SecProbe.io

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 Presidio
Property Trust, Inc.

 4995
Murphy Canyon Road, Suite 300

 San
Diego, California 92123

 August
20, 2025

 Securities
and Exchange Commission

 Division
of Corporation Finance

 Office
of Real Estate & Construction

 100
F Street N.E.

 Washington,
D.C. 20549

 Re:

 Presidio
 Property Trust, Inc.

 Registration
 Statement on Form S-11

 Filed
 August 14, 2025

 File
 No. 333-289605

 Ladies
and Gentlemen:

 Pursuant
to Rule 461 promulgated under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. (the "Company") hereby
respectfully requests acceleration of the effectiveness of the above-referenced Registration Statement so that such Registration Statement
will become effective as of 5:00 PM Eastern Time, August 22, 2025, or as soon as practicable thereafter.

 Very truly yours,

 Presidio Property Trust, Inc.

 By:
 /s/
 Jack Heilbron

 Jack
 Heilbron

 Chief
 Executive Officer

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 August 20, 2025

Jack Heilbron
Chief Executive Officer
Presidio Property Trust, Inc.
4995 Murphy Canyon Road
Suite 300
San Diego, CA 92123

 Re: Presidio Property Trust, Inc.
 Registration Statement on Form S-11
 Filed August 14, 2025
 File No. 333-289605
Dear Jack Heilbron:

 This is to advise you that we have not reviewed and will not review your
registration
statement.

 Please refer to Rules 460 and 461 regarding requests for acceleration.
We remind you
that the company and its management are responsible for the accuracy and
adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action
by the staff.

 Please contact Stacie Gorman at 202-551-3585 with any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Real
Estate & Construction
cc: Michael D. Nacht, Esq.
</TEXT>
</DOCUMENT>

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PRESIDIO
PROPERTY TRUST, INC.

4995
Murphy Canyon Road, Suite 300

San
Diego, CA 92123

May
14, 2024

VIA
EDGAR

United
States Securities and Exchange Commission

Division
of Corporation Finance

Office
of Real Estate & Construction

100
F. Street, N.E.

Washington,
D.C. 20549

Attention:
Benjamin Holt

  Re:
  Presidio
  Property Trust, Inc. (the “Company”)

  Registration
  Statement on Form S-3

  Filed
  April 26, 2024

  File
  No. 333-278960

Ladies
and Gentlemen:

In
accordance with Rule 461 under the Securities Act of 1933, as amended, the undersigned respectfully requests that the effective date
for the Registration Statement referred to above be accelerated so that it will be declared effective at 5:00PM EDT on Friday, May 17,
2024, or as soon thereafter as is practicable.

If
you have any questions, please call Avital Perlman, Esq. at 212-930-9700.

    Very
    truly yours,

    PRESIDIO
    PROPERTY TRUST, INC.

    By:
    /s/
    Jack K. Heilbron

    Name:
    Jack
    K. Heilbron

    Title:
    Chief
    Executive Officer and President

United States securities and exchange commission logo
May 2, 2024
Jack K. Heilbron
Chief Executive Officer and President
Presidio Property Trust, Inc.
4995 Murphy Canyon Road, Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Registration Statement on Form S-3
Filed April 26, 2024
File No. 333-278960
Dear Jack K. Heilbron:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration. We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Benjamin Holt at 202-551-6614 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction
cc:       Avital Perlman, Esq.

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January
14, 2022

VIA
EDGAR

United
States Securities and Exchange Commission

Division
of Corporation Finance

100
F. Street, N.E.

Washington,
D.C. 20549

Attn:
Austin Wood

Re:
Presidio Property Trust, Inc.

Registration
Statement on Form S-11

File
No. 333-260885

Ladies
and Gentlemen:

In
accordance with Rule 461 under the Securities Act of 1933, as amended, the undersigned respectfully requests that the effective date
for the Registration Statement referred to above be accelerated so that it will be declared effective at 8:00 a.m. on January 21, 2022
or as soon thereafter as is practicable.

    Very
    truly yours,

    PRESIDIO
    PROPERTY TRUST, INC.

    By:

    /s/Adam
    Sragovicz

    Adam
    Sragovicz

    Chief
    Financial Officer

United States securities and exchange commission logo
November 16, 2021
Adam Sragovicz
Chief Financial Officer
Presidio Property Trust, Inc.
4995 Murphy Canyon Road
Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Registration Statement on Form S-11
Filed November 9, 2021
File No. 333-260885
Dear Mr. Sragovicz:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Austin Wood at 202-551-5586 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction

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Presidio
Property Trust, Inc.

4995
Murphy Canyon Road, Suite 300

San
Diego, CA 92123

September
10, 2021

VIA
EDGAR

U.S.
Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
DC 20549

Attention:
Mr. Joseph Ambrogi

    Re:
    Presidio
    Property Trust, Inc.

    Registration
    Statement on Form S-11

    Filed
    August 27, 2021

    File
    No. 333-259096

Dear
Mr. Ambrogi:

Pursuant
to Rule 461 under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. (the “Company”) hereby requests acceleration
of effectiveness of the above referenced Registration Statement so that it will become effective at 4:30 p.m. Eastern Time on Tuesday,
September 14, 2021, or as soon as thereafter practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman
& Schole LLP, requests by telephone that such Registration Statement be declared effective.

    Very truly yours,

    /s/
    Jack K. Heilbron

    By:

    Jack K. Heilbron

    Title:

    Chief Executive Officer and President

    cc:
    Ellenoff
    Grossman & Schole LLP

United States securities and exchange commission logo
September 3, 2021
Jack K. Heilbron
Chief Executive Officer and President
Presidio Property Trust, Inc.
4995 Murphy Canyon Road
Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Registration Statement on Form S-11
Filed August 27, 2021
File No. 333-259096
Dear Mr. Heilbron:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Joseph Ambrogi at 202-551-4821 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction

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The Benchmark Company, LLC

150 East 58th Street, 17th Floor

New York, New York 10155

June 9, 2021

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attention: Mr. Ronald E. Alper

Re:         Presidio Property Trust, Inc.

Registration Statement on Form S-11

Filed May 14, 2021, as amended June 1, 2021

File No. 333-256150

Dear Mr. Alper:

As representative of the underwriters of the proposed public offering of securities of Presidio Property Trust, Inc. (the “Company”), we hereby join the Company’s request that the effective date of the above-referenced Registration Statement on Form S-11 be accelerated so that it will be declared effective at 4:30 p.m., Eastern Time, on Thursday, June 10, 2021, or at such later time as the Company or its counsel may orally request via telephone call to the staff of the Division of Corporation Finance of the Securities and Exchange Commission.

Pursuant to Rule 460 under the Act, we, as representative of the underwriters, wish to advise you that there will be distributed to each underwriter, who is reasonably anticipated to participate in the distribution of the security, as many copies of the proposed form of preliminary prospectus as appears to be reasonable to secure adequate distribution of the preliminary prospectus.

The undersigned advises that it has complied and will continue to comply, and that it has been informed by the participating underwriters that they have complied with and will continue to comply, with the requirements of Rule 15c2-8 under the Securities Exchange Act of 1934, as amended.

			Very truly yours,

			The Benchmark Company, LLC

			By: /s/ Michael S. Jacobs

			Name: Michael S. Jacobs

			Title: Head of Equity Capital Markets

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Presidio Property Trust, Inc.

4995 Murphy Canyon Road, Suite 300

San Diego, CA 92123

June 9, 2021

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attention: Mr. Ronald E. Alper

Re:         Presidio Property Trust, Inc.

Registration Statement on Form S-11

Filed May 14, 2021, as amended June 1, 2021

File No. 333-256150

Dear Mr. Alper:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. (the “Company”) hereby requests acceleration of effectiveness of the above referenced Registration Statement so that it will become effective at 4:30 p.m. Eastern Time on Thursday, June 10, 2021, or as soon as thereafter practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman & Schole LLP, requests by telephone that such Registration Statement be declared effective.

