J of Notes to the  Financial  Statements of National  Property  Investors 7
included in its Form  10-KSB for the year ended  December  31, 1999  describes a
change in the method of  accounting to  capitalize  exterior  painting and major
landscaping,  which  would have been  expensed  under the old  policy.  You have
advised us that you believe  that the change is to a  preferable  method in your
circumstances because it provides a better matching of expenses with the related
benefit of the expenditures and is consistent with policies currently being used
by your industry and conforms to the policies of the Managing General Partner.

There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting  for exterior  painting and major  landscaping is to an acceptable
alternative  method which,  based on your business  judgment to make this change
for the reasons cited above, is preferable in your circumstances.

                                                               Very truly yours,
                                                           /s/Ernst & Young LLP

<PAGE>


                                                                  Exhibit 10.15
                                                       FHLMC Loan No. 002682303

                                MULTIFAMILY NOTE
                                  (MULTISTATE)

US $4,225,000.00                                        As of December 9, 1999


      FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more  than  one)  promises  to pay to the  order  of  GMAC  COMMERCIAL  MORTGAGE
CORPORATION,  a California  corporation,  the  principal sum of Four Million Two
Hundred  Twenty-Five  Thousand  and  00/100  Dollars  (US  $4,225,000.00),  with
interest  on the unpaid  principal  balance at the annual rate of seven and nine
hundred seventy thousandths percent (7.970%).

1. Defined  Terms.  As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness"  means the principal of, interest
on,  or any  other  amounts  due at any time  under,  this  Note,  the  Security
Instrument  or any other Loan  Document,  including  prepayment  premiums,  late
charges,  default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security  Instrument.  "Event of Default" and
other  capitalized  terms  used but not  defined  in this  Note  shall  have the
meanings given to such terms in the Security Instrument.

2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account  Manager,  or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.

3. Payment of Principal  and Interest.  Principal and interest  shall be paid as
follows:

(a) Unless  disbursement of principal is made by Lender to Borrower on the first
day of the month,  interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made  shall be  payable  simultaneously  with  the  execution  of this  Note.
Interest  under  this Note  shall be  computed  on the  basis of a 360-day  year
consisting of twelve 30-day months.

(b)  Consecutive  monthly  installments  of principal and interest,  each in the
amount of  Thirty  Five  Thousand  Two  Hundred  Sixty and  75/100  Dollars  (US
$35,260.75),  shall be  payable  on the first  day of each  month  beginning  on
February 1, 2000,  until the entire unpaid principal  balance  evidenced by this
Note is fully paid. Any accrued interest  remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued  interest" shall refer to accrued interest which has not become part of
the unpaid principal balance.  Any remaining principal and interest shall be due
and  payable  on  January  1, 2020 or on any  earlier  date on which the  unpaid
principal  balance of this Note  becomes due and  payable,  by  acceleration  or
otherwise (the "Maturity Date").  The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.

(c) Any regularly  scheduled monthly  installment of principal and interest that
is  received  by Lender  before  the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.

4.  Application of Payments.  If at any time Lender  receives,  from Borrower or
otherwise,  any amount  applicable  to the  Indebtedness  which is less than all
amounts due and payable at such time,  Lender may apply that  payment to amounts
then due and  payable in any manner and in any order  determined  by Lender,  in
Lender's  discretion.  Borrower  agrees that neither  Lender's  acceptance  of a
payment  from  Borrower in an amount that is less than all amounts  then due and
payable nor Lender's  application of such payment shall  constitute or be deemed
to  constitute  either  a  waiver  of  the  unpaid  amounts  or  an  accord  and
satisfaction.

5. Security.  The Indebtedness is secured,  among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security  Instrument"),  and reference is made to the Security  Instrument
for other rights of Lender as to collateral for the Indebtedness.

