NATIONAL PROPERTY INVESTORS 7, 10KSB, 1998-03-23

NATIONAL PROPERTY INVESTORS 7
10KSB, 1998-03-23
REAL ESTATE

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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, 1997

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

For the transition period from 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.)

One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)

Issuer's telephone number (864) 239-1000

Securities registered under Section 12(b) of the Exchange Act:
None

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

Limited Partnership Units
(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 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

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. X

State issuer's revenues for its most recent fiscal year. $7,464,000

State the aggregate market value of the voting partnership interests held by
nonaffiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interest, as of a specified date within the past 60 days. Market value
information for the Registrant's partnership interests is not available. Should
a trading market develop for these Interests, it is the Managing General
Partner's belief that the aggregate market value of the voting partnership
interests would not exceed $25,000,000.

DOCUMENTS INCORPORATED BY REFERENCE
NONE

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") on December 20, 1991. The Managing General Partner was a
wholly owned subsidiary of National Property Investors, Inc. ("NPI") until
December 31, 1996, at which time Insignia Properties Trust, an affiliate of
Insignia Financial Group, Inc. ("Insignia") acquired the stock of NPI Equity.

The Partnership's Registration Statement, filed pursuant to the Securities Act
of 1933 (No. 2-84975), was declared effective by the Securities and Exchange
Commission on February 10, 1984. The Partnership marketed its securities
pursuant to its Prospectus dated February 10, 1984, which was thereafter
supplemented (hereinafter the "Prospectus"). This Prospectus was filed with the
Securities and Exchange Commission pursuant to Rule 424 (b) and 424 (c) of the
Securities Act of 1933.

The principal business of the Partnership is and has been to acquire, hold for
investment, and ultimately sell income-producing real property. The Partnership
is a "closed" limited partnership real estate syndicate formed to acquire multi-
family residential properties.

From February 1984 through February 1985, the Partnership offered $50,000,000 in
Limited Partnership units and sold units having an initial cost of $30,259,000.
The net proceeds of this offering were used to purchase seven income producing
real 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. Subsequent to the completion of
the acquisition activities in March 1986, the principal activity of the
Partnership has been managing its portfolio. See "Item 2, Description of
Properties" for a description of the Partnership's properties.

Pursuant to a series of transactions which closed during the first half of 1996,
affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the
issued and outstanding shares of stock of Fox Capital Management Corporation
("FCMC"), NPI Equity and National Property Investors, Inc. ("NPI"), the sole
shareholder of NPI Equity until December 31, 1996, at which time the stock of
NPI Equity was acquired by Insignia Properties Trust. In connection with these
transactions, affiliates of Insignia appointed new officers and directors of
NPI, NPI Equity and FCMC. See "Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a) of the Exchange Act."

On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.

The Managing General Partner of the Partnership intends to maximize the
operating results, and ultimately, the net realizable value of each of the
Partnership's properties in order to achieve the best possible return for the
investors. Such results may best be achieved through property sales,
refinancings, debt restrucurings or relinquishment of the assets. The
Partnership intends to evaluate each of its holdings periodically to determine
the most appropriate strategy for each of the assets.

It is possible that legislation on the state or local level may be enacted in
the states where the Registrant's properties are located which may include some
form of rent control. 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 Managing General Partner is unable to
predict the extent, if any, to which such existing or new legislation or
regulations might adversely affect the properties still 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 is a potentially responsible party with respect to an environmental
clean up site.

The Partnership has no 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. NPI-AP Management
L.P., an affiliate of the Managing General Partner, provides property management
services to the Partnership.

The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. Each of its apartment
properties is located in or near a major urban area, and accordingly, competes
for rentals not only with similar apartment properties in its immediate area but
with hundreds of similar apartment properties throughout the urban area,
including properties owned and/or managed by affiliates of the partnership.
Such competition is primarily on the basis of location, rents, services, and
amenities. In addition, the Partnership competes with significant numbers of
individuals and organizations (including similar partnerships, real estate
investment trusts and financial institutions) with respect to the sale of
improved real properties, primarily on the basis of the prices and terms of such
transactions.

On January 19, 1996, an affiliate of Insignia acquired from DeForest Ventures
II, L.P., the entity which had tendered for units in 1994 and 1996, all of its
interest in the Registrant. The affiliate of Insignia acquired 25,065 limited
partnership units or approximately 41.4% of the total limited partnership units
of the Partnership. Subsequently, Insignia Properties, LP ("IPLP") acquired such
units pursuant to its Schedule 13-D filed with the SEC. IPLP owns 25,399
limited partnership units representing 42% of the total outstanding units. See
"Item 12. Certain Relationships and Related Transactions."

ITEM 2. DESCRIPTION OF PROPERTIES:

The following table sets forth the Partnership's investments in properties:

Date of
Property Purchase Type of Ownership Use

Fairway 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

SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)

Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis

Fairway View II $10,390 $ 4,990 5-27.5 yrs S/L $ 2,638
The Pines 7,850 4,463 5-27.5 yrs S/L 1,995
Patchen Place 8,498 5,119 5-27.5 yrs S/L 2,449
Northwoods I & II 9,480 4,958 5-27.5 yrs S/L 2,676
South Point 9,208 4,549 5-27.5 yrs S/L 3,180

Total $45,426 $24,079 $12,938

See "Note A" of the financial statements included in "Item 7" for a description
of the Partnership's depreciation policy.

SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)

Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity

Fairway View II (2) $ 4,200 7.33% (1) 11/01/03 $ 4,200
The Pines 3,484 8.56% 30 yrs 02/01/01 3,357
Patchen Place (2) 3,000 7.33% (1) 11/01/03 3,000
Northwoods I & II (2) 5,000 7.33% (1) 11/01/03 5,000
South Point (2) 4,600 7.33% (1) 11/01/03 4,600

Total $20,284 $20,157

(1) Interest only payments.
(2) See "Item 6. Management's Discussion and Analysis or Plan of Operation -
Liquidity and Capital Resources" for information relating to the
refinancing of these mortgages in 1996.

SCHEDULE OF RENTAL RATES AND OCCUPANCY:

Average Annual Average
Rental Rates Occupancy
Property 1997 1996 1997 1996

Fairway View II $6,665/unit $6,399/unit 93% 96%
The Pines 6,715/unit 6,471/unit 96% 98%
Patchen Place 6,859/unit 6,602/unit 88% 92%
Northwoods I & II 5,974/unit 5,836/unit 95% 97%
South Point 8,146/unit 7,934/unit 92% 91%

The Managing General Partner attributes the decrease in occupancy at Fairway
View II to construction of a new apartment complex directly adjacent to the
property. The decrease in occupancy at Patchen Place is also due to increased
competition as a result of newly constructed units. Occupancy is anticipated
to increase; however, upon the completion of needed maintenance at Patchen
Place. Slight decreases in occupancy at the Pines and Northwoods I & II were
offset by increases in average rental rates.

As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other apartment complexes in the area. The General Partner
believes that all of the properties are adequately insured. The multi-family
residential properties' lease terms are for one year or less. No residential
tenant leases 10% or more of the available rental space.

Real estate taxes (in thousands) and rates in 1997 for each property were:

1997 1997
Billing Rate

Fairway View II $ 53 9.95%
The Pines 70 1.13%
Patchen Place 45 .97%
Northwoods I & II 115 1.98%
South Point 97 1.62%

ITEM 3. LEGAL PROCEEDINGS

The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Partnership believes
that all such routine pending or outstanding litigation will be resolved without
a material adverse effect upon the business, financial condition, or operations
of the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The unit holders of the Registrant did not vote on any matter during the fiscal
year covered by this report.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS

There is no established market for the Units and it is not anticipated that any
will occur in the foreseeable future. As of December 31, 1997, there were 1,971
holders of record owning an aggregate of 60,517 units.

Distributions from operations totaling approximately $2,000,000 were paid to the
partners on October 2, 1997. The limited partners received approximately
$1,980,000 ($32.72 per limited partnership unit) and the general partner
received approximately $20,000. At December 31, 1996, distributions of
approximately $1,960,000 had been declared and accrued. These distributions were
paid to the partners in January 1997. Approximately $1,940,000 ($32.06 per
limited partnership unit) went to the limited partners and approximately $20,000
to the general partners. The distributions originated from refinancing proceeds
of Fairway View II, Patchen Place, Northwoods I & II, and South Point of
approximately $1,561,000 and the remaining from operations of approximately
$399,000. No distributions were paid to partners in 1996. The General Partner
is planning a distribution for the year ended December 31, 1998. Additional
future cash distributions will be dependent on the levels of net cash generated
from operations, refinancings, property sales and the availability of cash
reserves.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

RESULTS OF OPERATIONS

The Partnership's net loss for the year ended December 31, 1997, was
approximately $98,000 compared to a net loss of approximately $57,000 for the
year ended December 31, 1996. The increase in net loss is primarily due to an
increase in operating expense as the result of exterior rehabilitation projects
at Fairway View II and Patchen Place and interior painting at South Point
Apartments. Also, advertising expenses increased primarily due to concessions
being offered at all of the properties in an effort to increase occupancy rates.
These increases were partially offset by a decrease in water and sewer expenses,
which resulted from the installation of water saving devices at The Pines
Apartments. Offsetting the increase in net income was an increase in rental
income due to successful rental rate increases at all of the investment
properties.

Included in operating expense for the year ended December 31, 1997, is
approximately $476,000 of major repairs and maintenance comprised primarily of
exterior building repairs and exterior painting. For the year ended December
31, 1996, operating expense included approximately $282,000 of major repairs and
maintenance comprised of major landscaping, exterior building repairs and
parking lot repairs.

