SecProbe.io

CORRESP
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Filed by Bowne Pure Compliance

    RUSHALL & McGEEVER

    BRUCE J. RUSHALL

    A PROFESSIONAL LAW CORPORATION

    TELEPHONE: (760) 438-6855

    EILEEN L. McGEEVER

    6100 INNOVATION WAY

    FACSIMILE: (760) 438-3026

    LUCI M. MONTGOMERY

    CARLSBAD, CALIFORNIA 92009

    E-MAIL: rm@rushallmcgeever.com

September 5, 2008

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

Attn: Ms. Kristina Aberg, Attorney-Advisor

              Re:

    NetREIT

Form 10

Filed May 6, 2008

File No. 001-39049

Ladies and Gentlemen:

This letter is in response to the Staff’s letter of June 10, 2008. The responses below are
presented in the same order as the Staff’s comments in that letter. Please note that Registrant is
filing a Form 10/A and a Form 10-Q/A in conjunction with this letter, and the references herein to
the Form 10/A and the Form 10-Q/A refer to those respective filings.

General.

1. The Form 10/A states that it is filed on EDGAR to register Registrant’s common stock
pursuant to Section 12(g) of the 1934 Act. We inadvertently filed the
Form 10 as a “10-12B” submission. We have requested the EDGAR Management Division to change the filing to the correct
“10-12G” submission. As we are advised that our request will take several more weeks to process, we have elected to file
the Form 10/A now for the Staff’s review as an incorrect “10-12B/A” submission. We will request the EDGAR Management
Division to change it to the correct “10-12G/A” submission.

2. Registrant first had 500 shareholders of record and $10 million in assets on January 25,
2007.

3. Registrant notes the Staff’s comment.

4. The statement that Registrant anticipates a capital increase of approximately $30,000,000
to $50,000,000 from ongoing private placement offerings in 2008 is intended to be informational
only as to Registrant’s anticipated liquidity and future intentions. This information is not
intended to constitute an offer, or a solicitation of an offer to purchase, Registrant’s common
stock. The statement does not include details of a specific offering, such as price, offering
terms or identity of sales. Registrant has not, to the best of its knowledge, received any inquiry
regarding the private placement by reason of the Form 10. We understand that it is the Staff’s
position that the mere filing of a Registration Statement under the 1934 Act or the fact that
Registrant’s securities are registered thereunder does not constitute a public solicitation which
would make the exemption under Rule 506 unavailable.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 2

To place this disclosure in clearer context, Registrant has revised this disclosure to state
that Registrant “anticipates that the company’s capital will increase during 2008 from the proceeds
from one or more private placement offerings of its securities.”

5. Registrant
has filed a Form 10-QSB/A which, with revised officer certifications.

6. The Form 10-Q/A includes the exact form of the required certifications.

Item 1. Business, Page 1.

Our Company, NetREIT, page 1.

7. The
Form 10/A at page 18 includes an expanded discussion of Registrant’s business history under “Our
Company, NetREIT.”

Right to Acquire Property Manager’s Business, page 2.

8. The
discussion in the Form 10/A at page 2 under “Right to Acquire Property Manager’s Business”
includes a statement that, “We have no intention to exercise our option to acquire CHG Properties’
property management business.”

Item 1A. Risk Factors, Page 6.

Our bylaws may prevent our participation in certain business combinations, page 7.

9. The
discussion in the Form 10/A at page 6 includes definitions in Registrant’s bylaws of
“business combination” and “Interested Shareholder.”

Private placement offering — compliance with exemption requirements, page 7.

10. The
Form 10/A discloses at page 7 that Registrant believes the multiple offerings could be
integrated. Registrant bases this statement on the fact that the subsequent offering commenced
within six months of the termination of the prior offering, thus making the safe harbor in Rule
502(a) of Regulation D unavailable. The statement is also based on Registrant’s understanding of
Rule 502(a) and the Staff’s published guidelines of when it is appropriate to treat private
offerings as separate offerings.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 3

An investment in our Shares may be affected by adverse economic and regulatory changes, page
8.

11. The
Form 10/A starting at page 8 includes separate risk factor discussions regarding economic changes and
regulatory changes.

Risks related to Debt Financing, page 14.

12. The
Form 10/A at page 13 states that, “At May 31, 2008, our total outstanding mortgage debt was $17.9
million, which represents approximately 39% of our total real estate assets at cost. We intend to
use mortgage financing of up to 65% of the purchase price in our future property acquisitions.”

