SecProbe.io

Mail Stop 4561         June 10, 2008  Mr. Jack K. Heilbron Chief Executive Officer NetREIT 365 S. Rancho Santa Fe Road, Suite 300 San Marcos, CA 92078

Re: NetREIT
 Form 10
Filed May 6, 2008
 File No. 001-39049

Dear Mr. Heilbron:
 We have reviewed your filing and have th e following comments.  Where indicated, we
think you should revise your document in response to these comments.  If you disagree, we will
consider your explanation as to why our commen t is inapplicable or a revision is unnecessary.
Please be as detailed as necessa ry in your explanation.  In some  of our comments, we may ask
you to provide us with information so we may better understand your disclosure.  After
reviewing this information, we may raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requir ements and to enhance the overall disclosure in
your filing.  We look forward to working with you in these respects.  We welcome any questions
you may have about our comments or any other aspect of our review.  Feel fr ee to call us at the
telephone numbers listed at th e end of this  letter.
 General

 1. We note that when the company filed this registration statement on EDGAR, it provided
that it was registering its securities pursuant to Section 12(b) of the Exchange Act (please
see the EDGAR filing).  We note, however, that the cover page of the registration
statement states that none of the securities are being registered pur suant to Section 12(b)
but are being registered pursuan t to Section 12(g) of  the Exchange Act.  Please reconcile
and advise.
 2. We note that the company is filing this regist ration statement pursuan t to Section 12(g) of
the Exchange Act.  We also note the disclo sure on page 56 that the company had more
than 1,000 shareholders of record on April 23, 2008.  Please tell us the date when the
company first had 500 shareholders of record and $10 million in total assets.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 2
  3. Please note that the Form 10 goes effective by lapse of time 60 days after the date filed
pursuant to Section 12(g)(1) of the Exchange Act.   Please be aware that you will be
subject to the reporting requirements under Sec tion 13(a) of the Exchange Act at such
time, and that we will con tinue to review your filing on Form 10 until all of our
comments have been addressed.
 4. We note your disclosure on page 22 that you “anticipate an incr ease in capital of
approximately $30 to $50 million from an  ongoing private placement offering during
2008.”  Please provide us with an analysis as  to why the registration statement should not
be considered a form of general solic itation under Rule 502(c) of Regulation D.
 5. We note your registration statement was filed after the February 4, 2008 effective date of
Release No. 33-8876: Smaller Reporting Compa ny Regulatory Relief and Simplification
and further note you updated your financial st atements to comply with Rule 8-08 of
Regulation S-X on Form 10-QSB.  Please tell us the basis fo r filing your quarterly report
on Form 10-QSB versus on Form 10-Q.
 6. We note that the certifications filed with your Form 10-QSB were not  filed in the exact
form as outlined in Item 601(B)(31)(i) of Re gulation S-K.   Some of the discrepancies
include replacing the word “report” with “qua rterly report” in paragraphs 2, 3 and 4(a),
including paragraph 4(b) when you have not included a managements’ report on internal
control, the omission of the langu age “(the registrant’s fourth fiscal quarter in the case of
an annual report)” in paragraph 4(d) and the inconsistent use of “the registrant” versus
“the small business issuer.”  Please refer to  Item 308 of Regulation S-K and revise your
certifications accordingly.
 Item 1.  Business, page 1

 Our Company, NetREIT, page 1

7. Please expand the discussion of your business.   We refer you to Item 101(h)(4) of
Regulation S-K.
 Right to Acquire Property Ma nager’s Business, page 2

 8. We refer to your discussion th at you have the option to acqui re CHG Properties, Inc.’s
property management business.  Please revise your filing to disclose  here and elsewhere
in the registration statement, as appropriate,  if you currently intend to exercise this
option.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 3
 Item 1A.  Risk Factors, page 6
 Our bylaws may prevent our pa rticipation in certain busin ess combinations, page 7

 9. We refer to your disclosure that certain pr ovisions of your bylaws requiring a 67 percent
shareholder vote “do not apply to business co mbinations that are approved or exempted
by [y]our board of directors prior to the time that someone becomes an interested
shareholder.”  Please revise your risk factor to include a definition of “interested
shareholder” and clarify under what circ umstances approval by 67 percent of your
shareholders will not be required.  Please include disclosure to note if any or no
shareholder vote will be  required to approve such transactions.