As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment 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 Partnership 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, 1997, the Partnership had cash and cash equivalents of
approximately $2,500,000 compared to approximately $5,471,000 at December 31,
1996. For the year ended December 31, 1997, net cash and cash equivalents
decreased approximately $2,971,000. Net cash provided by operating activities
decreased primarily as a result of an increase in receivables and deposits and a
decrease in accounts payable and other liabilities. Due to refinancing of four
of the Partnership's investment properties in late 1996 (as discussed below),
cash from the former escrow accounts of approximately $300,000 was received in
1996. During 1997, approximately $203,000 was used to establish new escrow
accounts. These changes are reflected in the change in receivables and deposits
for the years ended December 31, 1996 and 1997, respectively. Accounts payable
and other liabilities decreased due to the timing of payments to vendors. Net
cash used in investing activities decreased due to a net decrease in restricted
escrows. The change from net cash provided by financing activities for the year
ended December 31, 1996, to net cash used in financing activities for the year
ended December 31, 1997, is partially due to the refinancing of the investment
properties in 1996 as described below. In addition, the Partnership made a
distribution in January 1997 totaling approximately $1,960,000, that was accrued
at December 31, 1996. The Partnership also made a distribution in October 1997
totaling approximately $2,000,000.

On July 12, 1996, the Partnership refinanced the mortgage encumbering Northwoods
Apartments. The refinancing replaced indebtedness on Northwoods in the amount
of approximately $1,926,000. The debt refinanced carried a stated interest rate
of 9.4% and had a maturity date of May 1, 1996. An extension to July 1, 1996,
had been granted. The new mortgage indebtedness of $5,000,000 carried an
interest rate of 2.5% plus the LIBOR rate, and the maturity date had been
extended to November 15, 1996.

On November 13, 1996, the Partnership refinanced the mortgage encumbering
Northwoods Apartments. The refinancing replaced indebtedness on Northwoods in
the amount of $5,000,000. The refinancing replaced the existing indebtedness
which carried an interest rate of 2.5% plus the LIBOR rate and had a maturity
date of November 15, 1996. The new mortgage indebtedness of $5,000,000 carries a
stated interest rate of 7.33%. The loan requires interest only payments with the
principal balance maturing on November 1, 2003.

On November 13, 1996, the Partnership refinanced the mortgage encumbering
Patchen Place Apartments. The refinancing replaced indebtedness on Patchen
Place in the amount of approximately $2,802,000. The refinancing replaced the
existing indebtedness which carried an interest rate of 7% and had a maturity
date of November 2013. The new mortgage indebtedness of $3,000,000 carries a
stated interest rate of 7.33%. The loan requires interest only payments with
the principal balance maturing on November 1, 2003.

On November 13, 1996, the Partnership refinanced the mortgage encumbering South
Point Apartments. The refinancing replaced indebtedness on South Point in the
amount of approximately $4,165,000. The refinancing replaced the existing
indebtedness which carried an interest rate of 7.5% and had a maturity date of
September 2021. The new mortgage indebtedness of $4,600,000 carries a stated
interest rate of 7.33%. The loan requires interest only payments with the
principal balance maturing on November 1, 2003. As a result of the refinancing,
the Partnership recognized an extraordinary loss on extinguishment of debt of
approximately $43,000 due to pre-payment penalties.

On November 13, 1996, the Partnership refinanced the mortgage encumbering
Fairway View II Apartments. The refinancing replaced indebtedness on Fairway
View II in the amount of approximately $5,661,000. The refinancing replaced the
existing indebtedness which carried an interest rate of 7.5% and had a maturity
date of July 2020. The new mortgage indebtedness of $4,200,000 carries a stated
interest rate of 7.33%. The loan requires interest only payments with the
principal balance maturing on November 1, 2003. As a result of the refinancing,
the Partnership recognized an extraordinary loss on extinguishment of debt of
approximately $47,000 due to pre-payment penalties.

The Managing General Partner has extended to the Partnership a line of credit of
up to $500,000. At the present time, the Partnership has no outstanding amounts
due under this line of credit. Based on present plans, management does not
anticipate the need to borrow 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 properties to adequately maintain the physical
assets and other operating needs of the Partnership. The mortgage indebtedness
of approximately $3,484,000 is amortized over thirty years with a required
balloon payment due February 1, 2001, at which time the property will either be
refinanced or sold. The mortgage indebtedness of approximately $16,800,000 is
interest only with required balloon payments due November 1, 2003, at which time
the properties will either be refinanced or sold. No cash distributions were
paid in 1996, although a distribution was declared and accrued at December 31,
1996. In January 1997, the Partnership distributed the accrued amount of
approximately $1,960,000 to the partners. Approximately $1,940,000 ($32.06 per
limited partnership unit) was distributed to the limited partners and
approximately $20,000 was distributed to the general partner. The distributions
originated from refinancing proceeds of Fairway View II, Patchen Place,
Northwoods I & II, and South Point, of approximately $1,561,000, and the
remaining amount originated from operations of approximately $399,000. On
October 2, 1997, the Partnership distributed from operations approximately
$2,000,000 to the partners. The limited partners received approximately
$1,980,000 ($32.72 per limited partnership unit) and the general partner
received approximately $20,000. The General Partner is planning a distribution
for the year ended December 31, 1998. Additional future cash distributions will
be dependent on the levels of net cash generated from operations, refinancings,
property sales and the availability of cash reserves.

Year 2000

The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.