6.  Acceleration.  If an Event of Default has  occurred and is  continuing,  the
entire unpaid principal  balance,  any accrued interest,  the prepayment premium
payable under  Paragraph  10, if any, and all other  amounts  payable under this
Note and any other Loan  Document  shall at once become due and payable,  at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.

7. Late  Charge.  If any  monthly  amount  payable  under this Note or under the
Security  Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without  demand by Lender,  a late charge equal to five percent (5%) of such
amount.  Borrower  acknowledges  that its failure to make timely  payments  will
cause Lender to incur  additional  expenses in servicing and processing the loan
evidenced  by this Note (the  "Loan"),  and that it is extremely  difficult  and
impractical to determine  those  additional  expenses.  Borrower agrees that the
late charge payable pursuant to this Paragraph  represents a fair and reasonable
estimate,  taking into  account all  circumstances  existing on the date of this
Note,  of the  additional  expenses  Lender  will  incur by  reason of such late
payment.  The late  charge is  payable in  addition  to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.

8. Default Rate. So long as (a) any monthly  installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is  continuing,  interest  under this Note shall accrue on the unpaid  principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable,  at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first  paragraph of this Note or the maximum  interest  rate which may be
collected from Borrower under  applicable law. If the unpaid  principal  balance
and all accrued  interest are not paid in full on the Maturity  Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate.  Borrower also  acknowledges  that its failure to make
timely payments will cause Lender to incur additional  expenses in servicing and
processing the Loan, that,  during the time that any monthly  installment  under
this Note is  delinquent  for more than 30 days,  Lender  will incur  additional
costs and  expenses  arising  from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities,  and that it is extremely difficult
and impractical to determine those additional costs and expenses.  Borrower also
acknowledges that, during the time that any monthly  installment under this Note
is  delinquent  for more than 30 days or any other Event of Default has occurred
and is  continuing,  Lender's risk of nonpayment of this Note will be materially
increased  and Lender is entitled to be  compensated  for such  increased  risk.
Borrower  agrees that the  increase in the rate of interest  payable  under this
Note to the Default Rate represents a fair and reasonable estimate,  taking into
account all  circumstances  existing on the date of this Note, of the additional
costs and  expenses  Lender  will incur by reason of the  Borrower's  delinquent
payment and the  additional  compensation  Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.

9.    Limits on Personal Liability.

(a) Except as otherwise  provided in this  Paragraph 9,  Borrower  shall have no
personal  liability  under this Note, the Security  Instrument or any other Loan
Document for the repayment of the  Indebtedness  or for the  performance  of any
other  obligations  of Borrower  under the Loan  Documents,  and  Lender's  only
recourse for the  satisfaction of the  Indebtedness  and the performance of such
obligations  shall be Lender's  exercise of its rights and remedies with respect
to the Mortgaged  Property and any other  collateral  held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair  Lender's  enforcement  of  its  rights  against  any  guarantor  of  the
Indebtedness or any guarantor of any obligations of Borrower.

(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note,  plus any other amounts for which Borrower has personal  liability
under this Paragraph 9.

(c) In addition to Borrower's  personal liability under Paragraph 9(b), Borrower
shall be personally  liable to Lender for the repayment of a further  portion of
the  Indebtedness  equal to any loss or damage suffered by Lender as a result of
(1) failure of  Borrower to pay to Lender upon demand  after an Event of Default
all  Rents to which  Lender  is  entitled  under  Section  3(a) of the  Security
Instrument  and the amount of all security  deposits  collected by Borrower from
tenants  then in  residence;  (2)  failure of  Borrower  to apply all  insurance
proceeds and condemnation  proceeds as required by the Security  Instrument;  or
(3)  failure of Borrower to comply  with  Section  14(d) or (e) of the  Security
Instrument relating to the delivery of books and records, statements,  schedules
and reports.

(d) For purposes of determining  Borrower's  personal  liability under Paragraph
9(b) and Paragraph  9(c), all payments made by Borrower or any guarantor of this
Note with respect to the  Indebtedness  and all amounts  received by Lender from
the  enforcement  of its rights under the Security  Instrument  shall be applied
first to the  portion of the  Indebtedness  for which  Borrower  has no personal
liability.