			Very truly yours,

			/s/ Jack K. Heilbron

			By: Jack K. Heilbron

			Title: Chief Executive Officer and President

			cc:

			Ellenoff Grossman & Schole LLP

			Sheppard, Mullin, Richter & Hampton LLP

United States securities and exchange commission logo
May 24, 2021
Jack K. Heilbron
Chief Executive Officer and President
Presidio Property Trust, Inc.
4995 Murphy Canyon Road, Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Registration Statement on Form S-11
Filed May 14, 2021
File No. 333-256150
Dear Mr. Heilbron:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Ronald (Ron) E. Alper at 202-551-3329 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction
cc:       Joshua Englard

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PRESIDIO PROPERTY TRUST, INC.

4995 Murphy Canyon Road, Suite 300

San Diego, California 92123

April 23, 2021

VIA EDGAR

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Tom Jones

			Re:

			Presidio Property Trust, Inc.

			Registration Statement on Form S-3/A, as amended

			Filed April 13, 2021

			File No. 333-251779

Dear Mr. Jones:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. hereby requests acceleration of effectiveness of the above referenced Registration Statement so that it will become effective at 4:30 p.m. EST on April 27, 2021, or as soon as thereafter practicable.

			Very truly yours,

			/s/ Adam Sragovicz

			Adam Sragovicz

			Chief Financial Officer

			cc:

			Ellenoff Grossman & Schole LLP

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			1345 Avenue of the Americas

			New York, NY  10105

			Telephone: (212) 370-1300

			Facsimile: (212) 370-7889

			www.egsllp.com

Presidio Property Trust, Inc.

4995 Murphy Canyon Road, Suite 300

San Diego, CA 92123

VIA EDGAR

April 12, 2021

U.S. Securities & Exchange Commission

Division of Corporation Finance

Office of Real Estate & Construction

100 F Street, NE

Washington, D.C. 20549

Attn: Erin E. Martin

			Re:

			Presidio Property Trust, Inc.

			Registration Statement on Form S-3

			Filed December 29, 2020

			File No. 333-251779

Dear Ms. Martin,

Presidio Property Trust, Inc. (the “Company” or “we”) hereby transmits the Company’s response to the comment letter received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission, dated January 19, 2021 regarding the Company’s Registration Statement on Form S-3 filed on December 29, 2020 (the “Registration Statement”). For the Staff’s convenience, we have repeated below the Staff’s comment in bold, and have followed the comment with the Company’s response.

Registration Statement on Form S-3

General

			1.

			Please tell us how you determined you are eligible to use Form S-3 as it appears that Part III of your annual report on Form 10-K for the year ended December 31, 2019 was not timely filed. We note that you furnished a Form 8-K on April 30, 2020; however, that 8-K does not appear to have been furnished by the original filing deadline of the report, which was April 29, 2020. Refer to the March 4, 2020 Securities Act Release No. 34-88318, which provides that a registrant relying on the Order furnishes to the Commission a Form 8-K by the later of March 16 or original filing deadline of the report, for guidance.

Pursuant to General Instructions I.A.3(b) of Form S-3, the Company has filed in a timely manner all reports required to be filed by it during the twelve calendar months and any portion of a month immediately preceding the filing of Amendment No.1 to the Registration Statement.

Incorporation of Certain Information by Reference, page 45

			2.

			Please revise your disclosure in this section to incorporate by reference your amended annual report on Form 10-K filed June 12, 2020 as required by Item 12(a)(2) of Form S-3, or advise.

The Company has revised the Incorporation by Reference section of the Registration Statement to include the Annual Report on Form 10-K for the year ended December 31, 2020.

Exhibits

			3.

			We note your auditor consented to the incorporation by reference of the report appearing in your Form 10-K for the year ended December 31, 2019; however, the report filed with your Form 10-K does not appear to include the effects of the one-for-two reverse stock split described in Note 15 as to which the date is August 3, 2020. Please revise accordingly.

The Company’s auditors have a provided a new consent, filed as an Exhibit to the Registration Statement, with respect to the audited financial statements for the year ended December 31, 2020.

			4.

			Please list a statement of eligibility of trustee for the indenture as an Exhibit 25 to your registration statement. See Item 601(b)(25) of Regulation S-K. If you wish to designate the trustees on a delayed basis, as permitted by Section 305(b)(2) of the Trust Indenture Act, please indicate that you will separately file the Form T-1 under the electronic form type "305B2" in the notes to the index. For further guidance, please refer to Trust Indenture Act of 1939 Compliance and Disclosure Interpretations Questions 206.01 and 220.01.

The Company has revised the notes to the Exhibit Index to the Registration Statement to indicate that it will designate the trustees for the indenture on a delayed basis, as permitted by Section 305(b)(2) of the Trust Indenture Act, by separately filing the Form T-1 under the electronic form type “305B2.”

We thank the Staff in advance for its consideration of the foregoing. Should you have any questions, please do not hesitate to contact me on 917-797-7935 (mobile) or at my email address, jdeblinger@egsllp.com.

			Very truly yours,

			/s/ Jonathan H. Deblinger

			Name: Jonathan H. Deblinger

			cc:

			Adam Sragovicz

			Chief Financial Officer, Presidio Property Trust, Inc.

United States securities and exchange commission logo
January 19, 2021
Adam Sragovicz
Chief Financial Officer
Presidio Property Trust, Inc.
4995 Murphy Canyon Road, Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Registration Statement on Form S-3
Filed December 29, 2020
File No. 333-251779
Dear Mr. Sragovicz:
            We have limited our review of your registration statement to those issues we have
addressed in our comments.  In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-3
General
1.Please tell us how you determined you are eligible to use Form S-3 as it appears that Part
III of your annual report on Form 10-K for the year ended December 31, 2019 was not
timely filed.  We note that you furnished a Form 8-K on April 30, 2020; however, that 8-
K does not appear to have been furnished by the original filing deadline of the report,
which was April 29, 2020. Refer to the March 4, 2020 Securities Act Release No. 34-
88318, which provides that a registrant relying on the Order furnishes to the Commission
a Form 8-K by the later of March 16 or original filing deadline of the report, for guidance.
Incorporation of Certain Information by Reference, page 45
2.Please revise your disclosure in this section to incorporate by reference your amended

 FirstName LastNameAdam Sragovicz
 Comapany NamePresidio Property Trust, Inc.
 January 19, 2021 Page 2
 FirstName LastName
Adam Sragovicz
Presidio Property Trust, Inc.
January 19, 2021
Page 2
annual report on Form 10-K filed June 12, 2020 as required by Item 12(a)(2) of Form S-3,
or advise.
Exhibits
3.We note your auditor consented to the incorporation by reference of the report appearing
in your Form 10-K for the year ended December 31, 2019; however, the report filed with
your Form 10-K does not appear to include the effects of the one-for-two reverse stock
split described in Note 15 as to which the date is August 3, 2020.  Please revise
accordingly.
4.Please list a statement of eligibility of trustee for the indenture as an Exhibit 25 to your
registration statement.  See Item Item 601(b)(25) of Regulation S-K.  If you wish to
designate the trustees on a delayed basis, as permitted by Section 305(b)(2) of the Trust
Indenture Act, please indicate that you will separately file the Form T-1 under the
electronic form type "305B2" in the notes to the index.  For further guidance, please refer
to Trust Indenture Act of 1939 Compliance and Disclosure Interpretations Questions
206.01 and 220.01.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.
            Please contact Ruairi Regan at 202-551-3269 or Erin E. Martin at 202-551-3391 if you
have any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction
cc:       Joshua Englard, Esq.

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October 1, 2020

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention:   Mr. Ronald E. Alper

Re:             Presidio Property Trust, Inc.

                     Registration Statement on Form S-11

                     Filed September 11, 2020

                     File No. 333-220514

Ladies and Gentlemen:

In accordance with Rule 461 under the Securities Act of 1933, as amended (the “Act”), Kingswood Capital Markets, division of Benchmark Investments, Inc., as representative of the several underwriters, hereby joins Presidio Property Trust, Inc. (the “Company”) in requesting that the Securities and Exchange Commission take appropriate action to cause the Registration Statement on Form S-11 (File No. 333-220514) (the “Registration Statement”) to become effective on Monday, October 5, 2020, at 4:30 p.m., Eastern Time, or as soon thereafter as practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman & Schole LLP, request by telephone that such Registration Statement be declared effective.

Pursuant to Rule 460 of the General Rules and Regulations of the Securities and Exchange Commission under the Act, we wish to advise you that copies of the Company’s Preliminary Prospectus, dated September 11, 2020, were furnished to one prospective underwriter and distributed by the underwriter approximately as follows through the date hereof: 150+ copies to institutional investors and 250+ copies to others.