Other

Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
forward-looking statements speak only as of the date of this annual report. The
Partnership expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Partnership's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.

ITEM 7. FINANCIAL STATEMENTS

NATIONAL PROPERTY INVESTORS 7

LIST OF FINANCIAL STATEMENTS

Independent Auditors' Report

Balance Sheet - December 31, 1997

Consolidated Statements of Operations - Years ended December 31, 1997 and 1996

Consolidated Statements of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1997 and 1996

Consolidated Statements of Cash Flows - Years ended December 31, 1997 and 1996

Notes to Consolidated Financial Statements

Independent Auditors' Report

To the Partners
National Property Investors 7
Greenville, South Carolina

We have audited the accompanying balance sheet of National Property Investors 7,
(a limited partnership) (the "Partnership") as of December 31, 1997, and the
related consolidated statements of operations, changes in partners' capital
(deficit) and cash flows for each of the two years in the period ended December
31, 1997. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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
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
as of December 31, 1997, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.

/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants

New York, N.Y.
January 17, 1998

NATIONAL PROPERTY INVESTORS 7
BALANCE SHEET
(in thousands except unit data)

December 31, 1997

Assets
Cash and cash equivalents $ 2,500
Receivables and deposits 422
Restricted escrows 652
Other assets 652
Investment properties (Notes B and E)
Land $ 3,738
Buildings and related property 41,688
45,426
Less accumulated depreciation (24,079) 21,347

$25,573

Liabilities and Partners' Capital (Deficit)

Liabilities
Accounts payable $ 88
Tenant security deposits 128
Accrued property taxes 56
Other liabilities 269
Mortgage notes payable (Note B) 20,284

Partners' Capital (Deficit)
General partner $ (255)
Limited partners (60,517 units issued
and outstanding) 5,003 4,748

$25,573

See Accompanying Notes to Consolidated Financial Statements

NATIONAL PROPERTY INVESTORS 7
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except unit data)

Years Ended December 31,
1997 1996

Revenues:
Rental income $7,028 $6,938
Other income 436 401
Total revenues 7,464 7,339

Expenses:
Operating 3,433 3,250
General and administrative 390 356
Depreciation 1,707 1,681
Interest 1,642 1,620
Property taxes 390 399
Total expense 7,562 7,306

(Loss) income before extraordinary item (98) 33

Extraordinary item - loss on early
extinguishment of debt (Note B) -- (90)

Net loss (Note C) $ (98) $ (57)

Net loss allocated to general partner (1%) $ (1) $ (1)

Net loss allocated to limited partners (99%) (97) (56)

Net loss $ (98) $ (57)

Net (loss) income per limited partnership unit:
(Loss) Income before extraordinary item $(1.60) $ .54
Extraordinary item - loss on early
extinguishment of debt -- (1.47)
Net loss $(1.60) $ (.93)

Distribution per limited partnership unit: $32.72 $32.06

See Accompanying Notes to Consolidated Financial Statements

NATIONAL PROPERTY INVESTORS 7
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands except unit data)

Limited
Partnership General Limited
Units Partner's Partners' Total

Original Capital contributions 60,517 $ 1 $30,259 $30,260

Partners' capital (deficit) at
December 31, 1995 60,517 $ (213) $ 9,076 $ 8,863

Distributions -- (20) (1,940) (1,960)

Net loss for the year ended
December 31,1996 -- (1) (56) (57)

Partners' capital (deficit) at
December 31, 1996 60,517 (234) 7,080 6,846

Distributions (20) (1,980) (2,000)

Net loss for the year ended
ended December 31, 1997 (1) (97) (98)

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

See Accompanying Notes to Consolidated Financial Statements

NATIONAL PROPERTY INVESTORS 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net loss $ (98) $ (57)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 1,707 1,681
Amortization of loan costs 112 47
Extraordinary item - loss on early
extinguishment of debt -- 90
Change in accounts:
Receivables and deposits (133) 434
Other assets 16 31
Accounts payable (100) 142
Tenant security deposits (22) (23)
Accrued taxes 56 (32)
Other liabilities 18 159

Net cash provided by operating activities 1,556 2,472

Cash flows from investing activities:
Property improvements and replacements (403) (400)
Decrease in restricted cash -- 149
Net increase in restricted escrows (82) (303)

Net cash used in investing activities (485) (554)

Cash flows from financing activities:
Payments on mortgage notes payable (33) (253)
Repayment of mortgage notes payable -- (19,554)
Proceeds from long-term borrowings -- 21,800
Prepayment penalties -- (90)
Loan costs paid (49) (627)
Distributions to partners (3,960) --
Net cash (used in) provided by
financing activities (4,042) 1,276

Net (decrease) increase in cash and
cash equivalents (2,971) 3,194

Cash and cash equivalents at beginning of year 5,471 2,277

Cash and cash equivalents at end of year $ 2,500 $ 5,471

Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,531 $ 1,510

Supplemental disclosure of non-cash financing
activities:
Accrued distribution to partners $ -- $ 1,960