(e) Borrower shall become  personally  liable to Lender for the repayment of all
of the  Indebtedness  upon the  occurrence  of any of the  following  Events  of
Default: (1) Borrower's acquisition of any property or operation of any business
not  permitted  by  Section  33 of  the  Security  Instrument;  (2)  a  Transfer
(including,  but not  limited  to,  a lien or  encumbrance)  that is an Event of
Default  under  Section  21 of the  Security  Instrument,  other than a Transfer
consisting  solely of the  involuntary  removal or  involuntary  withdrawal of a
general  partner in a limited  partnership  or a manager in a limited  liability
company; or (3) fraud or written material  misrepresentation  by Borrower or any
officer,  director,  partner,  member or employee of Borrower in connection with
the  application  for or  creation  of the  Indebtedness  or any request for any
action or consent by Lender.

(f) In addition to any personal  liability for the Indebtedness,  Borrower shall
be  personally  liable to Lender for (1) the  performance  of all of  Borrower's
obligations   under  Section  18  of  the  Security   Instrument   (relating  to
environmental  matters);  (2) the costs of any audit under  Section 14(d) of the
Security  Instrument;  and (3) any  costs  and  expenses  incurred  by Lender in
connection  with the  collection of any amount for which  Borrower is personally
liable under this  Paragraph  9,  including  fees and out of pocket  expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's  books and records to determine the amount for which  Borrower has
personal liability.

(g) To the extent that Borrower has personal  liability  under this Paragraph 9,
Lender may exercise its rights  against  Borrower  personally  without regard to
whether  Lender has exercised any rights  against the Mortgaged  Property or any
other  security,  or pursued any rights  against any  guarantor,  or pursued any
other rights available to Lender under this Note, the Security  Instrument,  any
other Loan  Document or  applicable  law. For purposes of this  Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or  permitted by the  Security  Instrument  prior to the
occurrence  of an  Event of  Default  or (2)  Borrower  was  unable  to apply as
required  or  permitted  by the  Security  Instrument  because of a  bankruptcy,
receivership, or similar judicial proceeding.

10.   Voluntary and Involuntary Prepayments.

(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:

(1)  Borrower may voluntarily prepay all of the unpaid principal balance of this
     Note on the last  Business  Day of a calendar  month if Borrower  has given
     Lender  at  least  30 days  prior  notice  of its  intention  to make  such
     prepayment.  Such  prepayment  shall be made by  paying  (A) the  amount of
     principal being prepaid,  (B) all accrued interest,  (C) all other sums due
     Lender  at the  time of such  prepayment,  and (D) the  prepayment  premium
     calculated  pursuant to Schedule A. For all purposes  including the accrual
     of interest,  any  prepayment  received by Lender on any day other than the
     last calendar day of the month shall be deemed to have been received on the
     last  calendar  day of such month.  For  purposes of this Note, a "Business
     Day" means any day other than a Saturday,  Sunday or any other day on which
     Lender is not open for  business.  Borrower  shall  not have the  option to
     voluntarily prepay less than all of the unpaid principal balance.

(2)  Upon  Lender's  exercise  of any right of  acceleration  under  this  Note,
     Borrower  shall pay to Lender,  in addition to the entire unpaid  principal
     balance of this Note outstanding at the time of the  acceleration,  (A) all
     accrued  interest  and all other sums due  Lender,  and (B) the  prepayment
     premium calculated pursuant to Schedule A.

(3)  Any  application  by  Lender of any  collateral  or other  security  to the
     repayment of any portion of the unpaid principal balance of this Note prior
     to the Maturity Date and in the absence of acceleration  shall be deemed to
     be a partial  prepayment  by Borrower,  requiring  the payment to Lender by
     Borrower of a prepayment premium. The amount of any such partial prepayment
     shall be computed so as to provide to Lender a prepayment  premium computed
     pursuant to Schedule A without  Borrower  having to pay  out-of-pocket  any
     additional amounts.

