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         September 26, 2008  Mr. Jack K. Heilbron Chief Executive Officer NetREIT 365 S. Rancho Santa Fe Road, Suite 300 San Marcos, CA 92078

Re: NetREIT
 Amendment No. 1 to Form 10
Filed September 5, 2008
 File No. 001-39049

Dear Mr. Heilbron:

We have reviewed your response letter da ted September 5, 2008 and have the following
additional comments. Where indi cated, we think you should revise  your document in response to
these comments.  If you disagree, we will consid er your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Please be as detailed as necess ary in your explanation.
In some of our comments, we may ask you to pr ovide us with information so we may better
understand your disclosure.  After reviewing th is 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 yo u 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 your counsel’s affirmation regarding the company’s awarene ss of its obligations
under the Securities Act of 1933 and the Exchange Act of 1934 and the representations
which followed. Please provide to us the same  representations from the company, signed
by an appropriate officer of the company.

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 2
2. We note your response to comment one of  our letter dated June 10, 2008 and your
disclosure that you inadverten tly filed the Form 10 as “10- 12B.”  Please file your next
amendment under Section 12(g) of  the Exchange Act.  Please also note that after you file
your next amendment under 12(g), your filing b ecomes effective by lapse of time 60 days
after the original filing date of May 6, 2008, pur suant to Section 12(g) (1) of the Securities
Exchange Act of 1934.  At that time, you w ill be subject to the reporting requirements
under Section 13(a) of th e Exchange Act.
3. We read your response to comment five .  However; beginning February 4, 2008,
companies formerly classified as “small busin ess issuers” under Regul ation S-B must file
their quarterly reports on Form 10-Q once fina ncial statements for a fiscal year ending
after December 15, 2007 have been filed.  Although small business issuers are now
required to file on Form 10-Q, the disclosure requirements of that form are now tailored for smaller companies.
We note that your quarterly report as of March 31, 2008 was on Form 10-QSB and not
Form 10-Q.  Although we are not asking you to correct that filing ju st to reflect the
proper form type, we ask that you review your  filing requirements and consider whether
any action is necessary if your quarterly re port as of March 31, 2008 does not contain all
required material information.  We do note th at your June 30, 2008 quarterly report was
filed on the correct form.
4. We read your response to comment six but note that the revised certi fications filed with
your Form 10-QSB/A as of March 31, 2008 cont inue to include paragraph 4(b) when you
have not included a managements’ report on in ternal control.  Please refer Item 308 of
Regulation S-K and revise your certifications accordingly.
5. We note your response to comment 10.  Please pr ovide us with an analysis as to why
your private offerings should not  be integrated into a single offering.  Include in your
response an analysis as to what exemptions ar e available to you in the event the offerings
are integrated.
6. Please update throughout the registration statemen t, where appropriate, information as of
a recent practicable date.  For example, we note on page 1 you reference equity
capitalization as of March 31, 2008. On page 21, you disclose an outstanding balance on
a mortgage loan that matured on June 19, 2008 and acquisitions that you expect to have completed in June and July 2008. On page 25, you state that you were in compliance with
your debt covenants and restrictions as of December 31, 2007, and on page 36 you
discuss the acquisition of Waterman Plaza, which was scheduled to close in June 2008.

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 3
Item 1A. Risk Factors

 Our common stock is subordinate to our Preferred Stock in ri ghts to distributions, page 6

7. We refer to your statement that your Series AA Preferred Stock has a liquidation value of
$100 per share.  On page 20, however, you stat e that each share of Series AA Preferred
Stock is entitled to receive $25 plus accrued dividends upon liquidation.  Please revise to
be consistent or advise.

Terrorist attacks, such as the attack s that occurred in New York…, page 11
8. We refer to the statement at the top of page  12 that the war in Iraq and other hostilities
may have an impact on your tenants.  It is un clear to us from your current disclosure how
the war in Iraq may impact you specifically.  Pl ease revise to clarif y how specifically the
war in Iraq and other internat ional hostilities may affect you or delete the risk factor.

Item 2. Financial Information
 Management’s Discussion and Analys is of Financial Condition…, page 17

9. The last sentence of the preamble appear s to be incomplete.  Please revise.

Overview and Background, page 17
10. We refer to your disclosure about your increas ed in capital.  Please revise to include the
primary source(s) of this increase in capit al.  In addition, please include balancing
language here to note that you have had a loss from continuing operations in your last
two fiscal years.