See Accompanying Notes to Consolidated Financial Statements

NATIONAL PROPERTY INVESTORS 7
Notes to Consolidated Financial Statements

December 31, 1997

NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization: National Property Investors 7 (the "Partnership") is a California
limited partnership organized in October 1983, to acquire and operate
residential apartment complexes. The Partnership's general partner is NPI Equity
Investments, Inc. ("NPI Equity" or the "Managing General Partner"). NPI Equity
was a wholly owned subsidiary of National Property Investors, Inc. ("NPI, Inc.")
until December 31, 1996, at which time Insignia Properties Trust, an affiliate
of Insignia Financial Group, Inc. ("Insignia") acquired the stock of NPI Equity.
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group, Inc.
("Insignia"). The Partnership will terminate on December 31, 2008, or sooner,
in accordance with the terms of the Agreement of Limited Partnership. As of
December 31, 1997, the Partnership operates five residential apartment complexes
located throughout the United States.

Principles of Consolidation: In November 1996, the Partnership refinanced the
mortgages secured by the Fairway View II, Patchen Place and Southpoint
properties, which were purchased on behalf of the Partnership by three lower
tier partnerships, in which the Partnership held a 99.99% interest as a general
partner. In conjunction with the refinancing of the properties, ownership of
Fairway View II, Patchen Place and Southpoint reverted to the Partnership and
the three lower tier partnerships were dissolved. The statements of operations
for the year ended December 31, 1996, and the statements of cash flows at
December 31, 1996, are consolidated. All significant intercompany transactions
and balances have been eliminated.

Depreciation: Depreciation is computed by the straight-line method over
estimated useful lives ranging from 10 to 27.50 years for buildings and
improvements and seven years for furnishings.

Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds, and certificates of deposit with original
maturities of less than 90 days. 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.

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.

Loan Costs: Loan costs of approximately $774,000 are included in "Other assets"
in the accompanying balance sheet and are being amortized on a straight-line
basis over the lives of the related loans. At December 31, 1997, accumulated
amortization is approximately $180,000. Amortization of loan costs is included
in interest expense.

Income Taxes: Taxable income or loss of the Partnership is reported in the
income tax returns of its partners. Accordingly, no provision for income taxes
is made in the financial statements of the Partnership.

Investment Properties: Investment properties 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.

Fair Value: 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 value.

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 expense, included in operating expense, was approximately $92,000
and $81,000 for the years ended December 31, 1997 and 1996, respectively.

Reclassifications: Certain reclassifications have been made to the 1996
balances to conform to the 1997 presentation.

NOTE B - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows (dollar amounts in
thousands):

Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity

Fairway View II $ 4,200 $ 26 7.33% 11/01/03 $ 4,200
The Pines 3,484 28 8.56% 02/01/01 3,357
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 $20,284 $131 $20,157

On July 12, 1996, the Partnership refinanced the mortgage encumbering Northwoods
Apartments with short term financing maturing on November 15, 1996. The
refinancing replaced indebtedness on Northwoods in the amount of approximately
$1,926,000. The debt refinanced carried a stated interest rate of 9.4% and had
a maturity date of May 1, 1996. An extension to July 1, 1996, had been granted.
The new mortgage indebtedness of $5,000,000 carried an interest rate of 2.5%
plus the LIBOR rate.

On November 13, 1996, the Northwoods Apartments obtained permanent financing,
which replaced indebtedness in the amount of $5,000,000 with a new mortgage of
$5,000,000. The refinancing replaced the existing indebtedness which carried an
interest rate of 2.5% plus the LIBOR rate and had a maturity date of November
15, 1996. The new mortgage requires interest-only payments at a stated rate of
7.33% with the principal balance due at a maturity date of November 1, 2003.

On November 13, 1996, the Partnership refinanced the mortgages encumbering
Northwoods Apartments, Patchen Place Apartments, South Pointe Apartments, and
Fairway View II Apartments. The new mortgages require interest-only payments at
stated rates of 7.33% with the principal balances due at a maturity date of
November 1, 2003.

The Patchen Place Apartments refinancing replaced indebtedness in the amount of
approximately $2,802,000 with a new mortgage of $3,000,000. The refinancing
replaced the existing indebtedness which carried an interest rate of 7% and had
a maturity date of November, 2013.

The South Point Apartments refinancing replaced indebtedness in the amount of
approximately $4,165,000 with a new mortgage of $4,600,000. The refinancing
replaced the existing indebtedness which carried an interest rate of 7.5% and
had a maturity date of September, 2021. As a result of the refinancing, the
Partnership recognized an extraordinary loss on extinguishment of debt of
approximately $43,000 due to pre-payment penalties.

The Fairway View II Apartments refinancing replaced indebtedness in the amount
of approximately $5,661,000 with a new mortgage of $4,200,000. The refinancing
replaced the existing indebtedness which carried an interest rate of 7.5% and
had a maturity date of July, 2020. As a result of the refinancing, the
Partnership recognized an extraordinary loss on extinguishment of debt of
approximately $47,000 due to pre-payment penalties.

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 refinanced notes require prepayment penalties if
repaid prior to maturity and prohibit resale of the property subject to existing
indebtedness.

