UNITEDSTATESSECURITIESAND EXCHANGE COMMISSIONWashington,D.C. 20549

**FORM10-K**

[x]Annual Report Pursuant to Section 13 or 15(d) of the Securities andExchange Act of 1934

For the fiscal year ended December 31, 2010

[] Transition report pursuant to section 13 or 15(d) of the SecuritiesExchange Act of 1934

Forthe transition period from ________________ to _______________

CommissionFile No. 2-83291.

**DSIREALTY INCOME FUND VII**

aCalifornia Limited Partnership

**
California

95-3871044

(Stateor other jurisdiction of incorporation or organization)

(I.R.S.Employer Identification No.)
**

**6700E. Pacific Coast Hwy., Long Beach, California 90803**

(Addressof principal executive offices)

Registrant’stelephone number, including area code (562) 493-8881

Securitiesregistered pursuant to Section 12(b) of the Act: 

**NONE**

Securitiesregistered pursuant to Section 12(g) of the Act:

Unitsof Limited Partnership Interests

Indicateby check mark if registrant is a well-known seasoned issuer, asdefined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicateby check mark if the registrant is not required to file reportspursuantto Section 13 or Section 15(d) of the Exchange Act. Yes[ ] No [X]

Indicateby check mark whether the registrant (l) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period thatthe registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  Yes[X] No [ ]

Indicate by check mark whetherthe registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (232.405 of thischapter) during the preceding 12 months (or for such shorter periodthat the registrant was required to submit and post such files). Yes [] No [X]

Indicateby check mark if disclosure of delinquent filers pursuant to Item405 of Regulation S-K (229.405 of this chapter) is not containedherein, and will not becontained, to the best of registrant's knowledge, in definitiveproxy or information statements incorporated by reference in PartIII of this Form 10-K or any amendment to this Form 10-K. [X]

Indicateby check mark whether theregistrant isa large accelerated filer, an accelerated filer, a non-acceleratedfiler, or a smaller reporting company.

Largeaccelerated filer [ ] Accelerated filer [ ]  Non-acceleratedfiler [ ] Smaller reporting company [X]

Indicateby check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Certainstatements contained in this discussion or elsewhere in this reportmay be deemed “forward-looking statements” within themeaning of the Private Securities Litigation Reform Act of 1995 andSection 27A of the Securities Act of 1933 and Section 21Eof the Securities Exchange Act of 1934. Words and phrases such as“expects”, “anticipates”,“intends”,“plans”, “believes”, “seeks”,“estimates”, “designed to achieve”,variations of such words and similar expressions are intended toidentify such forward-looking statements, which generally are nothistorical in nature. All statements that address operatingperformance, events or developments that we expect or anticipate willoccur in the future – including statements relating torent and occupancy growth, general conditions in the geographic areaswhere we operate – are forward-looking statements. Thesestatements are not guarantees of future performance and involvecertain risks, uncertainties and assumptions that are difficult topredict. 

Althoughwe believe the expectations reflected in any forward-lookingstatements are based on reasonable assumptions, we can give noassurance that our expectations will be attained and therefore,actual outcomes and results may differ materially from what isexpressed or forecasted in such forward-looking statements. Many ofthe factors that may affect outcomes and results are beyond ourability to control. 

**PART I**

**ITEM1. BUSINESS**

DSIRealty Income Fund VII (the "Partnership") is apublicly-held limited partnership organized under the CaliforniaUniform Limited Partnership Act pursuant to a Certificate andAgreement of Limited Partnership (hereinafter referred to as"Agreement") dated August 1, 1983. The General Partners areDSI Properties, Inc., a California corporation, and RJC CapitalManagement, LLC and JWC Capital Management, LLC. The two LLCs are thoseof Robert J. Conway and Joseph W. Conway, the initial Gereral Partnersof Registrant. The General Partners areaffiliates of Diversified Securities, Inc., a wholly-owned subsidiaryof DSI Financial, Inc. The General Partners provide similar servicesto other partnerships. Through its public offering of LimitedPartnership Units, Registrant sold twenty-four thousand (24,000)units of limited partnership interests aggregating Twelve MillionDollars ($12,000,000). The General Partners have retained a onepercent (1%) interest in all profits, losses and distributions(subject to certain conditions) without making any capitalcontribution to the Partnership. The General Partners are notrequired to make any capital contributions to the Partnership in thefuture.

ThePartnership is engaged in the business of investing in and operatingmini-storage facilities with the primary objectives of generating,for its partners, cash flow, capital appreciation of its properties,and obtaining federal income tax deductions so that during the earlyyears of operations, all or a portion of such distributable cash maynot represent taxable income to itspartners. Funds obtained by Registrant during the public offeringperiod of its units were used to acquire mini-storage facilities.Registrant does not intend to sell additional limited partnershipunits. The term of the Partnership is fifty years, but it isanticipated that the Partnership will sell and/or refinance itsproperties prior to the termination of the Partnership. ThePartnership is intended to be self-liquidating and it is not intendedthat proceeds from the sale or refinancing of its operatingproperties will be reinvested. Registrant has no full time employeesbut shares one or more employees with other limited partnershipssponsored by the General Partners. 

TheGeneral Partners are vested with authority as to the generalmanagement and supervision of the business and affairs of thePartnership. Limited Partners have no right to participate in themanagement or conduct of such business and affairs. An independentmanagement company has been retained to provide day-to-day managementservices with respect to all of the Partnership's investmentproperties.

Pleaserefer to the discussion appearing elsewhere herein under the captionManagement's Discussion and Analysis of Financial Condition andResults of Operations for a detailed analysis of the results ofoperations of the Partnership's properties.

Thebusiness in which the Partnership is engaged is highly competitive.Each of its mini-storage facilities is located in or near a majorurban area, and accordingly, competes with a significant number ofindividuals and organizations with respect to both the purchase andsale of its properties and for rentals. Generally, the Partnership'sbusiness is not affected by the change in seasons.

**ITEM1A. RISK FACTORS**

Notrequired.

**ITEM1B. UNRESOLVED STAFF COMMENTS**

None.

**ITEM2. PROPERTIES**

ThePartnership owns a fee interest in thefollowingmini-storage facilities, none of which are subject to long-termindebtedness. The following table sets forth informationregarding properties owned by the Partnership. 