(b)  Notwithstanding  the provisions of Paragraph  10(a), no prepayment  premium
     shall be payable with respect to (A) any  prepayment  made no more than 180
     days before the Maturity Date, or (B) any prepayment  occurring as a result
     of the application of any insurance  proceeds or  condemnation  award under
     the Security Instrument.

(c)   Schedule A is hereby incorporated by reference into this Note.

(d)  Any  permitted  or required  prepayment  of less than the unpaid  principal
     balance  of this Note  shall not  extend  or  postpone  the due date of any
     subsequent monthly  installments or change the amount of such installments,
     unless Lender agrees otherwise in writing.

(e)  Borrower  recognizes that any prepayment of the unpaid principal balance of
     this Note,  whether voluntary or involuntary or resulting from a default by
     Borrower,  will result in Lender's incurring loss,  including  reinvestment
     loss,  additional expense and frustration or impairment of Lender's ability
     to meet its commitments to third parties.  Borrower agrees to pay to Lender
     upon demand damages for the detriment caused by any prepayment,  and agrees
     that it is extremely  difficult and  impractical to ascertain the extent of
     such damages.  Borrower therefore  acknowledges and agrees that the formula
     for  calculating  prepayment  premiums set forth on Schedule A represents a
     reasonable  estimate  of  the  damages  Lender  will  incur  because  of  a
     prepayment.

(f)  Borrower further  acknowledges  that the prepayment  premium  provisions of
     this  Note are a  material  part of the  consideration  for the  Loan,  and
     acknowledges  that the  terms  of this  Note  are in  other  respects  more
     favorable to Borrower as a result of the Borrower's  voluntary agreement to
     the prepayment premium provisions.

11.  Costs and Expenses.  Borrower  shall pay all expenses and costs,  including
     fees and out-of-pocket expenses of attorneys and expert witnesses and costs
     of investigation,  incurred by Lender as a result of any default under this
     Note or in  connection  with  efforts to collect  any amount due under this
     Note,  or to enforce  the  provisions  of any of the other Loan  Documents,
     including  those incurred in  post-judgment  collection  efforts and in any
     bankruptcy  proceeding  (including any action for relief from the automatic
     stay of any bankruptcy proceeding) or judicial or non-judicial  foreclosure
     proceeding.

12.  Forbearance.  Any  forbearance  by Lender in exercising any right or remedy
     under this Note,  the Security  Instrument,  or any other Loan  Document or
     otherwise  afforded by applicable law, shall not be a waiver of or preclude
     the exercise of that or any other right or remedy. The acceptance by Lender
     of any payment after the due date of such payment, or in an amount which is
     less than the required payment,  shall not be a waiver of Lender's right to
     require  prompt  payment when due of all other  payments or to exercise any
     right or  remedy  with  respect  to any  failure  to make  prompt  payment.
     Enforcement by Lender of any security for Borrower's obligations under this
     Note  shall not  constitute  an  election  by Lender of  remedies  so as to
     preclude the exercise of any other right or remedy available to Lender.

13.  Waivers.  Presentment,  demand,  notice  of  dishonor,  protest,  notice of
     acceleration, notice of intent to demand or accelerate payment or maturity,
     presentment  for payment,  notice of  nonpayment,  grace,  and diligence in
     collecting  the  Indebtedness  are waived by Borrower and all endorsers and
     guarantors of this Note and all other third party obligors.