Scheduled principal payments on the mortgage notes payable subsequent to
December 31, 1997, are as follows (in thousands):

1998 $ 38
1999 41
2000 44
2001 3,361
2002 --
Thereafter 16,800

Total $20,284

In November 1996, the Partnership refinanced the mortgages secured by the
Fairway View II, Patchen Place and Southpoint properties, which were purchased
on behalf of the Partnership by three lower tier partnerships, in which the
Partnership held a 99.99% interest as a general partner. In conjunction with
the refinancing of the properties, ownership of Fairway View II, Patchen Place
and Southpoint reverted to the Partnership and the three lower tier partnerships
were dissolved. The properties were refinanced with conventional debt no longer
subject to certain requirements of the Department of Housing and Urban
Development.

NOTE C - INCOME TAXES

Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.

Differences between the net income (loss) as reported and Federal taxable loss
result primarily from depreciation over different methods and lives and on
differing cost bases. The following is a reconciliation of reported net income
(loss) and Federal taxable income (loss) (in thousands except unit data):

1997 1996

Net loss as reported $ (98) $ (57)
Add (deduct):
Depreciation differences 58 (67)
Miscellaneous 79 71

Federal taxable loss $ 39 $ (53)

Federal taxable loss
per limited partnership unit $ .64 $ (.87)

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

1997
Net assets as reported $ 4,748
Land and buildings (1,512)
Accumulated depreciation (6,904)
Syndication and distribution costs 3,555
Prepaid rent 47
Other 85

Net assets - Federal tax basis $ 19

NOTE D - 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.

Pursuant to a series of transactions which closed during 1996, affiliates of
Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and
outstanding shares of stock of NPI Equity and National Property Investors, Inc.
("NPI"). NPI Equity was a wholly-owned subsidiary of NPI until December 31,
1996, at which time Insignia Properties Trust, an affiliate of Insignia,
acquired the stock of NPI Equity. In connection with these transactions,
affiliates of Insignia appointed new officers and directors of NPI Equity and
NPI. An affiliate of Insignia owns 25,399 units or approximately 42% of the
total Limited Partnership Units.

The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred during the years ended December 31, 1997 and 1996 (in
thousands):

1997 1996

Property management fees (included
in operating expenses) $ 366 $ 356

Reimbursement for services of
affiliates, including approximately
$34,000 and $8,000 of construction
oversight reimbursements in 1997 and
1996, respectively (included in general
and administrative expenses and
operating expenses) 217 206

In addition to the items noted above, during the year ended December 31, 1996,
the Partnership paid approximately $175,000 to affiliates of the Managing
General Partner for expense reimbursements and brokerage fees incurred in
connection with the July 12, 1996, and November 13, 1996, refinancings of
Northwoods Apartments, Fairway View II Apartments, Patchen Place Apartments and
South Point Apartments. These charges have been capitalized as loan costs, and
will be amortized over the lives of the related loans.

For services relating to the administration of the Partnership and operation of
Partnership properties, NPI Equity is entitled to receive payment for non-
accountable expenses up to a maximum of $150,000 per year, based upon the number
of Partnership units sold, subject to certain limitations. NPI Equity was
entitled to approximately $91,000 and $35,000 of reimbursement for the years
ended December 31, 1997 and 1996, respectively.

For managing the affairs of the Registrant, the Managing General Partner of the
Registrant is entitled to receive a partnership management fee. The fee is
equal to 4% of the Registrant's adjusted cash from operations, 50% of which is
subordinated to the limited partners' receipt of an 8% return on adjusted
invested capital and 50% of which is subordinated to the limited partners'
receipt of a 5% return on adjusted invested capital. The Managing General
partner was entitled to a fee of approximately $41,000 during the year ended
December 31, 1997, and was not entitled to receive a fee for the year ended
December 31, 1996.

The Managing General Partner is entitled to receive 1% of distributions of
adjusted cash from operations and an allocation of 1% of the net income or loss
of the Partnership. A distribution to the Managing General Partner of
approximately $20,000 was accrued at December 31, 1996, and paid in 1997.
Limited partners received a distribution of approximately $1,940,000 which was
accrued at December 31, 1996, and paid in 1997. The distributions were primarily
from refinancing proceeds. On October 2, 1997, the Partnership distributed from
operations approximately $2,000,000 to the partners. The Limited Partners
received approximately $1,980,000 and the Managing General Partner received
approximately $20,000.

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.

For the period of January 19, 1996 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency and insurer unaffiliated
with the Managing General Partner. An affiliate of the Managing General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the master
policy. The agent assumed the financial obligations to the affiliate of the
Managing General Partner who received payments on these obligations from the
agent. The amount of the Partnership's insurance premiums accruing to the
benefit of the affiliate of the Managing General Partner by virtue of the
agent's obligations is not significant.

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.