**
 

 

 

**2010**

**2009**

 

Parcel

(Average)

(Average)

 

Size

Date

Rentable

Revenue

Rentable

Revenue

Location

(Acres)

Opened

Sq. Ft.

Sq. Ft.

Occ %

Sq. Ft.

Sq. Ft.

Occ %

Chico, CA

1.97

Jul-84

39,080

6.31

73.3

38,993

6.88

79.3

La Verne,CA

2.78

Apr-85

52,210

9.72

73.5

52,210

9.75

75.7

Littleton,CO

3.07

Oct-85

45,730

7.89

65.2

45,780

8.67

73.5

Riverside,CA

2.92

Jan-85

61,027

6.02

63.0

61,027
  6.42
62.6

Fairfield,CA

2.29

Aug-84

41,010

10.63

73.9

41,010

11.29

79.2
**

**ITEM3. LEGAL PROCEEDINGS**

ThePartnership is not a party to any material pending legal proceedings.

**ITEM4. [REMOVED AND RESERVED]**

**PART II**

**ITEM5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

MarketInformationThePartnership is a limited partnership and thus has no common stock.There is no established trading market for limited partnershipinterests in the Partnership and it is not anticipated that any suchpublic market will develop. The Limited Partnership Agreementeffectively prevents the transfer of Limited Partnership Interestsexcept under very limited circumstances.  In order to transfer aLimited Partner­ship Interest, a Limited Partner must obtain theconsent of the General Partners of the Partnership, which have theabsolute right to refuse any request for a transfer. In addition, theproposed transferee must meet all applicable suitability standardsand agree to be bound by the Limited Partnership Agreement.

ApproximateNumber of Security Holders** **

As of December 31, 2010, there were approximately846holders of Limited Partnership Interests.   

Distributions         

Average cashdistributions of $6.88 per Limited Partnership Unit were declared andpaid each quarter for the year ended December 31, 2010and $8.17perLimited Partnership Unit were declared and paid each quarter for theyear ended December 31, 2009. It is the Partnership expectation thatdistributions will continue to be paid in the future.

**ITEM6. SELECTED FINANCIAL DATA**

NotRequired.

**ITEM7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS.**

**CriticalAccounting Policies**

Revenuerecognition - Revenue is recognized using the accrual method based oncontractual amounts provided for in the lease agreements, whichapproximates recognition on a straight-line basis. The term of thelease agreements is usually less than one year.

**RESULTSOF OPERATIONS**

**2010 COMPARED TO 2009**

Totalrevenues decreased from $2,033,246 in 2009 to $1,920,061 in 2010,while total expenses increased from $1,248,696 to $1,252,659. As a result, netincome from continuing operations decreasedfrom$784,550to $667,402. Rental revenues decreased primarily as a result of decreased occupancyrates and poor economic conditions nationwide.Occupancylevels forthe Partnership’s mini-storage facilities averaged 69.8% forthe year 2010 as compared to 74.1%for 2009. Operating expenses increased$62,479 (8.1%) primarily due to increases in advertising, fire andliability insurance, real estate taxes and workers compensationinsurance expenses, partially offset byan decrease in salary and wages expense.General andadministrative expenses decreased $27,582 (9.7%)primarily as a result of decreases in legal andprofessional, office supplies,petty cash expenses, other taxes and licenses and computer &equipment leases expenses, partially offset by increases inpostage and administration expenses.TheGeneral Partners’incentive management fee which is based on cash available fordistribution, decreased as a result of the decrease in net cashprovided by operating activities.

Operatingexpenses consist mainly of expenses such as promotional advertising,yellow pages and other forms of advertising, utilities, andmaintenance, real estate taxes, salariesand wages and their related expenses. General and administrativeexpenses consist mainly of expenses such as legal and professional,office supplies, accounting services and computer expenses.

**LIQUIDITYAND CAPITAL RESOURCES**

Netcash provided by operating activities decreased approximately$254,641 (29.9%) in 2010 compared to 2009 primarily due to thedecrease in net income from continuing operations.

Cash used in investing activities,consists of acquisitionofproperty or capital improvements tothe Partnership's mini storage facilities. There were no significantinvesting activities in 2010 and 2009. The Partnership currentlyhas nomaterial commitments for capitalexpenditures.

Cash used in financing activities, as set forth in the statements ofcash flows, has consisted solely of cash distributions to partners in2010 and 2009 and payments on capital lease obligations.

Withthe continuing crisis in the housing and lending markets, very few newfacilities are being built. We anticipate that when thefinancial markets stabilize and the economy begins to grow again,occupancies and income should rebound quickly.

TheGeneral Partners plan to continue to improve and maintain Partnershipproperties with cash generated from operations. The Partnershipanticipates that cash flows generated from operations of thePartnership's rental real estate operations will be sufficient to coveroperating expenses and distributions for the next twelve months andbeyond.

TheGeneral Partners are not aware of any environmental problems whichcould have a material adverse effect upon the financial position of thePartnership.

**LONG-TERMLIABILITIES AND CONTRACTUAL OBLIGATIONS**

None.

**OFF-BALANCESHEET ARRANGEMENTS******None.**QUARTERLYFINANCIAL INFORMATION (UNAUDITED)**

Summarizedquarterly financial data for the year ended December 31, 2010 was asfollows: 

|                                                                | **2010Quarter Ended:** |
|----------------------------------------------------------------|------------------------|
|                                                                | **March31**            | **June30** | **September30** | **December31** |
| Total revenues                                                 | 482,667                | 489,793 | 469,189 | 478,412 |
| Net income                                                     | 119,198                | 197,352 | 187,409 | 163,443 |
| Net income per limited partnership unit                        |                        |  |  |  |
| $4.92                                                          | $8.14                  | $7.73 | $6.74 |
| Weighted average numberof limited partnershipunits outstanding |
|                                                                |                        |  |  |
| 24,000                                                         | 24,000                 | 24,000 | 24,000 |

**ITEM7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

NotRequired.