The undersigned advises that it has complied and will continue to comply, and that it has been informed by the participating underwriters and dealers that they have complied with and will continue to comply, with the requirements of Rule 15c2-8 under the Securities Exchange Act of 1934, as amended.

			Very truly yours,

			KINGSWOOD CAPITAL MARKETS,

			a division of Benchmark Investments, Inc.

			By:       _/s/ Joseph T. Rallo

			Name: Joseph T. Rallo

			Title:    Chief Executive Officer

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Presidio Property Trust, Inc.

4995 Murphy Canyon Road, Suite 300

San Diego, CA 92123

October 1, 2020

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attention: Mr. Ronald E. Alper

Re:       Presidio Property Trust, Inc.

  Registration Statement on Form S-11

     Filed September 11, 2020

 File No. 333-220514

Dear Mr. Alper:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. (the “Company”) hereby requests acceleration of effectiveness of the above referenced Registration Statement so that it will become effective at 4:30 p.m. Eastern Time on Monday, October 5, 2020, or as soon as thereafter practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman & Schole LLP, requests by telephone that such Registration Statement be declared effective.

			Very truly yours,

			/s/ Jack K. Heilbron

			By: Jack K. Heilbron

			Title: Chief Executive Officer and President

			cc:

			Ellenoff Grossman & Schole LLP

			Nelson Mullins Riley & Scarborough LLP

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August 6, 2020

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention: Mr. Ronald E. Alper

Re: Presidio Property Trust, Inc.

        Registration Statement on Form S-11

        Filed August 4, 2020

        File No. 333-220514

Ladies and Gentlemen:

In accordance with Rule 461 under the Securities Act of 1933, as amended (the “Act”), Kingswood Capital Markets, division of Benchmark Investments, Inc., as representative of the several underwriters, hereby joins Presidio Property Trust, Inc. (the “Company”) in requesting that the Securities and Exchange Commission take appropriate action to cause the Registration Statement on Form S-11 (File No. 333-220514) (the “Registration Statement”) to become effective on Monday, August 10, 2020, at 4:30 p.m., Eastern Time, or as soon thereafter as practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman & Schole LLP, request by telephone that such Registration Statement be declared effective.

Pursuant to Rule 460 of the General Rules and Regulations of the Securities and Exchange Commission under the Act, we wish to advise you that copies of the Company’s Preliminary Prospectus, dated August 3, 2020, were furnished to 10 prospective underwriters and distributed by the underwriters approximately as follows through the date hereof: 300+ copies to institutional investors and 500+ copies to others.

The undersigned advises that it has complied and will continue to comply, and that it has been informed by the participating underwriters and dealers that they have complied with and will continue to comply, with the requirements of Rule 15c2-8 under the Securities Exchange Act of 1934, as amended.

Very truly yours,

KINGSWOOD CAPITAL MARKETS,

a division of Benchmark Investments, Inc.

By: _/s/ Joseph T. Rallo

Name:  Joseph T. Rallo

Title:  Chief Executive Officer

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Presidio Property Trust, Inc.

4995 Murphy Canyon Road, Suite 300

San Diego, CA 92123

August 6, 2020

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attention: Mr. Ronald E. Alper

Re: Presidio Property Trust, Inc.

Registration Statement on Form S-11

Filed August 4, 2020

File No. 333-220514

Dear Mr. Alper:

Pursuant to Rule 461 under the Securities Act of 1933, as amended, Presidio Property Trust, Inc. (the “Company”) hereby requests acceleration of effectiveness of the above referenced Registration Statement so that it will become effective at 4:30 p.m. Eastern Time on Monday, August 10, 2020, or as soon as thereafter practicable, or at such other time as the Company or its outside counsel, Ellenoff Grossman & Schole LLP, requests by telephone that such Registration Statement be declared effective.

Very truly yours,

/s/ Jack K. Heilbron

By: Jack K. Heilbron

Title: Chief Executive Officer and President

cc:   Ellenoff Grossman & Schole LLP

Nelson Mullins Riley & Scarborough LLP

February 13, 2020
Jack K. Heilbron
Chief Executive Officer and President
Presidio Property Trust, Inc.
4995 Murphy Canyon Road, Suite 300
San Diego, CA 92123
Re:Presidio Property Trust, Inc.
Amendment No. 2 to Registration Statement on Form S-11
Fled February 7, 2020
File No. 333-220514
Dear Mr. Heilbron:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Ronald (Ron) Alper at 202-551-3329 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction
cc:       Lawrence A. Rosenbloom

September 25, 2017

Via E -mail
Jack K. Heilbron
Chief Executive Officer and President
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA  92029

Re: NetREIT, Inc.
  Registration Statement on Form  S-11
Filed  September 18, 2017
  File No.  333-220514

Dear Mr. Heilbron :

This is to advise you that we have not  reviewed and will not review your registration
statement .

Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

Please  contact me at 202 -551-3758  with any questions.

Sincerely,

 /s/ Sandra B. Hunter

Sandra B. Hunter
Staff Attorney
Office of Real Estate and
Commodities

February 12, 2015

Via Email
Mr. Kenneth W. Elsberry
Chief Financial Officer
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA  92029 -2900

Re: NetREIT, Inc.
 Form 10-K
Filed March 31, 2014
File No. 000 -53673

Dear Mr. Elsberry :

We have completed our review of your filing .  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy a nd adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Eric McPhee

Eric McPhee
Staff Accountant

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 The Contrarian Real Estate Investment Trust

 January 15, 2015

Securities and Exchange Commission

 Washington, D.C. 20549

Via Edgar

 Attention:     Mr. Eric
McPhee, Staff Accountant

RE:
NetREIT, Inc. (the “Company”), a Maryland corporation and non-traded REIT

 Form 10-K
for the Fiscal Year Ended December 31, 2013

 Filed March 31, 2014

File No. 000-53673

 Dear Mr. Eric McPhee:

 This response kindly requests the Accounting Staff’s comments and guidance regarding the Company’s responses below to the comments in the
Staff’s letter of December 19, 2014 regarding the above-referenced filing on Form 10-K. The Company’s responses below correspond to the same numbers as the Staff’s comments in the December 19, 2014 letter.

General

1.
We have previously not filed Schedule III- Real Estate and Accumulated Depreciation as required by Rule 5-04 of Regulation S-X under the belief that the schedule was not required to be separately presented if all the
required information is included in the Notes to Financial Statements or in the Property section of the Form 10-K. The reconciliation table of the beginning and ending of each period was not included; however, a description of the acquisitions and
real estate sold was included in the Footnotes to the Financial Statements. In future Exchange Act periodic reports, we will present the information in a schedule format pursuant to Rule 5-04 of Regulation S-X.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Operating Portfolio, page 35

2.
In future Exchange Act periodic reports, we will provide additional tenant information including information on tenant ratings and describe how we monitor tenant credit quality for our net leases. Please note that we
only have one single tenant net lease property. All of other properties are multi-tenant.

3.
Due to our growth cycle, the significant increase in our rental income has been primarily due to the acquisition of new properties, and the variance resulting from period-to-period changes in the same property has been
insignificant. In future Exchange Act periodic reports, we will provide additional disclosure on same property performance on period-to-period changes.

 1282 Pacific Oaks Place,
Escondido, CA 92029-2900 ª Phone 866-781-7721 ª Fax 760-471-0399 ª info@netreit.com

 The Contrarian Real Estate Investment Trust

 Recent Events Having Significant Effect on Results of Operations, page 42

4.
In future Exchange Act reports, we will provide disclosure regarding the relationship of rent rates on expired, new, or renewed leases, as well as discuss the rents scheduled to expire in the current period.

 Revenues, page 45

5.
In future Exchange Act periodic reports, we will provide a discussion of net operating income for period-to-period material changes.