NOTE E - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION

(dollar amounts in thousands)

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

Fairway View II $ 4,200 $1,086 $ 8,788 $ 516
The Pines 3,484 579 6,521 750
Patchen Place 3,000 706 6,409 1,383
Northwoods I & II 5,000 478 7,919 1,083
South Point 4,600 859 7,686 663

Total $20,284 $3,708 $37,323 $ 4,395

<TABLE>
<CAPTION>
Gross Amount at Which Carried
At December 31, 1997
Buildings
And Related
Personal Accumulated Year of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Fairway View II $1,094 $ 9,296 $10,390 $ 4,990 1981 11/84 5-27.5 yrs.
The Pines 584 7,266 7,850 4,463 1978 04/85 5-27.5 yrs.
Patchen Place 714 7,784 8,498 5,119 1971 07/85 5-27.5 yrs.
Northwoods I & II 483 8,997 9,480 4,958 1981 07/85 5-27.5 yrs.
South Point 863 8,345 9,208 4,549 1980 03/86 5-27.5 yrs.

Total $3,738 $ 41,688 $45,426 $ 24,079
</TABLE>

Reconciliation of Investment Properties and Accumulated Depreciation (in
thousands):

Years Ended December 31,
1997 1996
Investment Properties

Balance at beginning of year $45,023 $44,647
Property Improvements 403 400
Disposals of property -- (24)

Balance at end of year $45,426 $45,023

Years Ended December 31,
1997 1996

Accumulated Depreciation

Balance at beginning of year $22,372 $20,701
Additions charged to expense 1,707 1,681
Disposals of property -- (10)

Balance at end of year $24,079 $22,372

The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996 is $43,915,000 and $43,512,000, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1997 and 1996 is $30,976,000 and $29,329,000, respectively.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURES

There were no disagreements with Imowitz Koenig & Co., LLP regarding the 1997 or
1996 audits of the Partnership's financial statements.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

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"). NPI Equity was a wholly owned subsidiary of National
Properties, Inc. ("NPI, Inc.") until December 31, 1996, at which time Insignia
Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc.
("Insignia") acquired the stock of NPI Equity.

The names and ages of, as well as the positions and offices held by, the
executive officers and directors of NPI Equity are set forth below. There are
no family relationships between or among any officers or directors.

Name Age Position

William H. Jarrard, Jr. 51 President and Director

Ronald Uretta 41 Vice President and Treasurer

Martha L. Long 38 Controller

Robert D. Long, Jr. 30 Vice President

Daniel M. LeBey 32 Vice President/Secretary

Kelley M. Buechler 40 Assistant Secretary

William H. Jarrard, Jr. has been President and Director of the Managing General
Partner since December 1996. He has acted as Senior Vice President of IPT,
parent of the General Partner, since May 1997. Mr. Jarrard previously acted as
Managing Director - Partnership Administration of Insignia from January 1991
through September 1997 and served as Managing Director - Partnership
Administration and Asset Management from July 1994 until January 1996.

Ronald Uretta has been Vice President and Treasurer of the Managing General
Partner since December 1996 and Insignia's Treasurer since January 1992. Since
August 1996, he has also served as Chief Operating Officer. He has also served
as Secretary from January 1992 to June 1996 and as Insignia's Chief Financial
Officer from January 1992 to August 1996.

Martha L. Long has been Controller of the Managing General Partner since
December 1996 and Senior Vice President - Finance and Controller of Insignia
since January 1997. In June 1994, Ms. Long joined Insignia as its Controller,
and was promoted to Senior Vice President - Finance in January 1997. Prior to
that time, she was Senior Vice President and Controller of the First Savings
Bank, in Greenville, SC.

Robert D. Long, Jr. has been Vice President of the Managing General Partner
since January 2, 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P.
("MAE"), an affiliate of Insignia, in September 1993. Since 1994 he has acted
as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr.
Long was an accountant for Insignia until joining MAE in 1993. Prior to joining
Insignia, Mr. Long was an auditor for the State of Tennessee and was associated
with the accounting firm of Harsman Lewis and Associates.

Daniel M. LeBey has been Vice President and Secretary of the Managing General
Partner since January 29, 1998 and Insignia's Assistant Secretary since April
30, 1997. Since July 1996 he has also served as Insignia's Associate General
Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with
the law firm of Alston & Bird LLP, Atlanta, Georgia.

Kelley M. Buechler has been Assistant Secretary of the Managing General Partner
since June 1996 and Assistant Secretary of Insignia since 1991.

ITEM 10. EXECUTIVE COMPENSATION

No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of the Managing General Partner. The Partnership has no
plan, nor does the Partnership presently propose a plan, which will result in
any remuneration being paid to any officer or director upon termination of
employment. However, fees and other payments have been made to the Partnership's
Managing General Partner and its affiliates, as described in "Item 12. Certain
Relationships and Related Transactions".

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding limited partnership
units of the Registrant owned by each person who is known by the Registrant to
own beneficially or exercise voting or dispositive control over more than 5% of
the Registrant's limited partnership units.

Name and address of Amount and nature of
Beneficial Owner Beneficial Owner % of Class

Insignia Properties, LP (1) 25,399 42.0

(1) The business address of Insignia Properties, LP is One Insignia Financial
Plaza, Greenville, South Carolina.