**ITEM8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA **

**DSIREALTY INCOME FUND VII**(ACalifornia Real Estate Limited Partnership)

**INDEXTO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE**

**FINANCIALSTATEMENTS:**

Reportof Independent Registered Public Accounting Firm                                                                       F-1

BalanceSheets as of December 31, 2010 and 2009                                                                              F-2

Statementsof Income for the Years Ended December 31, 2010 and 2009                                                  F-3 

Statementsof Changes in Partners' Equity (Deficit) for theYears Ended December 31, 2010 and 2009            F-4

Statements of Cash Flows for the Years Ended December 31, 2010 and 2009                                            F-5 

Notesto Financial Statements                                                                                                           F-6 

**SUPPLEMENTALSCHEDULE:**

Schedule III - Real Estate and Accumulated Depreciation as of December31, 2010                                     F-9

**ITEM9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE**

None.

**ITEM9A. CONTROLS AND PROCEDURES**

ThePartnership’s management, with the participation of theprincipal executive officer and principal financial officer of DSIProperties, Inc., its General Partner, who are the equivalent of thePartnership’s principal executive officer and principalfinancial officer, respectively, has evaluated the effectiveness ofthe Partnership’s disclosure controls and procedures (asdefined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934, as amended (the *“ExchangeAct”*))as of the end of the period covered by this report. Based on suchevaluation, the principal executive officer and principal financialofficer of the General Partner, who are the equivalent of thePartnership’s principal executive officer and principalfinancial officer, respectively, have concluded that, as of the endof such period, the Partnership’s disclosure controls andprocedures are effective.  

Management’sReport on Internal Control Over Financial Reporting

ThePartnership’s management is responsible for establishing andmaintaining adequate internal control over financial reporting.Internal control over financial reporting is defined in Rule13a-15(f) and 15d-15(f) under the Exchange Act as a process designedby, or under the supervision of, the principal executive andprincipal financial officers of the General Partner, who are theequivalent of the Partnership’s principal executive officer andprincipal financial officer, respectively, and effected by thePartnership’s management and other personnel to providereasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principlesand includes those policies and procedures that:

-  pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositionsof assets; 
-  provide reasonable assurance that transactions are recordedas necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and thatreceipts and expenditures are being made only in accordance withauthorizations of the Partnership’s management; and 
-  provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use or disposition of assetsthat could have a material effect on the financial statements. 

Becauseof its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Projections of anyevaluation of effectiveness to future periods are subject to therisks that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies orprocedures may deteriorate.

ThePartnership's management assessed the effectiveness of thePartnership's internal control over financial reporting as of December31, 2010. In making this assessment, the Partnership's managementused the criteria set forth by the Committee of SponsoringOrganizations of the Treadway Commission (COSO) in InternalControl-Integrated Framework.

Basedon their assessment, the Partnership's management concluded that, as ofDecember 31, 2010, the Partnership's internal control over financialreporting was effective.

Thisannual report does not include an attestation report of thePartnership’s registered public accounting firm regardinginternal control over financial reporting. Management’s reportwas not subject to the attestation by the Partnership’sregistered public accounting firm pursuant to rules of theSecurities and Exchange Commission that permit the Partnership toprovide only management’s report in this annual report.

Changesin Internal Control Over Financial Reporting.

Therehave been no significant changes in the Partnership’s internalcontrol over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) during the fourth quarter of 2010that have materially affected, or are reasonably likely to materiallyaffect, the Partnership’s internal control over financialreporting.

**ITEM9B. ****OTHER INFORMATION**

In thepreliminary submission to the Securities andExchange commission, the General Partners solicited the consentsof limitedpartners to an amendment of the Certificate and Agreement ofLimited Partnershipto reflect a proposed change in legal status of the GeneralPartners. Thechange was to amend paragraph 6 of the Limited PartnershipAgreementindicating that the General Partners of the Partnership are DSIProperties, Inc., aCalifornia corporation (no change) and RJC Capital Management, LLCand JWCCapital Management, LLC.  The two LLCs are those of Robert J.Conway and Joseph W.Conway, the initial General Partners of Registrant. There are24,000 units available tovote and the General Partners received 14,080 votesor 59% votingin favor of the amendment. Ballots were reviewed and tabulated bytheindependent accounting firm of Goodrich, Baron & Goodyear, LLPand the results were certified on December 31, 2010. 

******PARTIII**

**ITEM10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.**

ThePartnership has no directors or executives officers of its own. The following biographical information is presented for the officersof DSI Properties, Inc., a General Partner of the Partnership, aswell as the partners of RJC CapitalManagement, LLCand JWCCapital Management, LLC.  The two LLCs are those of Robert J.Conway and Joseph W.Conway, the initial General Partners of RegistrantThe General Partners have principalresponsibilityfor the Partnership’s affairs.

DSIProperties, Inc.

**RobertJ. Conway,**76, has been President and a member of theBoard of Directors of DSI Properties, Inc. since 1973.He has alsobeen President and a member of the Board of Directors of DiversifiedSecurities, Inc., since 1965. Mr. Conway is also a licensedCalifornia real estate broker, and received a Bachelor of ScienceDegree from Marquette University with majors in Corporate Finance andReal Estate.

**JosephW. Conway,**81, has been Vice President, Treasurer and member of the Board ofDirectors of DSI Properties, Inc. since 1973. He has also beenExecutive Vice President, Treasurer and a member of the Board ofDirectors of Diversified Securities, Inc. since 1965. Mr. Conwayreceived a Bachelor of Arts Degree from Loras College with a major inAccounting.

**JosephW. Stok,**87, has been a member of the Board of Directors of DSI Properties,Inc. since 1994, a Vice President of Diversified Securities, Inc.since 1973, and an Account Executive with Diversified Securities,Inc. since 1967.

Asthe Partnership has no directors or executive officers, it has noaudit, nominating or other committees.

**ITEM11. EXECUTIVE COMPENSATION**

Noneof the directors or officers of the General Partners received anydirect remuneration from the Partnership during the years endedDecember31, 2010or 2009.