14.  Loan  Charges.  If any  applicable  law  limiting the amount of interest or
     other charges  permitted to be collected  from Borrower in connection  with
     the Loan is interpreted  so that any interest or other charge  provided for
     in any Loan Document,  whether considered separately or together with other
     charges  provided for in any other Loan  Document,  violates  that law, and
     Borrower is entitled to the benefit of that law, that interest or charge is
     hereby  reduced to the extent  necessary to eliminate that  violation.  The
     amounts,  if any,  previously  paid to Lender  in  excess of the  permitted
     amounts shall be applied by Lender to reduce the unpaid  principal  balance
     of this Note.  For the purpose of  determining  whether any  applicable law
     limiting the amount of interest or other charges  permitted to be collected
     from  Borrower  has  been  violated,   all  Indebtedness  that  constitutes
     interest,  as  well  as all  other  charges  made in  connection  with  the
     Indebtedness that constitute interest,  shall be deemed to be allocated and
     spread ratably over the stated term of the Note. Unless otherwise  required
     by applicable  law, such allocation and spreading shall be effected in such
     a manner that the rate of interest  so computed is uniform  throughout  the
     stated term of the Note.

15.  Commercial  Purpose.  Borrower  represents  that the  Indebtedness is being
     incurred  by  Borrower  solely for the purpose of carrying on a business or
     commercial enterprise, and not for personal, family or household purposes.

16.  Counting  of  Days.  Except  where  otherwise  specifically  provided,  any
     reference  in this Note to a period  of "days"  means  calendar  days,  not
     Business Days.

17.  Governing  Law. This Note shall be governed by the law of the  jurisdiction
     in which the Land is located.

18.  Captions.  The captions of the paragraphs of this Note are for  convenience
     only and shall be disregarded in construing this Note.

19.  Notices.  All  notices,   demands  and  other  communications  required  or
     permitted to be given by Lender to Borrower  pursuant to this Note shall be
     given in accordance with Section 31 of the Security Instrument.

20.  Consent to  Jurisdiction  and Venue.  Borrower  agrees that any controversy
     arising under or in relation to this Note shall be litigated exclusively in
     the   jurisdiction   in  which   the  Land  is   located   (the   "Property
     Jurisdiction").   The  state  and  federal  courts  and  authorities   with
     jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction
     over all controversies which shall arise under or in relation to this Note.
     Borrower irrevocably consents to service,  jurisdiction,  and venue of such
     courts for any such litigation and waives any other venue to which it might
     be entitled by virtue of domicile, habitual residence or otherwise.

21.  WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
     TRIAL BY JURY WITH  RESPECT  TO ANY ISSUE  ARISING  OUT OF THIS NOTE OR THE
     RELATIONSHIP  BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF
     RIGHT BY A JURY AND (B) WAIVES  ANY RIGHT TO TRIAL BY JURY WITH  RESPECT TO
     SUCH ISSUE TO THE EXTENT  THAT ANY SUCH RIGHT  EXISTS NOW OR IN THE FUTURE.
     THIS  WAIVER OF RIGHT TO TRIAL BY JURY IS  SEPARATELY  GIVEN BY EACH PARTY,
     KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

      ATTACHED SCHEDULES.  The following Schedules are attached to this Note:


             X       Schedule A    Prepayment Premium (required)



             X       Schedule B    Modifications to Multifamily Note



      IN WITNESS  WHEREOF,  Borrower has signed and  delivered  this Note or has
caused  this  Note  to  be  signed  and   delivered   by  its  duly   authorized
representative.

                    NATIONAL   PROPERTY   INVESTORS  7,  a  California   limited
                    partnership, doing business in Virginia as National Property
                    Investors 7 L.P.

                    By:  NPI Equity  Investments,  Inc., a Florida  corporation,
                         its general partner

                    By:_________________________________
                         Patti K. Fielding Vice
                         President

                         13-3230613
                         Borrower's Social Security/Employer ID Number


<PAGE>


PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE  CORPORATION,  WITHOUT  RECOURSE,
THIS 9TH DAY OF DECEMBER, 1999.