Note 1. Organization and Basis of Presentation, page F-7

6.
In connection with the six (6) limited partnerships that were consolidated into the financial statements in accordance with the guidelines attributable to variable interest entities, these entities were primarily
liquidating entities that the Company was managing on behalf of the general partners of the entities. These entities represent less than five percent (5%) of the Company’s total net assets and total mortgage debt. In regard to ASC
810-10-50-12, as to the methodology for determining whether we are the primary beneficiary of the entities, Company previously disclosed that in March 2010 we acquired Dubose Model Homes USA (DMHU) and entered into management contracts to provide
management services to the nineteen (19) limited partnerships sponsored by DMHU, and for which a DMHU affiliate served as the general partner. The conclusion to consolidate the entities has not changed in the most recent financial statements.
We did not provide financial or other support to these entities during 2013. In regard to ASC 810-10-50-14, the carrying amount and classification of the major assets and liabilities of the model homes and mortgage balances thereon were disclosed in
the Footnote to the Financial Statements. The major creditors of these consolidated entities are mortgage lenders, who have recourse to our general credit due to the guarantee by the Company of the mortgage loans.

All of these limited partnerships were completely liquidated and dissolved in 2014. Due to the liquidating nature and the insignificant amount
of assets and liabilities of these entities at December 31, 2013, we respectfully request that the disclosure provided in the 2013 financials be accepted. The Company will streamline and improve the disclosure in the 2014 Form 10K.

 1282 Pacific Oaks Place,
Escondido, CA 92029-2900 ª Phone 866-781-7721 ª Fax 760-471-0399 ª info@netreit.com

 The Contrarian Real Estate Investment Trust

 Intangible Assets, page F-12

7.
Lease Intangibles are quantified in Note 3 to the Financial Statements, page F-23. At December 31, 2013 the Balance Sheet included in “Other Assets, net” goodwill amounts arising from two acquisitions
aggregating $2,349,843.

 This amount included $1,032,000 relating to the Dubose Model Homes, USA (“DMHU”)
acquisition in March 2010 described in Note 1 to the Consolidated Financial Statements page F-8 and $1,317,843 relating to the merger acquisition of NTR Property Management and CHG Properties (“NTR-CHG”) effective January 31, 2013
described in Note 1 to The Consolidated Financial Statements page F-9. These amounts were grouped in the Other Assets, net classification on the balance sheet due to their immateriality in relation to total assets of $181,245,382 or 1.3%. If the
Staff disagrees with this classification please advise and we will classify them accordingly in future Exchange Act periodic reports.

Valuation Methodologies

ASC 820 refers to three valuation methodologies that may be used in measuring fair value:

•

The market approach - uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•

The income approach – uses valuation techniques to convert future benefits and costs (usually potential cash flows or earnings) into a single present value amount; and

•

The cost approach – based on the amount that currently would be required to replace the service capacity of an asset.

The income approach is commonly used to measure the fair value of level 3 assets for which no relevant market prices exist. In addition,
goodwill is an asset that must be measured residually and not directly, which typically results in the cost approach to be an inappropriate valuation methodology to use in goodwill impairment testing.

A form of income approach, the discounted cash flow method, was used to measure the fair value of the associated with the DMHU and the NTR-CHG
goodwill. The discounted cash flow (“DCF”) method is a method of valuing an asset based upon the concept of the time value of money. All future cash flows, both inflows (revenues) and outflows (expenses and investments), are estimated
and discounted to provide an estimate of their present values. The sum of all future cash flows, both incoming and outgoing, is the net present value which is taken as the value of the asset under analysis.

 1282 Pacific Oaks Place,
Escondido, CA 92029-2900 ª Phone 866-781-7721 ª Fax 760-471-0399 ª info@netreit.com

 The Contrarian Real Estate Investment Trust

 Documents and Inputs Considered

Below is a summary of the documents and inputs considered in measuring the fair value of goodwill of both entities for purposes of testing
goodwill impairment:

•

Valuation calculations associated with the acquisition of DHMU and NTR-CHG, which included management projections of the revenues and cost savings related to the acquisitions, discount rate assumptions, and other
relevant data;

•

Actual performance post-acquisition as compared to the expectations as of the acquisition date;

•

Number of properties associated with the model home business by DMHU entities and number of properties being managed by NTR Property Management, Inc. as of December 31, 2013;

•

Balance sheet for the entities as of December 31, 2013; and

•

Budget data and projections for periods subsequent to December 31, 2013.

 Fair Value
Measurement Conclusions

 The fair value of DMHU entities and the NTR Property Management, Inc. under the DCF method was estimated to be
$30.7 million and $1.6 million, respectively. Based upon the balance sheet at December 31, 2013 of the DHMU entities and NTR Property Management, Inc. as of the December 31, 2013, the carrying value of these entities was $22.1 million and
$1.5 million, respectively.

 Key inputs and sources to the DCF method included the below factors:

•

Revenues and expenses for 2014 based upon budget data approved by management;

•

Revenues and expenses after 2014 based upon projections from management;

•

Discount rates assumed reasonable based upon cost of capital estimates for the industries.

Impairment Testing Conclusions

Based upon the measurement of the fair value and carrying value for entities as of December 31, 2013, the fair value exceeded the carrying
value. Therefore, there was no goodwill impairment indicator for entities as of December 31, 2013.

 The Company intends to incorporate Staff comments
on a prospective basis and, at this time, does not intend to amend previously filed reports as a result of the Staff comments received and the responses thereto.

The Company acknowledges the following:

 The
Company is responsible for the adequacy and accuracy of the disclosure in the filing;

 Staff comments or changes to disclosure in response
to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

 1282 Pacific Oaks Place,
Escondido, CA 92029-2900 ª Phone 866-781-7721 ª Fax 760-471-0399 ª info@netreit.com

 The Contrarian Real Estate Investment Trust

 The Company may not assert staff comments as a defense in any legal proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

 If, after review of the Company’s responses to the Staff’s
comments in the December 19, 2014 letter you have additional comments or questions, please do not hesitate to contact the undersigned at your convenience.

Very truly yours,

 /s/ Kenneth W. Elsberry

Kenneth W. Elsberry

 Chief Financial Officer

NetREIT, Inc.

 1282 Pacific Oaks Place,
Escondido, CA 92029-2900 ª Phone 866-781-7721 ª Fax 760-471-0399 ª info@netreit.com

December 19, 2014

Via Email
Mr. Kenneth W. Elsberry
Chief Financial Officer
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA  92029 -2900

Re: NetREIT, Inc.
 Form 10-K for the Fiscal Year Ended December 31, 2013
Filed March 31, 2014
File No. 000 -53673

Dear Mr. Elsberry :

We have reviewed your filing an d have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstance s or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these  comments, we may have additional comments.

General

1. Please tell us why you have not filed Schedule III – Real Estate and Accumulated
Depreciation as required by Rule 5 -04 of Regulation S -X.

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Operating Portfolio, page 35

2. In future Exchange Act periodic reports, please expand your disclosure to provide tenant
rating diversification and describe how you monitor tenant credit quality for your net
leases. Also, please identify any material changes in tenant credit qua lity.

Kenneth W. Elsberry
NetREIT, Inc.
December 19, 2014
Page 2

 3. In your future Exchange Act periodic reports, please include disclosure on period -to-
period changes in same property performance.   Your disclosure should also address the
relative impact of occupancy and rent changes, and explain why any properties have been
excluded from the same property pool.

Recent Events Having Significant Effect on Results of Operations, page 42

4. Please provide disclosure in future Exchange Act reports regarding the relationship of
rent rates on leases that expired in the rep orting period and the rent rates on renewals or
new leases on the same space.   If practicable, please also supplement this disclosure with
narrative disclosure about the relationship between rents on leases scheduled to expire in
the current period and man agement’s assessment of current market rents for the expiring
space.

Revenues, page 45

5. In future Exchange Act periodic reports, to the extent material, please supplement your
disclosure in this section to include a detailed discussion of period to period changes in
net operating income.

Note 1. Organization and Basis of Presentation, page F -7

6. We note that you have several investments in variable interest entities for which you have
determined that you are the primary beneficiary.  Please revise yo ur disclosure to include
all of the disclosures required by ASC 810 -10-50-12 and ASC 810 -10-50-14.  Please
provide us with your revised disclosures.

Intangible Assets, page F -12

7. Please quantify the carrying amounts of goodwill and other intangible assets  on your
balance sheet as of December 31, 2013.  In your response, please indicate the amount of
goodwill related to each acquisition and provide a detailed discussion of the tests you
performed to determine that no impairment existed as of December 31, 20 13.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provide  a written statement from t he company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

Kenneth W. Elsberry
NetREIT, Inc.
December 19, 2014
Page 3

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with res pect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Kristi Marrone at (202) 551 -3429 or me at (202) 551 -3693 if you have
questions regarding comments on the financial statements and related matters.  Please contact
Jerard Gibson  at (202) 551 -3473 or Kristina Aberg  at (202) 551 -3404 with any other questions.