Private placement offering – compliance with exemption requirements, page 7

 10. We refer to your statement on page 8 that “[ you] believe these multiple offerings will be
combined (or integrated) and treated as a si ngle offering for federa l and state securities
law purposes.”  Please explain to us the basis for this belief.
 An investment in our Shares may be affect ed by adverse economic and regulatory changes,

page 8
 11. Please include separate risk factors rega rding economic and regulatory changes and
describe the risks in more detail.
Risks related to Debt Financing, page 14

 12. Please consider disclosing here the amount of your current outstanding debt as of a recent
date.  Also discuss your plan to borrow more funds.
 If we enter into financing arrangement involving balloon payment obligations…, page 14

 13. Please revise to include the amount of and date any balloon payments are due.
 Our investment in mortgage loans secured by real estate, page 15

 14. It is unclear to us the risk to which you are subject.  Plea se revise your disclosure to
clarify the risk that makes investing in  your securities speculative or risky.
 We do not have substantial experience in maki ng or investing in mortgage loans, page 15

 15. It is unclear to us the risk to which you are subject.  If your management lacks experience
or expertise in mortgage loan investments, please state so and clarify how this is a risk to
investors.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 4
  Our rights, and the rights of our shar eholders, to recover claims…, page 16

 16. We refer to your statement that you and your  shareholders may have limited rights
against your directors and offi cers than what may be afforded under common law.  Please
expand your discussion to disclose what these rights are and in what ways they may be
limited.
 Dividends we pay on our Securities to  tax-exempt investors…, page 17

 17. Please clarify the risk to a tax-exempt inve stor if your dividend s are classified as
“unrelated business taxable income.”
Item 2. Financial Information

 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

 Overview and Background, page 19

18. We believe your MD&A section could benefit from an expanded “Overview” section that
offers investors an introductory understandi ng of NetREIT and the matters with which
management is concerned primarily in eval uating the company’s financial condition and
operating results.  A good introduction, accordingly, might include a discussion of the following:  the economic or industry-wide fact ors relevant to the company; a discussion
of how the company earns or expects to ear n revenues and income; the identity of the
company’s primary business lines, location(s) of operations and prin cipal services; and
insight into material opportunities, cha llenges, risks, and material trends and
uncertainties.  To the extent known, provi de insight into challenges, risks and
opportunities of which management is aware and discuss any actions being taken to
address the same.  We note th at the company had a loss from continuing operations in the
statements of operations for fiscal years ended December 31, 2007 and 2006.  For a more detailed discussion of what is expected in both this subheading and the MD&A section in
general, please refer to SEC Release N o. 33-8350 Dec. 19, 2003.  See also Item 303 of
Regulation S-K.

19. We refer to your statement that you have been  “in a fast growth stage having increased
capital by 1219% and [y]our investment portfolio by 1080%.”  Please revise your
disclosure to include the basis for this statement.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 5
 Financing, page 22
 20. We refer to the private placement offering of Units and preferred stock commenced on
February 15, 2005 and note that you issued  433,204 warrants to purchase common stock
and 50,200 shares of Series AA Preferred Stoc k in the offering.  Please disclose how
many Units were sold in the offering.
 21. We note your disclosure that each share of  Series AA Preferred Stock is entitled to
annual cumulative cash dividends of 7% and that your preferred st ock ranks senior to
your common stock as to the payment of dividends and distribution of assets upon
liquidation.  Please add a risk factor regarding these supe rior rights that preferred
stockholders have over common stockholders.
 22. We refer to your statement that the use of proceeds from your offering commenced in
October 2006 was “primarily used to acquire th e properties and build th e infrastructure.”
Please revise to describe the infrastructure in more detail.
 Net Income Available to Common Stockholders, page 25

23. Please revise to indicate the loss from  continuing operations.

Other Liquidity Needs, page 27
 24. We note that distributions for the last two years have exceeded cash flows from operating
activities.  Expand your disclo sure to discuss the altern ative means of funding these
distributions including proceeds from propert y sales, borrowings or proceeds from stock
issuances.  Clarify the vari ability an investor can exp ect in dividend distributions
particularly when they are funded from pr operty sales, borrowings or proceeds from
stock issuances.
 Non-GAAP Supplemental Financial Measure: Funds from Operations (“FFO”), page 28

