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Correspondence

BRUCE J. RUSHALL

EILEEN L. McGEEVER

LUCI M. MONTGOMERY

    RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

6100 INNOVATION WAY

CARLSBAD, CALIFORNIA 92009

TELEPHONE: (760) 438-6855

FACSIMILE: (760) 438-3026

E-MAIL: rm@rushallmcgeever.com

April 10, 2009

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    Re:

    NetREIT

Form 10

Filed May 6, 2008

File No. 001-39049

Ladies and Gentlemen:

NetREIT
(“Registrant”, the “Company”, or “we”) requests the Accounting Staff’s comments and guidance regarding Registrant’s responses
below to the comments in the Staff’s letter of March 31, 2009 regarding the above-referenced Form
10 filing. Registrant’s responses below are presented in the same numbers as the Staff’s comments
in that letter.

Once we receive the Staff’s comments in response to this letter, Registrant will file an initial
Form 10 as a 10-12G submission (the “Form 10”).

General

RESPONSE TO COMMENT 1:

Following the clearance of accounting related issues in Comment 7 and 10 below, the Registrant will
file amended Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30,
2008, which will include the correct certifications.

RESPONSE TO COMMENT 2:

The Form 10 will include Registrant’s updated Financial Statements and Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the years ended December 31, 2008 and
2007.

RESPONSE TO COMMENT 3:

Registrant will file the financial information required by Rule 8-06 of Regulation S-X as set forth
below for the properties included in the 8-K Reports Registrant has filed since it filed its
initial Form 10 on May 6, 2008. The following table sets forth for each property investment
Registrant has made after January 1, 2007; (i) the status of the required Rule 8-06 financial
information filing or (ii) the basis on which Registrant asserts Rule 8-06 financial information is
not required for the investment.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

    United States Securities and Exchange Commission

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    April 10, 2009

Page 2

    Percent of

    Cost of

    Date

    Total

    Date

    Acquisition

    8-K

    Assets at

    Status of

    Property

    Acquired

    (In millions)

    Filed

    12-31-07

    Audit

    Executive Office Park

    7-9-08

    $
    10.1

    7-16-08

    19.1
    %

    Completing audit, 1

    Waterman Plaza

    8-12-08

    7.2

    8-18-08

    13.6
    %

    New property, 2

    Pacific Oaks Plaza

    9-3-08

    4.9

    9-5-08

    9.2
    %

    Owner occupied property, 3

    Morena Office Center

    1-8-09

    6.6

    1-8-09

    12.4
    %

    Completing audit, 4

    Fontana Medical Plaza LLC

    2-25-09

    1.9

    2-25-09

    3.6
    %

    None - not significant

    Rangewood Medical Center

    3-23-09

    2.7

    3-27-09

    5.1
    %

    None - not significant

    1.

    The Company has substantially completed its amendment to Form 8-K, including audited statements
of Statements of Revenues Over Certain Operating Expenses for the year ended December 31, 2007. The
Company has suspended further activity towards completing this filing until accounting issues,
which may affect the pro forma financial statements, with the Commission have been resolved.

    2.

    Waterman Plaza was a newly constructed building with no operating history.
Therefore, there is no requirement for pro forma
financial statements and an audited historical Statements of Revenues Over Certain Operating
Expenses.

    3.

    Up to the time of the sale, the seller had used the property as their office space and post
acquisition the Company has utilized all but 3,900 square feet of a 16,000 square foot building as
its headquarters. Therefore, there is no requirement for pro forma financial statements and an
audited historical Statements of Revenues Over Certain Operating Expenses.

    4.

    The Company has obtained some of the documentation from the seller and has done planning for an
upcoming audit. The Company has suspended further activity towards completing this filing until
accounting issues, which may affect the pro forma financial statements, with the Commission have
been resolved.

RESPONSE TO COMMENT 4:

Registrant notes the Staff’s comments regarding completion of its review of Registrant’s restated
financial statements.

 RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

    United States Securities and Exchange Commission

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    April 10, 2009

Page 3

RESPONSE TO COMMENT 5:

The Registrant has expanded its disclosures relative to accounting for joint ventures. Please see
the revised Note to the proposed Financial Statements regarding Registrant’s consideration of EITF
04-5 in determining the appropriate accounting for Registrant’s joint ventures. The expanded
disclosure of the first paragraph to the significant accounting policies “Investment in Real Estate
Ventures” note will read as follows:

The Company analyzes its investments in joint ventures to determine whether the joint venture
should be accounted for under the equity method of accounting or consolidated into the financial
statements based on standards set forth under SFAS Interpretation No. 46(R), “Consolidation of
Variable Interest Entities”, Statement of Position 78-9, “Accounting for Investments in Real Estate
Ventures” and Emerging Issues Task Force (“EITF”) Statement No. 04-5, “Determining Whether a General
Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When
the Limited Partners Have Certain Rights. Based on the guidance set forth in SFAS Interpretation
No. 46(R)”. The Company has determined that the partners and/or tenants in common in its real
estate ventures have certain protective rights that limit the Company’s control of the investment.
Therefore, the Company’s share of its investment in real estate ventures have been accounted for
under the equity method of accounting in the accompanying financial statements.

RESPONSE TO COMMENT 6:

Registrant has expanded its disclosures relative to accounting for partial sales of real estate.
Please see the revised note to the proposed Financial Statements for Registrant’s consideration of
paragraph 33 of SFAS 66 in its accounting policy with respect to disclosure of gain recognition of
sales of undivided interests in properties. The new note in the significant accounting policies
will read as follows:

Sales of Undivided Interests in Properties.

The Company accounts for profit recognition on sales of real estate in accordance with SFAS No.
66: “Accounting for Sales of Real Estate” (“SFAS 66”). Pursuant to SFAS 66, profits from sales will
not be recognized under the full accrual method by the Company until certain criteria are met. A
sale is a partial sale if the seller retains an equity interest in the property or has an equity
interest in the buyer. Profit (the difference between the sales value and the proportionate cost of
the partial interest sold) shall be recognized at the date of sale if a sale has been consummated
and the following:

    a.

    The buyer is independent of the seller.

    b.

    Collection of the sales price is reasonably assured.

    c.

    The seller will not be required to support the operations of the property or its related
obligations to an extent greater than its proportionate interest.

Gains relating to transactions which do not meet the criteria for full accrual method of accounting
are deferred and recognized when the full accrual method of accounting criteria are met or by using
the installment or deposit methods of profit recognition, as appropriate in the circumstances.

 RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

    United States Securities and Exchange Commission

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    April 10, 2009

Page 4

RESPONSE TO COMMENT 7:

The Company allocates its purchase price between land and buildings based on several indications
of value, including recent comparable land sales, property tax assessments and, in some instances,
independent appraisals. We will reword the second paragraph in our disclosure of
significant accounting policies “Property Acquisitions” note to read as follows:

The Company allocates the purchase price to tangible assets of an acquired
property (which includes land, building and tenant improvements) based on the
estimated fair values of those tangible assets, assuming the building was
vacant. Estimates of fair value for land, building and building improvements are
based on many factors including, but not limited to, comparisons to other
properties sold in the same geographic area, independent third party valuations
and, in some states, recent property tax assessments. The Company also considers
information obtained about each property as a result of its pre-acquisition due
diligence, marketing and leasing activities in estimating the fair values of the
tangible and intangible assets and liabilities acquired.

RESPONSE TO COMMENT 8:

Registrant has filed its Item 4.02 8-K Report.

RESPONSE TO COMMENT 9:

Registrant
notes the Staff’s comment. Registrant will file its request with the Division of
Corporate Finance’s Office of Chief Accountant for a waiver from the Rule 8-08 financial
information filing requirements for the properties purchased before the initial filing of the Registrant’s Form 10.

RESPONSE TO COMMENT 10:

World Plaza

Background

In September 2007, the Company acquired an assignment to a 99 year ground lease that commenced in
1963, the existing buildings, and building improvements to the land with rights to mortgage same and
an assignment of the existing tenant’s lease agreements. The Company paid $7.7 million.