Sincerely,

Eric McPhee
Staff Accou ntant

September 6, 2012

Via E -mail
Mr. Kenneth W. Elsberry
Chief Financial Officer
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA 92029

 RE: NetREIT, Inc.
Form 10 -K for the Fiscal Year  Ended December 31, 2011
  Filed March 28, 2012
  File No. 0 -53673

Dear Mr. Elsberry:

We have completed our review of your filing .  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Daniel L. Gordon

Daniel L. Gordon
        Branch Ch ief

CORRESP
1
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    response_letter.htm

August 29, 2012

United States Securities and Exchange Commission

Washington, D.C.  20549

Via Edgar

Attn:       Mr. Daniel L. Gordon, Accounting Branch Chief

Mr. William Demarest, Staff Accountant

Re:           NetREIT, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2011

Filed March 28, 2012

File No. 0-53673

Gentlemen:

Registrant requests the Accounting Staff's comments and guidance regarding Registrant’s responses below to the comments in the Staff’s letter of August 23, 2012 regarding the above-referenced filing on Form 10-K.  Registrant's responses below are presented in the same numbers as the Staff’s comments in that letter.

Note 2. Significant Accounting Policies

Acquisition of Dubose Model Home Income Funds #3 LTD, Dubose Model Home Income Fund #4 LTD, Dubose Model Home Income Fund #5 LTD and Dubose Model Home Investors Fund #113 (“MH Funds”), page F-11

1.

As a general observation, we believe the sellers considered selling and future holding costs in establishing a price they would accept. Had they not sold the entire lot of model homes to us in a single transaction, they might have spent considerable time and effort locating buyers for individual properties in a down market.

Our footnote regarding the transaction states that the bargain purchase gain was based on an assessment of the estimated fair value of the assets acquired and liabilities assumed.

Contributing to the gain were two underlying factors. These were as follows:

·

The valuation of the real estate assets in the partnerships was based on a net realizable value concept whereas the Company valued the assets at the acquisition date in accordance with ASC 850-20-30-1 and fair values were used. We believe the difference between the two approaches accounted for at least 70% of the gain.

·

The sellers electing the cash option to sell elected to sell at a 20% discount to value. This difference accounted for at least 20% of the gain.

2.

All of the Company shares sold to the public from the inception of the offering in 2006 through the close were sold at $10 per share. In 2010 alone, we issued approximately 1.6 million shares at $10 per share.

3.

The selling partners originally invested in the three partnerships were individual investors who were independent of Larry Dubose. Mr. Dubose did not have any investment interest in any of the 3 Income Funds.

The registrant acknowledges the following:

·

the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·

staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·

The Company may not assert staff comments as a defense in any legal proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If, after review of this letter and the amended filings, you have additional comments or questions, please contact the undersigned at your convenience.

Very truly yours,

/s/ J. Bradford Hanson

J. BRADFORD HANSON

PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

August 23, 2012

Via E -mail
Mr. Kenneth W. Elsberry
Chief Financial Officer
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA 92029

 RE: NetREIT, Inc.
Form 10 -K for the Fiscal Year Ended December 31, 2011
  Filed March 28, 2012
  File No. 0 -53673

Dear  Mr. Elsberry:

We have reviewed your response letter dated August 9, 2012 , and have the following
additional comments. In our comments, we ask you to provide us with information so we may
better understand your disclosure.

Please respond to this letter v ia EDGAR within ten business days by providing the
requested information or by advising us when you will provide the requested response.

After reviewing any amendment to your filings and the information you provide in
response  to this comment, we may have additional comments.

Note 2. Significant Accounting Policies

Acquisition of Dubose Model Home Income Funds #3 LTD, Dubose Model Home Income Fund
#4 LTD and Dubose Model Income Fund #5 LTD and Dubose Model Home Investors Fund
#113 (“MH Income Funds”), page F -11

1. We have reviewed your response to comment 5.  It appears that you have estimated fair
value of the three funds purchased at approximately $2.9 million (net assets) and you
paid cash and stock that had a value of approxi mately $2 million.  Tell us how you were
able to purchase these funds below fair market value.  For reference see ASC 805 -30-50-
1(f)(2).

2. In your response to comment 5 you note that the Company is raising equity capital
through shares of common stock at $1 0 per share.  Please tell us how many shares of
stock have been sold at $10.  We may have further comment.

Mr. Kenneth W. Elsberry
NetREIT, Inc.
August 23, 2012
Page 2

 3. Please clarify to us how you determined that the transactions were with unrelated parties
given that Mr. Dubose is now a member of your board of directors.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require. Sinc e the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

You may contact William Demarest, Staff Accountant, at (202) 551 -3432  or me at (202)
551-3486 with any questions.

        Sincerely,

        /s/ Daniel L. Gordon

        Daniel L. Gordon
        Branch Chief

CORRESP
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    responsetoletterdated7272012.htm

The Contrarian Real Estate Investment Trust

August 9, 2012

United States Securities and Exchange Commission

Washington, D.C.  20549

Via Edgar

Attn:       Mr. Daniel L. Gordon, Accounting Branch Chief

Mr. William Demarest, Staff Accountant

Re:           NetREIT, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2011

Filed March 28, 2012

File No. 0-53673

Gentlemen:

Registrant requests the Accounting Staff's comments and guidance regarding Registrant’s responses below to the comments in the Staff’s letter of July 27, 2012 regarding the above-referenced filing on Form 10-K.  Registrant's responses below are presented in the same numbers as the Staff’s comments in that letter.

Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

1.

The Company will add a disclosure regarding capitalization policies to both our critical and significant accounting policies. However, it should be noted that our expenditures for other than acquisitions are in the form of tenant improvements which generally occur over a very short time frame of a month or less. Substantially all of our acquisitions have been of seasoned properties generally with high occupancy at the time acquired. We have not had any long term construction projects that would result in the capitalization of costs such as interest, real estate taxes or other costs other than the direct costs of the contractor responsible for the small scale tenant improvements.

Liquidity and Capital Resources

Overview, page 67

2.

Since we closed our capital raising activities through our private placement in December 2011, we have been seeking resources to acquire properties through the financing of unencumbered properties. In this discussion we were attempting to disclose how much borrowing capacity we may have through the use of the unencumbered properties. At the time of filing, we did not have any existing agreements with lenders to fund mortgages at our option. We will make this fact clear in future filings.

1

Consolidated Statements of Cash Flows, Page F-6

3.

In our first quarter filing we added capital expenditures to the description under the caption real estate acquisitions and improvements. Our acquisitions have been disclosed as a part of our real estate assets footnote and our improvements are also separately disclosed in the segment information footnote. However, we will break out these two line item separately in the statement of cash flows in future filings.

Note 1. Organization, page F-7

4.

The Company is a limited partner  in eight partnerships that purchase and leaseback model homes from developers. In considering the consolidation question, the Company first evaluated if these partnerships could  be Variable Interest Entities (“VIEs”) primarily under item one of the definition that follows:

A VIE is an entity meeting one of the following three criteria as elaborated in FASB ASC 810-10 [formerly FIN 46 (Revised)]:

1.

The total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders.

2.

As a group, the equity-at-risk holders lack one of the three following characteristics:

A.

The power to direct the activities of the entity that most significantly impact the entity’s economic performance.

B.

The obligation to absorb the expected losses of the legal entity.

C.

The right to receive the expected residual returns of the legal entity.

3.

The equity investors as a group (a) do not absorb losses or receive residual returns proportionate to their voting rights or (b) the legal entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

We determined that these entities are likely VIEs because they do not have the ability to finance their activities without additional subordinated financial support provided by either the Company or the former general partner, a role subsequently assumed by NetREIT, in the form of guarantees on the mortgage notes payable among other acts.

Also, beyond the VIE consideration, we believe we have voting control with our direct and indirect ownership interests ranging from a low of 65% to a high of approximately 85% and direct the significant activities of these limited partnerships through NetREIT, the parent Company.

We will expand our disclosures in future filings to make it more clear that these entities are considered VIEs and our basis for consolidating them.