**ITEM12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS**

Thefollowing table sets forth certain information regarding thebeneficial ownership of the Partnership's limited partnership unitsas of December 31, 2010 by (i) each person known to beneficially ownmore than 5% of the Partnership's limited partnership units, and (ii)each officer of the General Partners of the Partnership.

| **Titleof Class**           | **Nameof Beneficial Owner** | **Numberof LP Units Beneficially Held (1)** | **Percentof Class** |
|-----------------------------|-----------------------------|---------------------------------------------|---------------------|
| LimitedPartnership Interest | Robert J. Conway            | 222 -Direct                                 | Lessthan 1%         |
| LimitedPartnership Interest | Joseph W. Conway            | 187 - Direct                                | Lessthan 1%         |
|                             | **Total**                   | 409                                         | 1.7%                |

(1)Unless otherwise indicated, the address for each listed director orofficer is c/o 6700 E. Pacific Coast Hwy. #150, Long Beach, CA 90803.As used in this table, "beneficial ownership" means thesole or shared power to vote or direct the voting or to dispose ordirect the disposition of any security. 

(2)As of December 31, 2010, no person owned more than 5% of the limitedpartnership units of record, nor was any person known by thePartnership to beneficially own more than 5% thereof.

**ITEM13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE**

ThePartnership has no employees and depends on the General Partners andtheir affiliates for the management and administration of allPartnership activities. The Partnership Agreement provides forcertain payments to affiliates for services and reimbursement ofcertain expenses incurred by affiliates on behalf of the Partnership.

Under the Agreement of Limited Partnership, the General Partners areallocated 1% of the net profits or losses from operations of thePartnership. During 2010 an aggregate of $6,674 was allocated to theGeneral Partners, and during 2009 an aggregate of $7,845 wasallocated to the General Partners. In addition, under the LimitedPartnership Agreement the General Partners are entitled to receive apercentage, of any cash distribution from the sale, otherdisposition, or refinancing of properties of the Partnership, basedon a formula set forth in the Limited Partnership Agreement. As there wereno sales or refinancings of Partnership properties during 2010, no suchfees were paid during this year. ****

In addition, the general partners are entitled to receive an incentivemanagement fee for supervising the operations of the Partnership, equalto 9% per annum of the cash available for distribution on a cumulativebasis, calculated as cash generated from operations less capitalexpenditures. During 2010 the Partnership paid the General Partners anincentive management fee of $59,175, and during 2009 the Partnershippaid the General Partners an incentive management fee of $82,161.

Allof the Partnership’s properties were purchased from DahnCorporation ("Dahn"). Dahn is not affiliated with thePartnership, but is affiliated with other partnerships in which DSIProperties, Inc. is a general partner The Partnership has enteredinto management agreements with Dahn to operate its mini-storagefacilities. Each agreement provides for a management fee equal to 5% ofgross revenue from operations, defined as the entire amount of allreceipts from the renting or leasing of storage compartments and saleof locks. The management agreements are renewable annually. During 2010and 2009 the Partnership paid Dahnmanagement fees of $95,767 and $101,494, respectively.Amounts payable to Dahn at December 31, 2010 and 2009, were $7,315 and$11,828,respectively.

Noneof the General Partner's directors is “independent” underthe independence standards established by the Securities and ExchangeCommission, as all directors are employed by a General Partner.

**ITEM14. PRINCIPAL ACCOUNTING FEES AND SERVICES**

**AuditFees**

Theaggregate fees for professional services rendered by CacciamattaAccountancy Corporation for the audit of the Partnership's annualfinancial statements and for reviews of the financial statementsincluded in the Partnership's Quarterly Reports on Form 10-Q for 2010were $39,700** **and for 2009 were $39,700.

**OtherFees**

ThePartnership did not pay Cacciamatta Accountancy Corporation anyNon-Audit-Related Fees, Tax Fees, or other fees during 2010 and 2009.

**PARTIV**

**ITEM15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

(1)Financial Statements

SeeIndex to Financial Statements and Supplemental Schedule in Item 8.

(2)Financial Statement Schedules

SeeIndex to Financial Statements and Supplemental Schedule in Item 8.

(3)Exhibits

13 Annual Report Letterto Limited Partners

31.1 Rule13a-14(a)/15d-14(a) Certification: Principal Executive Officer

31.2 Rule13a-14(a)/15d-14(a) Certification: Principal Financial Officer

32.1 Section 1350Certification: Principal Executive Officer

32.2 Section 1350Certification: Principal Financial Officer

**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

**DSIREALTY INCOME FUND VI****,**

aCalifornia Limited Partnershipby:DSI Properties, Inc., a California Corporation, asGeneral Partner

By:  /s/ ROBERT J. CONWAY

Dated:March 31, 2011

**ROBERTJ. CONWAY, **(President, ChiefExecutive Officer and Director)

By: /s/JOSEPH W. CONWAY

Dated:March 31,2011

**JOSEPHW. CONWAY,  **(Executive VicePresident and Director)

By:  /s/ RICHARD P. CONWAY

Dated: March 31, 2011

**RICHARD P. CONWAY,**(Senior Vice President, Chief FinancialOfficer) 

Pursuantto the requirements of the Securities Exchange Act of 1934, thisreport has been signed by the following persons on behalf of theregistrant and in the capacities and on the date indicated.

**DSIREALTY INCOME FUND VI****,**

aCalifornia Limited Partnershipby:DSI Properties, Inc., a California corporation, asGeneralPartner

By:  /s/ ROBERT J. CONWAY

Dated:March 31, 2011

**ROBERTJ. CONWAY, **(President, ChiefExecutive Officer and Director)

By: /s/JOSEPH W. CONWAY

Dated:March 31,2011

**JOSEPHW. CONWAY,  **(Executive VicePresident and Director)

By:  /s/ RICHARD P. CONWAY

Dated: March 31, 2011

 

**ITEM****15(1)**

**2010ANNUAL REPORT TO LIMITED PARTNERS OF**

**DSIREALTY INCOME FUND VII**

Financial Statements for its fiscal year ended December 31, 2010

**REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Tothe Partners of DSI Realty Income Fund VII:

Wehave audited the accompanying balance sheets of DSI Realty Income FundVII, a California Limited Partnership (the "Partnership") as ofDecember 31, 2010 and 2009 and the related statements ofincome, changes in partners' equity (deficit), and cash flows foreach of the years in the two year period ended December 31, 2010. Ouraudits also included the supplemental schedule listed in the Index atItem 15(2). These financial statements and the supplemental scheduleare the responsibility of the Partnership's management. Ourresponsibility is to express an opinion on these financial statementsand supplemental schedule based on our audits.

Weconducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Partnership is not required to have, nor were weengaged to perform, an audit of its internal control over financialreporting. Our audits included consideration of internal controlover financial reporting as a basis for designing audit proceduresthat are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Partnership'sinternal control over financial reporting. Accordingly, we express nosuch opinion.

Anaudit also includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basisfor our opinion.

Inour opinion, the financial statements referred to above present fairly,in all material respects, the financial position of DSI Realty IncomeFund VII at December 31, 2010 and 2009, and the results of itsoperations and its cash flows for each of the years in the two yearperiod ended December 31, 2010, in conformity with accountingprinciples generally accepted in the United States of America. Also, inour opinion, the supplemental schedule referred to above, whenconsidered in relation to the basic financial statements taken as awhole, presents fairly, in all material respects, the information setforth therein.

/s/Cacciamatta Accountancy Corporation

Irvine, California

March31, 2011

PageF-1

**DSIREALTY INCOME****FUNDVII**(ACalifornia Real Estate Limited Partnership) 

| **BALANCE SHEETS**                     |                |                |
|----------------------------------------|----------------|----------------|
| **AS OF DECEMBER 31**                  | **2010**       | **2009**       |
| **ASSETS**                             |                |                |
| Cash and cashequivalents               | $ 367,302      | $ 624,860      |
| Property, net                          | 1,752,849      | 1,735,263      |
| Uncollectedrental revenue              | 98,731         | 85,352         |
| Prepaidadvertising                     | 3,438          | 14,256         |
| Other assets                           | 28,712         | 21,250         |
| **TOTAL**                              | **$2,251,032** | **$2,480,981** |
| **LIABILITIESAND PARTNERS' EQUITY**    |                |                |
| **LIABILITIES**                        |                |                |
| Distribution dueto partners (Note 4)   | $ 181,818      | $ 212,121      |
| Incentivemanagement fee liability      | -              | 22,925         |
| Propertymanagement fee liability       | 7,315          | 11,828         |
| Deferred income                        | 43,021         | 56,946         |
| Accrued expenses                       | 38,198         | 33,257         |
| Other liabilities                      | 14,874         | 21,246         |
| **Totalliabilities**                   | 285,226        | 358,323        |
| **PARTNERS'EQUITY (DEFICIT) (Note 4)** |                |                |
| General partners                       | (88,112)       | (86,543)       |
| Limited partners                       | 2,053,918      | 2,209,201      |
| **Totalpartners' equity**              | 1,965,806      | 2,122,658      |
| **TOTAL**                              | **$2,251,032** | **$2,480,981** |

Theaccompanying notes are an integral part of these FinancialStatements.

PageF-2

**DSIREALTY INCOME****FUNDVII**(ACalifornia Real Estate Limited Partnership) 

| **STATEMENTS OFINCOME**                                |               |               |
|--------------------------------------------------------|---------------|---------------|
| **FOR THE YEARS ENDEDDECEMBER 31**                     | **2010**      | **2009**      |
| **REVENUES**                                           |               |               |
| Self-storagerental income                              | $1,790,533    | $1,902,023    |
| Ancillaryoperating revenue                             | 129,303       | 130,729       |
| Interest andother income                               | 225           | 494           |
| **Total Revenues**                                     | **1,920,061** | **2,033,246** |
| **EXPENSES**                                           |               |               |
| Depreciation                                           | 12,092        | 14,313        |
| Operating                                              | 829,496       | 767,017       |
| General andadministrative                              | 256,129       | 283,711       |
| General partners' incentivemanagement fee (Note 4)     | 59,175        | 82,161        |
| Property management fee (Note 6)                       | 95,767        | 101,494       |
| **Total Expenses**                                     | **1,252,659** | **1,248,696** |
| **NET INCOME**                                         | **$667,402**  | **$784,550**  |
| **AGGREGATE NET INCOME ALLOCATED****TO (Note 4)**      |               |
| Limited partners                                       | $ 6,674       | $ 7,845       |
| General partners                                       | 660,728       | 776,705       |
| TOTAL                                                  | $ 667,402     | $ 784,550     |
| Number oflimited partnership units outstanding         | 24,000        | 24,000        |
| NET INCOME PER LIMITED PARTNERSHIP UNIT(Notes 2 and 4) | $ 27.53       | $ 32.69       |

Theaccompanying notes are an integral part of these FinancialStatements.

PageF-3

**DSIREALTY INCOME FUND VII**(ACalifornia Real Estate Limited Partnership) 

| **STATEMENTS OFCHANGES IN PARTNERS' EQUITY (DEFICIT)** |
|--------------------------------------------------------|
|                                                        | **GeneralPartners** | **GeneralPartners** | **Total** |
| BALANCE DECEMBER 31,2008                               | (85,866) | 2,276,209 | 2,190,343 |
| Net income allocation                                  | 7,845 | 776,705 | 784,550 |
| Distributions                                          | (8,522) | (843,713) | (852,235) |
| BALANCE DECEMBER31, 2009                               | $ (86,543) | $2,209,201 | $ 2,122,658 |
| Net incomeallocation                                   | 6,674 | 660,728 | 667,402 |
| Distributions                                          | (8,243) | (816,011) | (824,254) |
| **BALANCEDECEMBER 31, 2010**                           | **$(88,112)** | **$2,053,918** | **$1,965,806** |

Theaccompanying notes are an integral part of these FinancialStatements.