At acquisition, the property consisted of the master ground lease and a lease fee interest with
respect to 3 one story class “C” buildings with approximately 55,096 square feet of retail
center in San Bernardino, California. The land lease, including an option to purchase the land, was
assigned to the Company without modification from its original inception executed in 1963. The
option to purchase the land calls for the lessee to pay a fixed purchase price of $181,710. The
only time this option can be exercised is at the end of the lease term in 2062, and the option must be
exercised within 90 days of the end of the lease term or any rights to
exercise the purchase option will be lost.

The purchase price for the land remains fixed for the entire 99 year lease term at $181,710 while
the value of the land has appreciated significantly since 1963. The Company attributed a value of
$1.4 million, net of the present value of the option cost, to the land purchase option. The land
value was based upon other comparable property sales near the date of purchase and a copy of a
recent appraisal prepared for the benefit of the existing lender from whom we assumed the loan.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

    United States Securities and Exchange Commission

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    April 10, 2009

Page 5

Accounting References on point to this issue

Paragraph 15 of FIN 21 states the following:

In a business combination, the acquiring enterprise shall retain the previous classification in
accordance with FASB Statement No. 13 for the leases of an acquired enterprise unless the
provisions of the lease are modified as indicated in paragraph 13 above.

Paragraph 7 of SFAS 13 states the following:

The criteria for classifying leases set forth in this paragraph and in paragraph 8 derive from
the concept set forth in paragraph 60. If at its inception (as defined in paragraph 5(b)) a lease
meets one or more of the following four criteria, the lease shall be classified as a capital lease
by the lessee. Otherwise, it shall be classified as an operating lease.

    a.

     The lease transfers ownership of the property to the lessee by the end of the lease term
(as defined in paragraph 5(f)). This criterion is met in situations in which the lease
agreement provides for the transfer of title at or shortly after the end of the lease term
in exchange for the payment of a nominal fee, for example, the minimum required by statutory
regulation to transfer title.

    b.

    The lease contains a bargain purchase option (as defined in paragraph 5(d)).

    c.

    The lease term (as defined in paragraph 5(f)) is equal to 75 percent or more of the
estimated economic life of the leased property (as defined in paragraph 5(g)). However, if
the beginning of the lease term falls within the last 25 percent of the total estimated
economic life of the leased property, including earlier years of use, this criterion shall
not be used for purposes of classifying the lease.

    d.

     The present value at the beginning of the lease term of the minimum lease payments (as
defined in paragraph 5(j)), excluding that portion of the payments representing executory
costs such as insurance, maintenance, and taxes to be paid by the lessor, including any
profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased
property (as defined in paragraph 5(c)) to the lessor at the inception of the lease over any
related investment tax credit retained by the lessor and expected to be realized by him.
However, if the beginning of the lease term falls within the last 25 percent of the total
estimated economic life of the leased property, including earlier years of use, this
criterion shall not be used for purposes of classifying the lease. A lessor shall compute
the present value of the minimum lease payments using the interest rate implicit in the
lease (as defined in paragraph 5(k)). A lessee shall compute the present value of the
minimum lease payments using his incremental borrowing rate (as defined in paragraph 5(1)),
unless (i) it is practicable for him to learn the implicit rate computed by the lessor and
(ii) the implicit rate computed by the lessor is less than the lessee’s incremental
borrowing rate. If both of those conditions are met, the lessee shall use the implicit rate.

 RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

    United States Securities and Exchange Commission

    Attn:

    Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Kristina Aberg, Attorney-Advisor

    April 10, 2009

Page 6

FAS 142 Paragraph 11 states the following:

The accounting for a recognized intangible asset is based on its useful life to the reporting
entity. An intangible asset with a finite useful life is amortized; an intangible asset with an
indefinite useful life is not amortized. The useful life of an intangible asset to an entity is the
period over which the asset is expected to contribute directly or indirectly to the future cash
flows of that entity.9 The estimate of the useful life of an intangible asset to an
entity shall be based on an analysis of all pertinent factors, in particular, the following factors
with no one factor being more presumptive than the other:

    a.

    The expected use of the asset by the entity.

    b.

    The expected useful life of another asset or a group of assets to which the
useful life of the intangible asset may relate.

FAS 142 Paragraph 13 states the following:

The amount of