Other Liquidity Needs, page 25

11. The revisions you made in response to our prior comment 24 do not address how
distributions have been funded historically in  light of the fact th at distributions have
exceeded cash flows from operations for the last  two years.  For example, for the year
ended December 31, 2007 cash flows from operating activities were $457,191 whereas
dividends paid were $1,078,063.  Please revise y our disclosure to discuss how dividends
paid historically have been funded in light of  the fact that they we re in excess of cash
flows from operating activities.  In addition, since FFO is a performance measure and not
a cash flow measure, the discussion that you a dded that suggests that  FFO is a source of
cash flows available to pay dividends should be revised.

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 4
Non-GAAP Supplemental Financial Measure:  Funds from Operations (“FFO”), page 26

 12. Your response to comment 25 indicates that  your definition of FFO excludes gains from
exchanges of property because those gain s will not be distributed to common
shareholders.  Your rationale suggests that you consider FFO to be a cash flow measure
which is inconsistent with your description of  it as a performance measure. In addition,
this is inconsistent with the fact that your calculation of FFO is ba sed on net income that
includes a $2.9 million gain from sale of real estate.  Per your disclosure on page 65 this
$2.9 million gain appears to be associated with a disposition that resulted in the purchase
of a replacement property.  It seems that this  transaction was effectively an exchange of
property and therefore by your definition FFO should exclude the $2.9 million gain.
Please confirm whether this is the case or pr ovide us with a further explanation regarding
this transaction and its impact on FFO a nd revise your disclosure accordingly.
 13. The disclosure in the penultimate paragraph on page 26 indicates that the purpose of FFO
is to provide a measure of Funds From Oper ations available for distribution to common
shareholders. Since FFO is a performance m easure and not a cash flow measure, this
description is inconsistent w ith the notion that FFO is a performance measure and could
leave investors with the mistaken impression that FFO represents a cash or liquidity
measure.  Please revise accordingly. In addi tion, you indicate that the NAREIT definition
of FFO is very general.  Please clarify the ba sis for this view in light of the extensive
guidance given by NAREIT and why you believe your defined FFO is more useful to
investors.  In order to avoid investors bei ng confused between your definition of FFO and
that prescribed by NAREIT, expand the disc losure to clarify how FFO as determined
based on the NAREIT guidelines would di ffer from the FFO you have presented;
specifically address how the NAREIT defi nition of FFO would have you treat the
amortization of finance charges and gains a nd losses on property sales and exchanges.
Clarify why you have not included FFO as defined by NAREIT.
 Item 3. Properties, page 29

14. The occupancy column in the table on page 29 appears to have been left blank.  Please
revise to include information on the o ccupancy rates for each listed property.
15. We refer to the physical occupancy table on pa ge 30 and the average effective annual rent
per square foot for the last 5 years table on page 31.  Please consid er including a footnote
to the tables to indicate the year in whic h you acquired certain properties to explain why
you have not included data for five years for each property.

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 5
Item 6.  Executive Compensation

 Long-Term Incentive Compensation Awards, page 49

16. Please disclose under which plan the restrict ed stock awarded in 2007 was granted.  For
example, state if the stock was grante d under the 1999 Flexible Incentive Plan, the
restricted stock plan discussed on page 72, or  if the awards were stand-alone awards.
17. Please include disclosure in this  section of the restricted st ock plan discussed on page 72.
Alternatively, please clarify if this is the same plan as the 2007 Incentive Award Plan
referenced on page 29.  In addition, please include information on the restricted stock
plan in the equity compensation plan in formation table required by Item 201(d) of
Regulation S-K, or explain to us why you do not believe this is requir ed.  Finally, please
file a copy of this plan as an exhibit to th e Form 10 or explain to us why you believe this
is not required.

1999 Flexible Income Plan, page 49
18. You refer to this plan as both the 1999 Fl exible Income Plan and the 1999 Flexible
Incentive Plan.  Please re vise to be consistent.

Item 9. Market Price and Dividends on Registrant’s Common Equity…, page 51
19. We refer to our prior comment 35 and note your  disclosure on page 52 related to your
1999 Flexible Incentive Plan.  The disclosure , however, does not include the number of
shares issued under the plan or the number of shares available for grant as of your latest
fiscal year.  Please include in  a tabular format the information required by Item 201(d).