2

Note 2. Significant Accounting Policies

Acquisition of Dubose Model Home Income Funds #3 LTD, Dubose Model Home Income Fund #4 LTD, Dubose Model Home Income Fund #5 LTD and Dubose Model Home Investors Fund #113 (“MH Funds”), page F-11

5.

Purchase price allocation of the Model Home Income funds (“Income Funds”) was determined in accordance with ASC 805-20-30-1 including valuing the noncontrolling interests.

The fair value of the individual real estate assets acquired was estimated based on third party independent appraisals which resulted in aggregate net markdown of approximately $158,000 from their carrying value at November 30, 2010, the date the Company closed the tender, or the acquisition date. (Adjustment 1)

The Company also estimated the fair value of the mortgage notes payable for a mark-to-market and determined that at acquisition date the weighted average interest rate on the mortgage portfolio in the Income Funds was 5.61% and the Company had closed a transaction with the same lender on October 29, 2010 at 5.75%. Using a discount period on these loans of twelve to eighteen months (amount of time assumed that the loans would remain outstanding) resulted in an immaterial difference between the carrying value and the estimated fair value and accordingly, an adjustment was deemed unnecessary.

The only other assets or liabilities with a possible market adjustment was the income funds’ investments in two limited partnerships. The limited partnerships balance sheets consisted of investments in real estate and mortgage notes payable related to these investments. These balance sheet items were considered at or near enough to market values to make any adjustment unnecessary.

The next step taken by management was recording the Company’s investment and removing the selling partners’ investment accounts with the offsetting entry to what we temporarily referred to as an unallocated asset account. (Adjustment 2)

After completing this step, the remaining partners’ investments were re-valued to equal the proportionate share of equity value held by the Company and the other partners. For example, Income Fund #3 had net equity of $1,240,000 and NetREIT’s 74% share was approximately $874,000. Equity at 100% should have been $1,188,000 resulting in a valuation adjustment of approximately $52,000. This was calculated for all three Income Funds. (Adjustment 3)

After completing the valuation adjustments, the unallocated asset accounts had a combined negative value, or negative goodwill, of approximately $1,227,000. In accordance with ASC 805-30-25-2, the negative goodwill was written down to zero giving rise to the Bargain Purchase Gain.  Approximately $872,000 of this adjustment was attributable to NetREIT and approximately $355,000 was attributable to noncontrolling interests. (Adjustment 4)

The adjustments by entity and combined are as follows:

3

Dubose Model Income Fund #3

November 30,

Adjustments

2010

1

2

3

Combined

4

Adjusted

Real estate

Assets

$

 3,549,238

$

 (234,238)

$

 -

$

 -

$

 3,315,000

$

$

 3,315,000

Other assets

 1,037,604

 1,037,604

 1,037,604

Unallocated

Assets

 (512,602)

 (51,472)

 (564,074)

 564,074

 -

.

$

 4,586,842

$

 (234,238)

$

 (512,602)

$

 (51,472)

$

 3,788,530

$

 564,074

$

 4,352,604

Mortgage

Notes

$

 2,598,923

$

 -

$

 -

$

 -

$

 2,598,923

$

 -

$

 2,598,923

Other

Liabilities

 1,425

 1,425

 1,425

-

 2,600,348

-

 -

-

 -

-

 -

-

 2,600,348

-

 -

-

 2,600,348

Partners'

Equity

 1,986,494

 (234,238)

 (1,386,865)

 (51,472)

 313,919

 149,028

 462,947

NetREIT, Inc.

 874,263

 874,263

 415,046

 1,289,309

 1,986,494

 (234,238)

 (512,602)

 (51,472)

 1,188,182

 564,074

 1,752,256

$

 4,586,842

$

 (234,238)

$

 (512,602)

$

 (51,472)

$

 3,788,530

$

 564,074

$

 4,352,604

4

Dubose Model Income Fund #4

November 30,

Adjustments

2010

1

2

3

Combined

4

Adjusted

Real estate

Assets

$

 2,618,157

$

 139,843

$

 -

$

 -

$

 2,758,000

$

$

 2,758,000

Other assets

 815,631

 815,631

 815,631

Unallocated

Assets

 (813,684)

 421,180

 (392,504)

 392,504

 -

.

$

 3,433,788

$

 139,843

$

 (813,684)

$

 421,180

$

 3,181,127

$

 392,504

$

 3,573,631

Mortgage

Notes

$

 1,997,925

$

 -

$

 -

$

 -

$

 1,997,925

$

 -

$

 1,997,925

Other

-

 1,997,925

-

 -

-

 -

-

 -

-

 1,997,925

-

 -

-

 1,997,925

Partners'

Equity

 1,435,863

 139,843

 (1,648,078)

 421,180

 348,808

 115,710

 464,518

NetREIT, Inc.

 834,394

 834,394

 276,794

 1,111,188

 1,435,863

 139,843

 (813,684)

 421,180

 1,183,202

 392,504

 1,575,706

$

 3,433,788

$

 139,843

$

 (813,684)

$

 421,180

$

 3,181,127

$

 392,504

$

 3,573,631

5

Dubose Model Income Fund #5

November 30,

Adjustments

2010

1

2

3

Combined

4

Adjusted

Real estate

Assets

$

 3,530,801

$

 (63,801)

$

 -

$

 -

$

 3,467,000

$

$

 3,467,000

Other assets

 122,206

 122,206

 122,206

Unallocated

Assets

 -

 (600,602)

 329,864

 (270,738)

 270,738

 -

.

$

 3,653,007

$

 (63,801)

$

 (600,602)

$

 329,864

$

 3,318,468

$

 270,738

$

 3,589,206

Mortgage

Notes

$

 2,842,287

$

 -

$

 -

$

 -

$

 2,842,287

$

 -

$

 2,842,287

Other

-

 2,842,287

-

 -

-

 -

-

 -

-

 2,842,287

-

 -

-

 2,842,287

Partners'

Equity

 810,720

 (63,801)

 (917,738)

 329,864

 159,045

 90,426

 249,471

NetREIT, Inc.

 317,136

 317,136

 180,312

 497,448

 810,720

 (63,801)

 (600,602)

 329,864

 476,181

 270,738

 746,919

$

 3,653,007

$

 (63,801)

$

 (600,602)

$

 329,864

$

 3,318,468

$

 270,738

$

 3,589,206

6

Combined

November 30,

Adjustments

2010

1

2

3

Combined

4

Adjusted

Real estate

Assets

$

 9,698,196

$

 (158,196)

$

 -

$

 -

$

 9,540,000

$

 -

$

 9,540,000

Other assets

 1,975,441

 -

 -

 -

 1,975,441

 -

 1,975,441

Unallocated

Assets

 -

 -

 (1,926,888)

 699,572

 (1,227,316)

(A)

 1,227,316

 -

$

 11,673,637

$

 (158,196)

$

 (1,926,888)

$

 699,572

$

 10,288,125

$

 1,227,316

$

 11,515,441

Mortgage

Notes

$

 7,439,135

$

 -

$

 -

$

 -

$

 7,439,135

$

 -

$

 7,439,135

Other

Liabilities

 1,425

 -

 -

 -

 1,425

 -

 1,425

-

 7,440,560

-

 -

-

 -

-

 -

-

 7,440,560

-

 -

-

 7,440,560

Partners'

Equity

 4,233,077

 (158,196)

 (3,952,681)

 699,572

 821,772

 355,164

 1,176,936

NetREIT, Inc.

 -

 -

 2,025,793

 -

 2,025,793

(B)

 872,152

 2,897,945

 4,233,077

 (158,196)

 (1,926,888)

 699,572

 2,847,565

 1,227,316

 4,074,881

$

 11,673,637

$

 (158,196)

$

 (1,926,888)

$

 699,572

$

 10,288,125

$

 1,227,316

$

 11,515,441

          (A)

“Negative Goodwill.”

          (B)

Bargain purchase gain attributable to the controlling interest (NetREIT, Inc.).

7

The stock portion of the value ($10.00 per share) was determined based on language in the tender offer documents distributed to the partners for their consideration. Below is an excerpt from one of the tender offer documents.