No director or officer of the Managing General Partner owns any units. There
are no arrangements known to the Registrant, the operation of which may, at a
subsequent date, result in a change of control of the Registrant.

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. On March 17, 1998, Insignia entered into an agreement to
merge its national residential property management operations, and its
controlling interest in Insignia Properties Trust, with Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust.
The closing, which is anticipated to happen in the third quarter of 1998, is
subject to customary conditions, including government approvals and the approval
of Insignia's shareholders. If the closing occurs, AIMCO will then control the
General Partner of the Partnership. The Partnership Agreement provides for
payments to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. Balances and other
transactions with affiliates of the Managing General Partner during the years
ended December 31, 1997 and 1996 are (in thousands):

1997 1996

Property management fees $366 $356

Reimbursement for services of
affiliates 217 206

For managing the affairs of the Registrant, the Managing General Partner of the
Registrant is entitled to receive a partnership management fee. The fee is
equal to 4% of the Registrant's adjusted cash from operations, 50% of which is
subordinated to the limited partners' receipt of an 8% return on adjusted
invested capital and 50% of which is subordinated to the limited partners'
receipt of a 5% return on adjusted invested capital. The Managing General
Partner received a fee totaling approximately $141,000 for the year ended
December 31, 1997. The Managing General Partner of the Registrant was not
entitled to receive a fee for the year ended December 31, 1996.

The Managing General Partner is entitled to receive 1% of distributions of
adjusted cash from operations and an allocation of 1% of the net income or loss
of the Partnership. There were no distributions of adjusted cash from operations
for the years ended December 31, 1996 and 1995, however, a distribution to the
Managing General Partner of approximately $20,000 was accrued at December 31,
1996. The distribution was paid in 1997. Limited partners received a
distribution of approximately $1,940,000 which was accrued at December 31, 1996,
and paid in 1997. The distributions were primarily from refinancing proceeds.
On October 2, 1997, the Partnership distributed approximately $2,000,000 to the
partners. The Limited Partners received approximately $1,980,000 and the
Managing General Partner received approximately $20,000.

As a result of its ownership of 25,399 limited partnership units, Insignia
Properties, LP could be in a position to significantly influence all voting
decisions with respect to the Registrant. Under the Partnership Agreement, unit
holders holding a majority of the Units are entitled to take action with respect
to a variety of matters. When voting on matters, Insignia Properties, LP would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the Managing General Partner because of its affiliation with the
Managing General Partner. However, DeForest Ventures II L.P., from whom
Insignia Properties, LP acquired significantly all of its Units, had agreed for
the benefit of non-tendering unit holders, that it would vote its Units: (i)
against any increase in compensation payable to the Managing General Partner or
to affiliates; and (ii) on all other matters submitted by it or its affiliates,
in proportion to the votes cast by non tendering units holders. Except for the
foregoing, no other limitations are imposed on Insignia Properties, LP's right
to vote each Unit acquired.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

The Exhibits listed on the accompanying Index to Exhibits are filed as
part of this Annual Report and incorporated in this Annual Report as set
forth in said Index.

(b) Reports on Form 8-K filed in the fourth quarter of fiscal year in 1997:

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized this 26th of March 1998.

NATIONAL PROPERTY INVESTORS 7

By: NPI EQUITY INVESTMENTS, INC.
Managing General Partner

By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director

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.

Signature/Name Title Date

/s/ William H. Jarrard, Jr. President and March 23, 1998
William H. Jarrard, Jr. Director

/s/ Ronald Uretta Vice President and March 23, 1998
Ronald Uretta Treasurer

NATIONAL PROPERTY INVESTORS 7

EXHIBIT INDEX

Exhibit Description of Exhibit
Number
(a) (2)

2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 1995, incorporated
by reference to the Registrant's Current Report on Form 8-K dated August
17, 1995.

2.2 Partnership Units Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia
Financial Group, Inc. ("Insignia") with the Securities and Exchange
Commission on September 1, 1995.

2.3 Management Purchase Agreement dated as of August 17, 1995, incorporated
by reference to Exhibit 2.2 to Form 8-K filed by Insignia with the
Securities and Exchange Commission on September 1, 1995.

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.

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 Definitive Proxy Statement of the Registrant dated July 2,
1981.

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

(d) Amendments to the Agreement 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)

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)

10.11 Multifamily 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)

10.12 Multifamily 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)

10.13 Multifamily 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)

10.14 Multifamily 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)

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.

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Property Investors 7 1997 Year-End 10-KSB and is qualified in its entirety by
reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000732439
<NAME> NATIONAL PROPERTY INVESTORS 7
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,500
<SECURITIES> 0
<RECEIVABLES> 422
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 45,426
<DEPRECIATION> 24,079
<TOTAL-ASSETS> 25,573
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 20,284
0
0
<COMMON> 0
<OTHER-SE> 4,748
<TOTAL-LIABILITY-AND-EQUITY> 25,573
<SALES> 0
<TOTAL-REVENUES> 7,464
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,562
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,642
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98)
<EPS-PRIMARY> (1.60)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>

</TABLE>