Number of Holders of Each Class of Stock, page 52
20. The last sentence in this paragraph app ears to be incomplete. Please revise.

Financial Statements and Notes
 Note 1 – Organization, page 62

 21. Based upon your response to comment 41 and the information within your Form 10, it
appears that you are using the proportionate consolidation met hod to record your interest
in the 7-11 property during 2007.  If so, please demonstrate that you m eet the criteria for
proportionate consolidation outlined in EITF  00-1.  If you do not meet these criteria,
clarify whether your investment is made thr ough a legal entity in which case the equity

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 6
method or consolidation may be appropria te based on the guidance of SOP 78-9 and
EITF 04-5.  If your investment is not ma de through an entity, then consider the
applicability of the cost me thod, reporting your investment on a single line item.  Update
your response to clarify the na ture of your investment in th is property and the basis for
your accounting policies related to it.

22. Additionally, we note on page 11 of your March 31, 2008 Form-10QSB that you
completed a similar transaction during Marc h 2008.  Please revise your disclosure to
include a description of your gain recognition and consolidat ion policies.  In the event
that you do not consolidate pa rtially owned entities or as sets, your disclosure should
include a discussion of how your investment is  reflected in your financial statements;
either under the cost, equity or proportionate consolidation methods and the basis for that
accounting treatment.
 Note 2 – Significant Accounting Policies

 Property Acquisitions, pages 62-63

 23. We read your response to previously issued  comment 42 and note that you calculated a
value of the in-place leases as  part of your analysis of a bove and below market leases.
Those in-place lease values shoul d be recorded as an intang ible asset, aside from any
value ascribed to above and below market leases.  Additionally, it appears that the
avoidance of lease origination costs could be a component of the in-place lease intangible
asset.  Please update your respons e to address these issues.
 24. We read your response to previously issued comment 43; however, Item 13 of the Form
10 states that smaller reporting companies may file financial information required by
Article 8 of Regulation S-X in lieu of info rmation required by other parts of Regulation
S-X.  As indicated in our original comment, transactional filings such as this require
financial statements under Rule 8-06 of Regul ation S-X for real esta te acquisitions that
are individually significant for all periods a nd significant in the aggregate for the most
recent year and interim financial statements.  In addition to the acquisitions disclosed within your Form 10, you are also required to in clude in this transactional filing, financial
statements under Rule 8-06 for the two ac quisitions completed on July 9, 2008 and
August 12, 2008.  Please revise the Form 10 to include all required financial statements
for acquired real estate operating proper ties for all periods and show us how you
determined your compliance with this requirement.

Mr. Jack K. Heilbron
NetREIT, Inc.  September 26, 2008 Page 7
25. We read your response to previously issu ed comment 44; however you did not indicate
your basis in GAAP for recording the value of  the purchase option as land.  Further, we
note that the purchase option appears to have  the qualities consistent with a contract
based intangible asset unde r SFAS 141.  Please update your response to address these
issues.
 Federal Income Taxes, page 65

 26. Please revise to include the more specific di sclosures of Rule 3-15( c) of Regulation S-X
related to the tax status  of your distributions.
 Note 10 – Segments, page 77

 27. We read your response to previously issued comment 49 and noted the revised disclosure
for the year ended December 31, 2007.  Please make the corresponding required
adjustments to your table of capital expend itures for the year ended December 31, 2006
to reconcile to the amounts presented within your financial statements.  Additionally we
note that your June 30, 2008 10-Q includes sim ilar segment disclosure on page 16 that
does not appear to reconcile to the Statement of Cash Flows for the period ended June 30,
2008.  Make the appropriate adjustments to your 10-Q to ensure that the table reconciles
to the Statement of Cash Flows for both periods  presented and that the presentation of the
two years is comparable.
 Signatures, page 79

28. Please include a date on all future filings.

Form 10-Q for the Six Months Ended June 30, 2008
 Financial Statements and Notes

 Statements of Operations, page 2

 29. It is unclear why gains on sales of real estate have been included in continuing operations
in the Form 10-Q but in discontinued operati ons in the Form 10-K.  Please clarify how
you have complie