“The Purchaser is offering to pay (i) XXXX.xx per Unit for each Unit that you tender for Shares (such payment to be in the form of Shares with a fair market value of $10.00 per Share as of the date of this offer to purchase), and (ii) $XXXX.xx per Unit for each Unit that you tender for Cash. Note, however, that if you are not an “accredited investor”, you will only be entitled to receive cash for your Units.”

At the time of the tender offers, the Company was also raising equity capital through sales of its common stock at $10 per share as well.

These transactions were with parties considered to be unrelated to NetREIT or any of its VIEs or other affiliates.

The Company intends to incorporate Staff comments on a prospective basis and, at this time, does not intend to amend previously filed reports as a result of the Staff comments received and the responses thereto.

The registrant acknowledges the following:

·

the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·

staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·

The Company may not assert staff comments as a defense in any legal proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If, after review of this letter and the amended filings, you have additional comments or questions, please contact the undersigned at your convenience.

Very truly yours,

/s/ Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

8

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

July 27 , 2012

Via e -mail
Mr. Kenneth W. Elsberry
Chief Financial  Officer
NetREIT, Inc.
1282 Pacific Oaks Place
Escondido, CA 92029

 RE: NetREIT, Inc.
Form 10 -K for the Fiscal Year Ended December 31, 20 11
  Filed March  28, 2012
  File No. 0-53673

Dear Mr. Elsberry :

We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please te ll us why in your response.

After reviewing any amendment to your filing and the  information  you provide in
response to these comments, we may have  additional comments.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Critical Accounting Policies, page 54
1. In future filings, please include a critical accounting policy and a significant accounting
policy that clearly describes your cap italization policy as it relates to capital expenditures
and tenant improvement costs including interest, salaries and G&A, real estate taxes and
any other significant amounts that are capitalized during the construction phase.   As part
of this critical ac counting policy and significant accounting policy you should discuss the
periods of capitalization including a discussion of when the capitalization period ends.

Mr. Kenneth W. Elsberry
NetREIT, Inc.
July 27, 2012
Page 2

 Liquidity and Capital Resources

Overview, page 67
2. We note your disclosure that you have an  estimated borrowing capacity of $20 million
from potential mortgages on unencumbered properties.  Please clarify whether you have
existing agreements with lenders to fund such mortgages at your option.

Consolidated Statements of Cash Flows, page F -6
3. In future filings please present separate line items for acquisitions of real estate and
capital expenditures for existing properties.

Note 1. Organization, page F -7
4. We note that you hold limited partner interests in a number of limited partnerships, which
you consolidate.  Please clarify to us how you evaluated your rights for each such
partnership and determined that the presumption of control by the general partner(s) is
overcome.  Refer to ASU 810 -20.

Note 2. Significant Accounting Policies

Acquisition o f Dubose Model Home Income Funds #3 LTD, Dubose Model Home Income Fund
#4 LTD and Dubose Model Income Fund #5 LTD and Dubose Model Home Investors Fund
#113 (“MH Income Funds”), page F -11
5. We note your disclosure which indicates that you have recognized a ga in of
approximately $872,000 related to the acquisition of significant interests in MH Income
Funds #3, #4, and #5 during 2010. Please provide us with the purchase price allocation
for each fund and how you reached the conclusion that gain recognition on t he
acquisition was appropriate. Specifically tell us how the assets acquired and liabilities
assumed were valued.  Also tell us how the stock portion of the consideration was valued.
Cite your references to GAAP. Also, advise us if the transaction was with  related parties.

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing inclu des the  information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosure s they have made.

 In responding to our commen ts, please provide a written  statement from the company
acknowledging that

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

Mr. Kenneth W. Elsberry
NetREIT, Inc.
July 27, 2012
Page 3

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal secur ities laws of the United States.

You may contact William Demarest, Staff Accountant, at (202) 551 -3432 or me at (202)
551-3486 with any questions .

        Sincerely,

        /s/ Daniel L. Gordon

        Daniel L. Gordon
        Branch Chief

CORRESP
1
filename1.htm

Correspondence

    May 1, 2009

    Via Email

dcaoletters@sec.gov

Office of Chief Accountant

Division of Corporate Finance

U.S. Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

Attn:    Ms. Louise Dorsey

                  Re:

    NetREIT (the “Company”)

Form 10

Filed May 6, 2008

CIK: 000108065

File No. 001-39049

Ladies and Gentlemen:

By this letter, the Company requests waiver from requirements of Rule 8-06 of Regulation S-X
regarding the filing of financial statements and information for the six properties the Company
acquired prior to the date the Company was required to register with the SEC as a reporting
company, December 31, 2007, and the filing of its Form 10 on May 6, 2008. Specifically, the Company
requests with respect to each property a waiver of the audited income statements required by Rule
8-06(a), the statement required by Rule 8-06(b) and the table required by Rule 8-06(c), together
hereafter referred to as the “Rule 8-06 financial statements.” In lieu of the Rule 8-06 financial
statements, the Company will file, as a part of its next amendment to its Form 10 (the “Form 10”),
audited financial statements for the years ended December 31, 2008 and 2007 that incorporates the
financial information for each of these acquisitions from the date of acquisition.

Factual Background:

Havana/Parker Complex was the only significant property the Company acquired in 2006. In 2007,
the Company acquired five properties: Garden Gateway Plaza, World Plaza, Regatta Square, Sparky’s
Palm Self-Storage and Sparky’s Joshua Self-Storage. Because of the startup nature of the Company’s
business, each of the five exceeded 10% of the Company’s total assets at the end of 2006, the
Company’s prior fiscal year.

    Percent of Total

    Assets at Beginning

    Percent of Total

    Cost of Acquisition

    of Year Properties

    Assets at

    Property

    Date Acquired

    (in millions)

    were Acquired

    December 31, 2007

    Havana/Parker Complex

    June 2006

    $
    5.829

    95.0
    %

    N/A

    Garden Gateway Plaza

    March 2007

    15.123

    90.0
    %

    28.5
    %

    World Plaza

    September 2007

    7.651

    45.5
    %

    14.4
    %

    Regatta Square

    October 2007

    2.180

    13.0
    %

    4.1
    %

    Sparky’s Palm Self-Storage

    November 2007

    4.849

    28.8
    %

    9.1
    %

    Sparky’s Joshua Self-Storage

    December 2007

    8.007

    47.6
    %

    15.1
    %

The Company acquired most of these properties from a financially challenged seller for what
the Company believes was an advantageous price and on advantageous terms. In each of these
transactions, the seller did not provide the Company with historical financial statements or
accounting records sufficient to meet the requirements of Rule 8-06.

Property Specific Basis for Respective Waiver Request

Set forth below is the basis for the Company’s request for a waiver with respect to each
property.

Havana/Parker Complex: The Company has been unable to obtain books and records and/or
historical financial statements and any supporting documents from the seller. When the Company
acquired the property, it was 75% leased under short-term leases to facilitate a higher selling
price in the short term. At the time of purchase, the property was in a transitional mode with the
seller operating the property with the intent of converting the office buildings to individual
condominiums and selling the property piecemeal. This effort was unsuccessful. Unlike the seller,
the Company acquired the property to renovate it and to operate it as a rental property. Therefore
most of the leases and tenants were not representative of the Company’s plans for use of the
property. Thus, the required historical financial statements would not be a relevant basis on which
to evaluate the property’s future performance.

Garden Gateway Plaza: Books and records of the seller and historical financial
statements have not been made available to the Company nor provided with the purchase of the
property. Approximately 50% of the square footage of the property had been totally renovated by
the Seller in 2004 and was in a rent up stage. At the time of the acquisition 42% of the total
square footage was leased during the latter part of 2006. In addition, 15% of the total square
footage was vacant. The Company acquired the property based on the existing rent roll at the
acquisition date and on the prospective leases presented by the Seller as opposed to the historical
financial performance of the previous two years.

World Plaza: Seller’s financial books and records were not properly maintained and
appropriate documentation that would facilitate an audit is not available. Our acquisition and
purchase price paid was based on the tenants in place at the time of acquisition as well as the condition of
the property.

Regatta Square: The Company cannot obtain historical income statements for the prior
fiscal year, because the seller had only owned the property beginning March 2006, did not have
access to or obtain prior historical financial statements and financial statements or documents to
support the financial statements are unavailable.

Sparky’s Palm Self-Storage: The seller has been completely uncooperative since closing
and will not provide financial records or documentation necessary to obtain audited financial
statements.