If we enter into financing arrangement involving balloon payment obligations..., page 14.

13. The
Form 10/A at page 13 states that, “We currently have balloon payments of $3.1 million due in
2012, $3.1 million due in 2014, and $2.8 million due in 2016.”

Our investment in mortgage loans secured by real estate, page 15.

14. Registrant has determined that this risk factor was too general and duplicative of the
other more specific risk factors. It is absent in the Form 10/A.

We do not have substantial experience in making or investing in mortgage loans, page 15.

15. The
Form 10/A at page 13 describes risks associated with Registrant’s lack of experienced loan
underwriting personnel.

Our rights and the rights of our shareholders to recover claims..., page 16.

16. The
Form 10/A includes at page 15 a discussion of the possible effects of the limitations in
Registrant’s Charter documents on the liability of its officers and directors.

Dividends we pay on our securities to tax-exempt investors..., page 17.

17.
The Form 10/A includes at page 15 an expanded discussion of “unrelated business taxable income.”

Item 2. Financial Information.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 4

Overview and Background, page 19.

18. The
overview under the Form 10/A MD&A at page 17 has been expanded to discuss the primary matters
with which management is concerned in evaluating Registrant’s financial condition and operating
results.

19. The
Form 10/A MD&A description of Registrant’s fast growth
stage increases at page 17 has been
revised.

Financing, page 22.

20. The
Form 10/A at page 20 states that 433,204 Units were sold in the offering which terminated in
October 2007.

21. The
Form 10/A at page 6 includes a risk factor regarding the superior rights of the Series AA
Preferred Stock.

22.
The Form 10/A MD&A at page 21 includes additional details
regarding Registrant’s use of the private offering proceeds.

Net Income Available to Common Stockholders, page 25.

23.
The Form 10/A MD&A at page 23 includes a description of loss from continuing operations.

Other Liquidity Needs, page 27.

24. The
Form 10/A MD&A at page 25 discusses Registrant’s funding of distributions over the last two years
by other means of funding to clarify the variability an investor can expect for dividend
distributions when they must be funded from sources other than cash flow from operations.

Non-GAAP Supplemental Financial Measure: Funds From Operations (“FFO”), page 28.

25.
The Form 10/A at page 26 clarifies the FFO determination under NAREIT guidelines as follows:

Our definition of FFO differs from the NAREIT definition in that the NAREIT definition is very
general and states that the most commonly accepted and reported measure of REIT operating
performance is a REIT’s net income, excluding gains or losses from sales of property, and adding
back real estate depreciation. The purpose of FFO is to provide a measure of Funds From Operation
available for distribution to common shareholders and we believe that excluding gains from
exchanges of property is appropriate. We believe gains from the disposition of property should be
included in FFO only where they result in funds that can be paid to the shareholders in the form of
a capital gain distribution. There are no funds available for distribution from a gain resulting
from an exchange of a property for another property. We would not have funds for distributions
until the property received in the exchange is sold.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 5

Item 3, Properties, page 32.

26. The
table on page 29 of the Form 10/A includes a column for average annual rental rate
per square foot or unit for each of the previous 5 years (or, if shorter, from the date of
acquisition).

27. The
table on page 29 of the Form 10/A includes a column and footnote for renovation or
improvements planned for each of the properties. As stated in the table, other than $60,000 of
repairs budgeted for the Havana/Parker property, Registrant currently has no plans to improve or
renovate any of its properties.

Mortgage Debt, page 36.

28. The
table on page 34 of the Form 10/A includes a column for the balance of the loan at
maturity.

Co-Ownership of Properties, page 42.

29. The
discussion on page 40 of the Form 10/A clarifies that, as of December 31, Registrant
owned 100% of all but one of its properties and subsequent thereto, Registrant sold an undivided
interest in a second property.

Item 6. Executive Compensation, page 49.

30. The
Form 10/A at page 46 includes a table setting forth outstanding equity awards for named executive
officers as of December 31, 2007, Registrant’s most recent fiscal year end.

31. The
Form 10/A at page 47 includes the disclosure required by Item 402(r) of Regulation
S-K.

32. The
Form 10/A at page 45 discusses monthly call allowances under “All Other Compensation”
in the Summary Compensation Table.

Item 7. Certain Relationships and Related Transactions and Director Independence, page 53.