PageF-4

**DSIREALTY INCOME****FUNDVII**(ACalifornia Real Estate Limited Partnership) 

| **STATEMENTS OFCASH FLOWS**                                                          |           |           |
|--------------------------------------------------------------------------------------|-----------|-----------|
| **FOR THE YEARS ENDEDDECEMBER 31**                                                   | **2010**  | **2009**  |
| **CASH FLOWSFROM OPERATING ACTIVITIES**                                              |           |           |
| Net income                                                                           | $ 667,402 | $ 784,550 |
| **Adjustments toreconcile net income to net cash provided by operating activities:** |           |           |
| Depreciation                                                                         | 12,092    | 14,313    |
| Gain on salefrom discontinued operations                                             | -         | -         |
| **Changes inassets and liabilities**                                                 |           |           |
| Other assets                                                                         | (10,023)  | 574,545   |
| Incentivemanagement fee payable to general partners                                  | (22,925)  | 2,989     |
| Propertymanagement fees payable                                                      | (4,513)   | 658       |
| Customerdeposits and other liabilities                                               | (45,659)  | (526,040) |
| Net cash provided by operating activities                                            | 596,374   | 851,015   |
| **CASH FLOWSFROM INVESTING ACTIVITIES**                                              |           |           |
| Additions toproperty                                                                 | (29,678)  | (2,883)   |
| Proceeds fromthe sale of discontinued operations                                     | -         | -         |
| Net cash used in investingactivities                                            | (29,678)  | (2,883)   |
| **CASH FLOWSFROM FINANCING ACTIVITIES**                                              |           |           |
| Distributions topartners                                                             | (824,254) | (852,235) |
| Net cash used infinancing activities                                                 | (824,254) | (852,235) |
| **NET DECREASE****IN CASH AND CASH EQUIVALENTS**                                     | (257,558) | (4,053)   |
| **CASH AND CASHEQUIVALENTS, AT BEGINNING OF YEAR**                                   | 624,860   | 628,913   |
| **CASH AND CASHEQUIVALENTS, AT END OF YEAR**                                         | $ 367,302 | $ 624,860 |
| **SUPPLEMENTALDISCLOSURE OF CASH FLOW INFORMATION**                                  |           |           |
| Cash paid forinterest                                                                | $ -       | $ -       |
| **NON CASHINVESTING AND FINANCING ACTIVITIES**                                       |           |           |
| Distribution due partners included inpartners' equity                                | $ 181,818 | $ 212,121 |

Theaccompanying notes are an integral part of these FinancialStatements.

PageF-5

**DSIREALTY INCOME FUND VII**(ACalifornia Real Estate Limited Partnership)

**NOTES TO FINANCIAL STATEMENTS**

**DECEMBER 31, 2010**

**1. GENERAL**

DSIRealty Income Fund VII, a California Limited Partnership (the"Partnership"), has three general partners (DSI Properties,Inc. and RJC CapitalManagement, LLCand JWCCapital Management, LLC.  The two LLCs are those of Robert J.Conway and Joseph W.Conway, the initial General Partners of Registrant) and limited partners owning24,000 limited partnership units, which were purchased for $500 perunit. The general partners have made no capital contributions to thePartnership and are not required to make any capital contributions inthe future. The Partnership has a maximum life of 50 years and wasformed on August 1, 1983, under the California Uniform LimitedPartnership Act for the primary purpose of acquiring and operatingreal estate.

ThePartnership owns mini-storage facilities located in Chico, Fairfield,La Verne and Riverside, California; and Ft. Collins and Littleton,Colorado. All facilities were purchased from Dahn Corporation("Dahn"). Dahn is not affiliated with the Partnership. Dahnis affiliated with other partnerships in which DSI Properties, Inc.is a general partner (see Note 6).

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

Cashand Cash Equivalents - The Partnership classifies its short-terminvestments purchased with an original maturity of three months orless as cash equivalents.

Propertyand Depreciation - Property is recorded at cost and is composedprimarily of mini-storage facilities. Depreciation is provided usingthe straight-line method over an estimated useful life of 20 yearsfor the facilities. Building improvements are depreciated over afive year period. Property under capital leases is amortized over thelesser of the lives of the respective leases or the estimated usefullives of the assets.

IncomeTaxes - No provision has been made for income taxes in theaccompanying financial statements. The taxable income or loss ofthe Partnership is allocated to each partner in accordance with theterms of the Agreement of Limited Partnership. Each partner's taxstatus, in turn, determines the appropriate income tax for itsallocated share of the Partnership's taxable income or loss. The netdifference between the basis of the Partnership's assets andliabilities for federal income tax purposes and as reported forfinancial statement purposes for the year ended December 31,2010 and2009 is $25,403 and $(21,007), respectively.

Revenues- Rental revenue is recognized using the accrual method based oncontractual amounts provided for in the lease agreements, whichapproximates recognition on a straight-line basis. The term of thelease agreements is usually less than one year.

Advertising Expense - Costs related to advertising in Yellow Pages arecapitalized and amortized over 12 months. All other advertising costsare expensed as incurred. Advertising expense for the years endedDecember 31, 2010 and 2009 were $145,935 and $109,394 respectively.

Net Income per LimitedPartnership Unit - Net income per limited partnership unit is computedby dividing net income allocated to the limited partners by theweighted average numberof limited partnership units outstanding during each year.

Estimates- The preparation of financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires the Partnership to make estimates and assumptions thataffect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differfrom those estimates.

Impairment of Long-Lived Assets - The Partnership regularly reviewslong-lived assets for impairment whenever events or changes incircumstances indicate that the carrying amount of the asset may not berecoverable. If the sum of the expected undiscounted future cash flowis less than the carrying amount of the asset, the Partnership wouldrecognize an impairment loss to the extent the carrying value exceededthe fair value of the property. No impairment losses were required in2010 or 2009.

FairValue of Financial Instruments - For all financial instruments,including cash and cash equivalents, other assets, distributions dueto partners, incentive management fee payable to general partners,property managementfee payable, and customer deposits and other liabilities, carryingvalues approximate fair values because of the short maturity of thoseinstruments. 

PageF-6

Concentrationsof Credit Risk - Financial instruments that potentially subject thePartnership to concentrations of credit risk consist primarily ofcash and cash equivalents and rent receivables. The Partnershipplaces its cash and cash equivalents with high credit qualityinstitutions.Accountsat banks are insured by the FederalDepositInsurance Corporation (FDIC) up to $250,000. At December 31, 2010, thePartnership had $16,040 in excess of insured limits. ThePartnership performs ongoing evaluations of these institutions to limitits concentration of risk exposure. Management believes this risk isnot significant due to the financial strength of the financialinsitutions utilized by the Partnership. 