GMAC COMMERCIAL MORTGAGE CORPORATION, a
   California corporation

By:_________________________________
   Donald W. Marshall
   Vice President


<PAGE>

                                   SCHEDULE A
                               PREPAYMENT PREMIUM

      Any prepayment  premium  payable under  Paragraph 10 of this Note shall be
computed as follows:

(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"),  the prepayment premium shall be the
greater of:

(i)   1.0% of the unpaid principal balance of this Note; or

(ii)  the product obtained by multiplying:

(A)   the amount of principal being prepaid,

                        by

(B)  the excess (if any) of the Monthly Note Rate over the Assumed  Reinvestment
     Rate,

                        by

(C)   the Present Value Factor.

     For purposes of subparagraph (ii), the following definitions shall apply:

     Monthly Note Rate:  one-twelfth  (1/12) of the annual  interest rate of the
     Note, expressed as a decimal calculated to five digits.

     Prepayment Date: in the case of a voluntary  prepayment,  the date on which
     the  prepayment  is made;  in any  other  case,  the  date on which  Lender
     accelerates the unpaid principal balance of the Note.

     Assumed  Reinvestment Rate:  one-twelfth (1/12) of the yield rate as of the
     date 5  Business  Days  before the  Prepayment  Date,  on the  9.250%  U.S.
     Treasury  Security  due  February  1, 2016,  as reported in The Wall Street
     Journal,  expressed as a decimal  calculated  to five digits.  In the event
     that no yield is published on the applicable date for the Treasury Security
     used to determine the Assumed Reinvestment Rate, Lender, in its discretion,
     shall select the non-callable  Treasury  Security maturing in the same year
     as the Treasury Security specified above with the lowest yield published in
     The Wall Street  Journal as of the applicable  date. If the  publication of
     such yield rates in The Wall Street Journal is discontinued for any reason,
     Lender  shall  select a  security  with a  comparable  rate and term to the
     Treasury  Security used to determine  the Assumed  Reinvestment  Rate.  The
     selection of an alternate security pursuant to this Paragraph shall be made
     in Lender's discretion.


<PAGE>


     Present Value Factor:  the factor that discounts to present value the costs
     resulting to Lender from the difference in interest rates during the months
     remaining in the Yield Maintenance Period,  using the Assumed  Reinvestment
     Rate as the discount rate, with monthly compounding,  expressed numerically
     as follows:

                                    [OBJECT OMITTED]

            n = number of months remaining in Yield Maintenance Period

            ARR = Assumed Reinvestment Rate

(b) If the  prepayment  is made after the  expiration  of the Yield  Maintenance
Period but more than 180 days before the Maturity Date,  the prepayment  premium
shall be 1.0% of the unpaid principal balance of this Note.


<PAGE>

                                   SCHEDULE B
                        MODIFICATIONS TO MULTIFAMILY NOTE

1.   The first sentence of 8 of the Note ("Default  Rate") is hereby deleted and
     replaced with the following:

            "So long as (a) any monthly installment under this Note remains past
            due for more than thirty (30) days or (b) any other event of Default
            has  occurred  and is  continuing,  interest  under  this Note shall
            accrue on the unpaid  principal  balance from the earlier of the due
            date of the first unpaid  monthly  installment  or the occurrence of
            such other Event of Default, as applicable,  at a rate (the "Default
            Rate")  equal to the lesser of (1) the maximum  interest  rate which
            may be  collected  from  Borrower  under  applicable  law or (2) the
            greater of (i) three  percent (3%) above the  Interest  Rate or (ii)
            four percent  (4.0%) above the  then-prevailing  Prime Rate. As used
            herein,  the term  "Prime  Rate"  shall  mean  the rate of  interest
            announced by The Wall Street Journal from time to time as the "Prime
            Rate"."

2.   Paragraph  9(c) of the Note is  amended to add the  following  subparagraph
     (4):

            "(4)  failure by  Borrower  to pay the amount of the water and sewer
            charges,  taxes,  fire, hazard or other insurance  premiums,  ground
            rents in accordance with the terms of the Security Instrument."