33. The
Form 10/A at page 50 under this subheading discloses the management fees paid to CHG Properties,
Inc. during Registrant’s past two fiscal years.

34. The
Form 10/A at page 50 includes a description of the standards Registrant used to determine
director independence.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 6

Item 9. Market Price and Dividends on Registrant’s Common Equity..., page 54.

35. Item 9
of the Form 10/A at page 52 states that as of May 15, 2008, Registrant had a total of 1,041
holders of its common stock and 31 holders of its Series AA Preferred Stock.

36. Item 9
of the Form 10/A at page 42 under “Compensation and
Analysis” describes Registrant’s 1999 Flexible Incentive
Plan, as required by
Item 201(d) of Regulation S-K. The Form 10/A at page 49
discusses equity awards Registrant has made under its 1999 Flexible
Incentive Plan.

Item 10. Recent Sale of Unregistered Securities, page 55.

Securities Issued in Private Placement Offerings, page 55.

37. Item 10
of the Form 10/A at page 53 includes disclosure regarding sales of unregistered securities
and the application of Regulation D, Rule 506 to these sales as required by S-K Item 701.

Issuances of Securities in Compensatory Transactions, page 56.

38. Item 10
at page 53 of the Form 10/A at page 53 includes the following discussion of the basis on which the
compensatory issuances under Registrant’s 1999 Flexible Incentive Plan were exempt under Rule 701.

Issuances of Securities in Compensatory Transactions

Since January 1, 2005, the Company has issued 13,607 shares of restricted common stock which will
vest during 2007 to 2012 and stock options to purchase 18,000 (20,837 shares after effect of stock
dividends) shares of its common stock at an exercise price of $10 as compensation to its directors,
its two executive officers, 13 of its employees and consultants pursuant to the NetREIT 1999 Equity
Incentive Plan. All of these securities were issued for non-cash consideration under the Plan.
These securities were issued under Registrant’s Liquidity Participation Plan of 1999. These
securities were sold pursuant to the exemption under Rule 701 because the sales were made pursuant
to a compensatory benefit plan, where the aggregate sales price or amount of securities sold in
reliance on this exemption during any consecutive 12-month period did not exceed the greatest of:
$1,000,000, 15% of the total assets of Registrant or 15% of Registrant’s outstanding common stock,
all as determined under Rule 701. Registrant may also claim an exemption under Section 4(2) of the
1933 Securities Act for these sales.

Item 11. Description of Registrant’s Securities to be Registered, page 56.

39.
Item 11 of the Form 10/A at page 54 states the rights of the Class A common stock.

40. The
discussion under Item 11 at page 54 of the Form 10/A cross-references legal restrictions on Registrant’s payment
of dividends.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

September 5, 2008

Page 7

Financial Statements and Notes.

Note 1. Organization, page 64.

41. As the Staff noted, Registrant sold a 48.601% interest in its 7-Eleven property during
2007 and footnote 3 in Item 3 implied that Registrant held the property in a partnership in 2007.
Registrant has changed footnote 3 to clarify the form of ownership in 2007 and the change in 2008.
Registrant recognized gain on the sale in 2007 as it did not retain ownership in the undivided
interest. Registrant’s accounting policy related to consolidations in 2007 was to include only its
51.4% interest in the property. In 2008 Registrant transferred this interest to a limited
partnership for which it serves as general partner. As sole general partner, Registrant controls
the partnership’s business and operations. After giving consideration to SOP 78-9, and
Registrant’s accounting policy, Registrant will include the entire entity in its consolidated
statements and such statements will reflect the minority interest.

Note 2. Significant Accounting Policies.

Property Acquisitions, pages 64-65.

42. Registrant’s inclusion of unamortized lease origination costs as an intangible asset is
based on its acquisition of one building that had been totally renovated and re-leased
(approximately 85% of the rentable space) just prior to its acquisition. In accordance with FASB
Statement No. 141, Registrant determined that the purchase price included consideration for the
origination costs of the leases and Registrant also determined that the purchase price was
significant enough to require that an appropriate portion of the purchase price be allocated to
lease origination costs, an intangible asset which is being amortized over the remaining life of
the leases.

Registrant evaluated the value of in-place leases of each of its retail and commercial
property acquisitions using then current market rent and annual increase information. Registrant
compared the total rent over the life of each lease to the current market rent plus annual
increases over the life of the lease to arrive at a total over or under rent value. Registrant
concluded that the leases of all properties did not hav