**RecentAccounting Pronouncements**

In June2009, the FASB approved its Accounting Standards Codification,or Codification, as the single source of authoritative United Statesaccounting and reporting standards applicable for all non-governmentalentities, with the exception of the SEC and its staff.  TheCodification, which changes the referencing of financial standards, iseffective for interim or annual financial periods ending afterSeptember 15, 2009.  Therefore, starting from the third quarter offiscal year 2009, all references made to US GAAP will use the newCodification numbering system prescribed by the FASB.  As theCodification is not intended to change or alter existing US GAAP, itdid not have any impact on the Partnership's consolidated financialstatements.As a result of the Partnership's implementation of the Codificationduring the year ended December 31, 2009, previous references to newaccounting standards and literature are no longer applicable.  Inthe current consolidated financial statements, the Partnership willprovide reference to both new and old guidance to assist inunderstanding the impact of recently adopted accounting literature,particularly for guidance adopted since the beginning of the currentfiscal year but prior to the Codification.In August 2009, the FASB issued Accounting Standards Update No. 2009-05("ASU 2009-05"), "Fair Value Measurements and Disclosures (Topic 820) -Measuring Liabilities at Fair Value."  ASU 2009-05 amends Subtopic820-10, "Fair Value Measurements and Disclosures - Overall," andprovides clarification for the fair value measurement ofliabilities.  ASU 2009-05 is effective for the first reportingperiod including interim period beginning after issuance.  ThePartnership does not expect the adoption of ASU 2009-05 to have amaterial impact on its consolidated financial statements.In August 2010, the FASB issued ASU No. 2010-21, "AccountingforTechnical Amendments to Various SEC Rules and Schedules ASU 2010-21."This ASU amends various SEC paragraphs pursuant to the issuance ofRelease No. 33-9026: Technical Amendments to Rules, Forms, Schedules,and Codification of Financial Reporting Policies and did not have asignificant impact on the Partnership's financial statements.

**3. PROPERTY**

Thetotal cost of property and accumulated depreciation were as follows asof December 31: 

|                                   | **2010**        | **2009**        |
|-----------------------------------|-----------------|-----------------|
| Land                              | $ 1,714,700     | $ 1,714,700     |
| Buildings andimprovements         | 6,429,803       | 6,400,125       |
| Rental trucksunder capital leases | 140,093         | 140,093         |
| **Total**                         | **8,284,596**   | **8,254,918**   |
|                                   |                 |                 |
| Less accumulateddepreciation      | (6,531,747)     | (6,519,655)     |
|                                   |                 |                 |
| **Property - net**                | **$ 1,752,849** | **$ 1,735,263** |

Depreciationexpense of $0 was recorded on the rental trucksunder capital leases in 2010 and 2009.

**4. ALLOCATION OF PROFITSAND LOSSES AND GENERAL PARTNERS' INCENTIVEMANAGEMENT FEE**

Underthe Agreement of Limited Partnership, the general partners are to beallocated 1% of the net profits or losses from operations, and thelimited partners are to be allocated the balance of the net profitsor losses from operations in proportion to their limited partnershipinterests. The general partners are also entitled to receive apercentage, based on a predetermined formula, of any cash distributionfrom the sale, other disposition, or refinancing ofthe project.

Inaddition, the general partners are entitled to receive an incentivemanagement fee for supervising the operations of the Partnership. Thefee is to be paid in an amount equal to 9% per annum of the cashavailable for distribution on a cumulative basis, calculated as cashgenerated from operations less capital expenditures.

PageF-7

**5. BUSINESS SEGMENT INFORMATION**

Thefollowing disclosure about segment reporting of the Partnership is madein accordance with the requirements of ASC 280-10 (formerly SFAS No.131, "Disclosures About Segments of an Enterprise and RelatedInformation") The Partnership operates in a single segment; storagefacility operations, under which the Partnership rents its storagefacilities to its customers on a need basis and charges rent on apredetermined rate.

**6. RELATED-PARTYTRANSACTIONS**

ThePartnership has entered into management agreements with Dahn to operateits mini-storage facilities. Each agreement provides for a managementfee equal to 5% of gross revenue from operations, defined as the entireamount of all receipts from the renting or leasing of storagecompartments and sale of locks. The management agreements are renewableannually. During 2010 and 2009 the Partnership paid Dahnmanagement fees of $95,767 and $101,494, respectively.Amounts payable to Dahn at December 31, 2010 and 2009, were $7,315 and$11,828,respectively.

|  |
|--|

PageF-8

**7. SUBMISSION OF MATTER TOA VOTE OF SECURITY HOLDERS**

**ITEM 15(2)**

**DSIREALTY INCOME FUND VII**(ACalifornia Real Estate Limited Partnership)

**SCHEDULEIII**

**REALESTATE AND ACCUMULATED DEPRECIATION**As of December 31, 2010 

| **Initial Cost** | **Gross CarryingAmount at December 31, 2010** |
|------------------|-----------------------------------------------|
| **Description**  | **Acquisition Date**                          | **Land** | **Buildingsand Improvements** | **Costs Subsequent to Acquisition** | **Land** | **Buildings and Improvements** | **Total** | **Accumulated Depreciation** |
| Chico, CA        | 12/83                                         | $ 209,700 | $ 932,373 | $ 12,419 | $ 209,700 | $ 944,792 | $ 1,154,492 | ($ 945,333) |
| Fairfield, CA    | 01/84                                         | 264,500 | 1,267,896 | 15,535 | 264,500 | 1,283,431 | 1,547,931 | (1,283,561) |
| La Verne, CA     | 08/84                                         | 453,250 | 1,243,974 | 41,451 | 453,250 | 1,285,425 | 1,738,675 | (1,273,006) |
| Littleton, CO    | 05/85                                         | 431,250 | 1,423,811 | 45,827 | 431,250 | 1,469,638 | 1,900,888 | (1,466,126) |
| Riverside, CA    | 06/84                                         | 356,000 | 1,391,210 | 55,307 | 356,000 | 1,446,517 | 1,802,517 | (1,423,626) |
|                  |                                               | **$1,714,700** | **$6,259,264** | **$170,539** | **$1,714,700** | **$6,429,803** | **$8,144,503** | **$(6,391,652)** |

Notes:

-  Depreciation expense is computedusing the straight-line method over an estimated useful life of 20years for the buildings. 

-  There are no encumbrances.  

PageF-9

**EXHIBIT13**

**2010ANNUAL REPORT TO LIMITED PARTNERS OFDSIREALTY INCOME FUND VII**

DearLimited Partner:

This report contains the Partnership'sbalance sheets as of December 31, 2010and 2009 and therelated statements of income, changes in partners' equity (deficit) andcash flows for each of the two years ended December 31, 2010 accompanied by areport of Independent Registered Public Accounting firm. ThePartnership's properties were each purchased for all cash and fundedsolely from subscriptions for limited partnership interests without theuse of mortgage financing.