25. Please clarify whether your FFO is determined  in accordance with the guidance issued by
the National Association of Real Estate Invest ments Trusts (NAREIT).  If it differs from
the NAREIT definition, clarify how it differs. We note that your FFO calculation did not
adjust for the gains from sales of depr eciable operating property and did include
adjustments to add back the amortization of fina ncing costs.  Please clarify to us the basis
for calculating FFO in this manner.  Re fer to Item 10(e) of Regulation S-K.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 6
 Item 3. Properties, page 32
 26. If applicable, with respect to  each improved property, please disclose the occupancy rate
and the average effective annual rental per squa re foot or unit for each of the last five
years prior to the date of filing.
 27. Outline briefly any proposed program for renova tion or improvement of your properties,
including the estimated cost th ereof and the method of financing to be used.  If you have
no such present plans, so state and indicate the purpose for which the property is being
held.
 Mortgage Debt, page 36

28. Please expand the table to show the balance due at maturity for each loan, assuming no
payment has been made on principal in advance of its due date.
Co-Ownership of Properties, page 42

29. We refer to your statement on page 42 that you co-own two of your properties.  We note
on page 32, however, that you st ate all but one of your prope rties are 100 percent owned
by you.  Please revise or advise to clarify this discrepancy.

Item 6. Executive Compensation, page 49
 30. Please include in a tabular format the out standing equity awards for your named
executive officers as of your most recent fiscal  year end.  We refer you to Item 402(p) of
Regulation S-K.
 31. Please include the disclosure required by Item 402(r) of Regulation S-K regarding the
compensation of your directors.
 32. We note your disclosure on page 50 and elsewh ere in the registration statement that your
named executive officers receive monthly ca r allowances, yet this amount does not
appear to be reflected in “All Other Co mpensation” in your Summary Compensation
table.  Please revise or advise.
 Item 7.  Certain Relationships and Related Tran sactions and Director Independence, page 53

33. We refer to your disclosure in Note 6 of your  Financial Statements and elsewhere in the
registration statement of the management fees  paid to CHG Properties, Inc.  Please
include this disclosu re under Item 7.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 7
 34. Please identify each director that is independe nt and disclose the st andards that you used
to determine such independence.  We refe r you to Item 407(a) of Regulation S-K.
 Item 9.  Market Price and Dividends on Registrant’s Common Equity…, page 54

 35. Please disclose the approximate number of holde rs of your common stock as of the latest
practicable date.  We refer you to Item 201(b)(1) of Regulation S-K.
 36. Please provide the information relating to E quity Compensation Plans as required by Item
201(d) of Regulation S-K.
 Item 10.  Recent Sale of Unregistered Securities, page 55

 Securities Issued in Private Placement Offerings, page 55

 37. We note your disclosure that the company ha s relied on the exemp tion of Section 4(2)
and Rule 506 of Regulation D.  For each transaction, please disclose how the company meets all of the requirements under Rule 506.  See Item 701(d) of Regulation S-K.  For
example, please disclose:

• how the securities were offered and sold without general solicitation;

• whether the purchasers were financially sophisticated as required under Rule
506(b)(ii); and

• what type of information was provided to  the purchasers (s ee Rule 502(b)).

Issuances of Securities in Comp ensatory Transactions, page 56

 38. Please disclose the facts relied upon to make  the exemption under Rule 701 available.
See Item 701(d) of Regulation S-K.
 Item 11.  Description of Registrant’s Securities to  be Registered, page 56

 39. Please expand your disclosure to include the liquidation and voting ri ghts of your Series
A Common Stock.  We refer you to Item 202(a) of Regulation S-K.
 40. We note your statement that it is your polic y to pay cash dividends quarterly.  Also
include a statement, or cross-reference to your risk factors, that payment of dividends is
subject to meeting certain solvency tests and that there may be circumstances under
which you may not be able to pay dividends.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT June 10, 2008 Page 8
 Financial Statements and Notes
 Note 1. Organization, page 64

 41. We note that you sold a 48.6percent undivided interest in your 7-Eleven property during
2007 and, per page 32, you continue to serve as  the general partner, which typically
indicates control over the operations of an  entity.  Please clarify your accounting policy
for recognizing gains and losses on transfers of  properties to entitie s in which you retain
or receive an ownership interest.  Refer to SOP 78-9, SFAS 66 and APB18.  In addition,
clarify how you are accounting fo r your 51.4% equity interest in the limited partnership
to which the property was transferred.  Tell us what consideration you gave to disclosing
your consolidation accounting policy includ ing your accounting for partially owned
entities under FIN 46(R), ARB 51 and EITF 04-5.
 Note 2. Si