Yourattention is directed to the section entitled Management's Discussionand Analysis of Financial Condition and Results of Operations for theGeneral Partners' discussion and analysis of the financial statementsand operations of the Partnership.

Average occupancy levelsand revenue per square foot for each of the Partnership's propertiesfor the years ended December 31, 2010 and 2009 were as follows: 

**
 

 

 

**2010**

**2009**

 

Parcel

(Average)

(Average)

 

Size

Date

Rentable

Revenue

Rentable

Revenue

Location

(Acres)

Opened

Sq. Ft.

Sq. Ft.

Occ %

Sq. Ft.

Sq. Ft.

Occ %

Chico, CA

1.97

Jul-84

39,080

6.31

73.3

38,993

6.88

79.3

La Verne,CA

2.78

Apr-85

52,210

9.72

73.5

52,210

9.75

75.7

Littleton,CO

3.07

Oct-85

45,730

7.89

65.2

45,780

8.67

73.5

Riverside,CA

2.92

Jan-85

61,027

6.02

63.0

61,027
  6.42
62.6

Fairfield,CA

2.29

Aug-84

41,010

10.63

73.9

41,010

11.29

79.2
**

 Verytruly yours,

**DSIREALTY INCOME FUND VII**

 By: DSI Properties, Inc.

 /s/ROBERT J. CONWAY

 By_______________________________

 ROBERTJ. CONWAY, President

**EXHIBIT31.1****Rule13a-14(a)/15d-14(a) Certification**

I,Robert J. Conway, certify that:

1. Ihave reviewed this annual report on Form 10-K of DSI Realty IncomeFund VII;

2.Based on my knowledge, this report does not contain any untruestatement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstancesunder which suchstatements were made, not misleading with respect to the periodcovered by this report.

3.Based on my knowledge, the financial statements, and other financialinformation included in this report, fairly present in all materialrespects the financial condition, results of operations and cashflows of the registrant as of, and for, the periods presented in thisreport.

4. Theregistrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)), for the registrant and have:

a)designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period inwhich this report is being prepared;

b)evaluated the effectiveness of the registrant's disclosure controlsand procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the endof the period covered by this report based on such evaluation; 

c)  evaluated the effectiveness of the registrant's disclosure controlsand procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of theend of the period covered by this report based on such evaluation;and 

d)disclosed in this report any change in the registrant's internalcontrol over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourthfiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting.

5. Theregistrant's other certifying officer and I have disclosed,based on our most recent evaluation of internal control overfinancial reporting, to the registrant's auditors and the auditcommittee of the registrant's board of directors (or personsperforming the equivalent functions):

a) allsignificant deficiencies and material weaknesses in the designor operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information; and 

b) anyfraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal control over financial reporting.

Date: March 31, 2011

/s/ROBERT J. CONWAY _______________________________

RobertJ. ConwayPresidentof DSI Properties, Inc., General Partner (chief executive officer)

**EXHIBIT31.2****Rule13a-14(a)/15d-14(a) Certification**

I,Richard P. Conway, certify that:

1. Ihave reviewed this annual report on Form 10-K of DSIRealty IncomeFund VII;

2.Based on my knowledge, this reportdoes not contain any untruestatement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstancesunder which suchstatements were made, not misleading with respect to the periodcovered by this report.

3.Based on my knowledge, thefinancial statements, and other financialinformation included in this report, fairly present in all materialrespects the financial condition, results of operations and cashflows of the registrant as of, and for, the periods presented in thisreport.

4. Theregistrant's other certifying officer and I areresponsible forestablishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)), for the registrant and have:

a)designed such disclosure controlsand procedures, or caused suchdisclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period inwhich this report is being prepared;

b)evaluated the effectiveness of theregistrant's disclosure controlsand procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures as of the endof the period covered by this report based on such evaluation; 

c)  evaluated the effectiveness of the registrant's disclosure controlsand procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of theend of the period covered by this report based on such evaluation;and 

d)disclosed in this report anychange in the registrant's internalcontrol over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourthfiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting.

5. Theregistrant's other certifyingofficer and I have disclosed,based on our most recent evaluation of internal control overfinancial reporting, to the registrant's auditors and the auditcommittee of the registrant's board of directors (or personsperforming the equivalent functions):

a) allsignificant deficiencies andmaterial weaknesses in the designor operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information; and 

b) any fraud, whetheror not material, that involves management orother employees who have a significant role in the registrant'sinternal control over financial reporting.

 Date: March 31, 2011

/s/RICHARD P. CONWAY

__________________________________

RichardP. ConwaySeniorVice President of DSI Properties, Inc., General Partner (chieffinancial officer)

**EXHIBIT32.1**

**CERTIFICATIONPURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002**

Inconnection with the Annual Report of DSIRealty Income Fund VII(the "Partnership") on Form 10-K for the period ending December 31,2010 as filed with the Securities and ExchangeCommission on the date hereof (the "Report"), I, Robert J.Conway, President of DSI Properties, Inc., General Partner of thePartnership, and performing the functions of chief executive officerof the Partnership, certify, pursuant to 18 U.S.C. 1350, as adoptedpursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in allmaterial respects, the financial condition and result of operationsof the Partnership.

/s/ROBERT J. CONWAY

___________________________________

RobertJ. ConwayPresidentof DSI Properties, Inc., General Partner (chief executive officer)

March 31, 2011

**EXHIBIT32.2**

**CERTIFICATIONPURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002**

Inconnection with the Annual Report of DSIRealty Income Fund VII(the "Partnership") on Form 10-K for the period ending December 31,2010 as filed with the Securities and ExchangeCommission on the date hereof (the "Report"), I, Richard P.Conway, Senior Vice President of DSI Properties, Inc., GeneralPartner of the Partnership, and performing the functions of chieffinancial officer of the Partnership, certify, pursuant to 18 U.S.C.1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002,that:

(1)The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in allmaterial respects, the financial condition and result of operationsof the Partnership.

/s/RICHARD P. CONWAY

__________________________________

RichardP. ConwaySeniorVice President of DSI Properties, Inc., General Partner (chieffinancial officer)

March 31, 2011