Sparky’s Joshua Self-Storage: The seller did not maintain financial books and records.
The Company learned that the seller sold the property because she did not have the expertise or
financial means to maintain and operate the property. The seller’s real estate broker prepared an
income statement from bank statements and daily reports, but advised the Company that there were no
records. The broker further represented that the statements were prepared using significant
assumptions. The property was built in 2004 and 2005. Our acquisition price was based on a low
purchase price in relation to the construction costs, good property condition and the prospects of
achieving profitable financial results on a prospective basis.

Common Basis for Waiver Requests

The following sets forth the Company’s arguments why the Office of the Chief Accountant should
grant the Company relief from providing the financial statements and information required by Rule
8-06 with respect to the subject properties.

Inability to obtain financial books or records necessary to prepare the Rule 8-06
financial statements. At the time the Company was entering into the purchase and sale
agreements for the purchase of these properties, the Company was not a reporting company and did
not obtain any contractual rights to obtain the records necessary to prepare the Rule 8-06
financial statements. Further, the Company did not anticipate it would meet the 1934 Act
registration requirements by the end of 2007. The Company now contractually requires sellers to
provide these records.

The cost to prepare the Rule 8-06 financial statements is prohibitive. The Company
believes that the costs to perform these audits at the time of acquisition were not justified,
given lack of financial statements and supporting documentation available at the time these
acquisitions were completed. The Company further believes that any benefits derived as a result of
obtaining audits and preparing and filing pro forma financial statements are minimal at best.

The Rule 8-06 financial statements are more than two years old and are of no use to
current or past investors in the Company. The historical performance of the properties as
described above are not indicative of results expected or achieved by the Company post acquisition.

We will contact your office shortly for the purpose of discussing any questions you may have
regarding this request. In the interim, please let us know if your office needs any additional
information.

Very truly yours,

s/ Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

JKH/

    cc:

    Ms. Jaime John, Staff Accountant

Ms. Cicely Lamothe, Accounting Branch Chief

Ms. Kristina Aberg, Attorney-Advisor

Mr. Tom Kluck, Legal Branch Chief

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE
Mail Stop 3010

        August 20, 2009
 Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks place Escondido, CA 92029
Re: NetREIT
 Preliminary Proxy Statement on Schedule 14A
Filed July 15, 2009
 File No. 000-53673

Dear Mr. Heilbron:
   We have completed our review of your  Preliminary Proxy Statement on Schedule
14A and have no further comments at this time.           S i n c e r e l y ,             T o m  K l u c k          B r a n c h  C h i e f

CORRESP
1
filename1.htm

Correspondence

July 30, 2009

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 3010

Washington, D.C. 20549

    Attn:

    Mr. Tom Kluck, Legal Branch Chief

    Ms. Erin Martin, Attorney-Advisor

    Re:

    NetREIT

    Preliminary Proxy Statement on Schedule 14A

    Filed July 15, 2009

    File No. 000-53673

Ladies and Gentlemen:

NetREIT’s (“Company”) responses below are responding to the comments in the Staff’s letter of July
28, 2009 regarding the above-referenced Preliminary Proxy Statement filed on July 15, 2009.

The Company’s responses below are presented in the same numbers as the Staff’s comments in that
letter. Additions are shown in bold text, and deletions are shown in strikethrough.

General

Please disclose the vote required for approval or election of the proposal presented in your
preliminary proxy statement.

    1.

    The Company has amended the section titled “VOTING PROCEDURES” with the additional
information.

The presence of the holders of a majority of outstanding shares entitled to vote at the
Annual Meeting, present in person or represented by proxy, is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. Shares that abstain from
voting on any proposal and “broker non-votes” are counted as present and entitled to vote
for purposes of determining a quorum. A “broker non-vote” occurs when a bank, broker, or
other holder of record holding shares for a beneficial owner does not vote because that
holder does not have discretionary voting power and has not received voting instructions
from the beneficial owner. Each outstanding share entitles the holder to one vote on all
matters presented to shareholders for a vote with the exception that shareholders have
cumulative voting rights with respect to the election of the Company’s Board of Directors.

Provided that a quorum exists, the eight nominees for Director who receive the most
votes will be elected. The provisions of the proposed revised Bylaws may only be amended or
repealed by the affirmative vote of a majority of the outstanding shares entitled to vote,
or 4,071,279 shares.

    2.

    Proposal 2, page 5

C. Proposal to Amend the Company’s Bylaws to require 66 2/3 Majority...page 6

    The SEC correctly noted that the proposed language was contradictory to Company’s stated
intent. It was the Company’s intent to conform the minimum number of Directors to match the
minimum number of five (5) and in conjunction with California law, require a super-majority
in order to reduce that minimum number of Directors to a number less than five (5). As
such, the language proposed for the amended bylaws has been revised as follows.

    Background of Proposal

    Article IV, Section 2 of the Bylaws currently states that an amendment reducing the fixed
number or the minimum directors to a number less than four (4) cannot be adopted if the
votes cast against its adoption at a meeting, or the shares not consenting in the case of an
action by written consent, are equal to more than sixteen and two-thirds percent (16-2/3) of
the outstanding shares entitled to vote thereon.

    The Board has reviewed the current Bylaws and California law and, in conjunction with
Proposal 2A, the Board recommends amending Article IV to state that a bylaw or amendment of
the articles reducing the fixed number or the minimum number of Directors to a number less
than five (5) cannot be adopted if the votes cast against its adoption at a meeting or the
 shares not consenting in the case of action by written consent are equal to more than 16
2/3% (sixteen and two thirds percent) of the outstanding shares entitled to vote.

    The pertinent section of California law, as written, states that after the issuance of
 shares, a bylaw or amendment of the articles reducing the fixed number or the minimum number
of directors to a number less than five cannot be adopted if the votes cast against its
adoption at a meeting or the shares not consenting in the case of action by written consent
are equal to more than 162/3 percent of the outstanding shares entitled to vote
[emphasis added].

    In order to maintain the integrity and consistency of the Directors and the Board and in
compliance with California law and in the best interest of the Shareholders, the Company
believes a super-majority vote of outstanding shares should be required to reduce the number
of Directors below the minimum number of less than five (5). The Company further believes
the threshold for the minimum number of Directors requiring the super majority vote should
equal the minimum number of five (5) Directors proposed in 2A. While the number written in
the California law is ambiguous and subject to potentially more than one mathematical
interpretation, a super-majority of sixty-six and two-thirds (66 & 2/3) would exceed any
minimum percentage that could be interpreted as required by California law.

Article IV Section 2 Number and Qualification of Directors

    New Bylaws

    Old Bylaws

    The indefinite number of Directors
may be changed, or a definite number
fixed without provision for an
indefinite number, but a duly
adopted amendment to the Articles of
Incorporation or by an amendment to
this Bylaw duly adopted by the vote
or written consent of holders of a
majority of outstanding shares
entitled to vote; provided however
than an amendment reducing the fixed
number or the minimum Directors to a
number less than five (5) cannot be
adopted if the votes cast against
its adoption at a meeting, or the
shares not consenting in the case of
an action by written consent, are
equal to or more than sixteen and
two-thirds percent (16 2/3%) of the
outstanding shares entitled to vote
thereon. No amendment may change the
stated maximum number of authorized
Directors to a number greater than
two times the stated minimum number
minus one.

    The indefinite number of directors
may be changed, or a definite number
fixed without provision for an
indefinite number, but a duly
adopted amendment to the Articles of
Incorporation or by an amendment to
this Bylaw duly adopted by the vote
or written consent of holders of a
majority of outstanding shares
entitled to vote; provided however
than an amendment reducing the fixed
number or the minimum directors to a
number less than four (4) cannot be
adopted if the votes cast against
its adoption at a meeting, or the
shares not consenting in the case of
an action by written consent, are
equal to or more than sixteen and
two-thirds percent (16 2/3%) of the
outstanding shares entitled to vote
thereon. No amendment may change the
stated maximum number of authorized
directors to a number greater than
two times the stated minimum number
minus one.

E. Proposal to Amend Bylaws to allow additional company structures...Page 7

The SEC has requested the Company disclose the reasons for the proposal to allow the use of
additional investment structures and the removal of the eighteen month restriction. The Company has
clarified the reasons for the proposal in the language identified in bold below.

Background of Proposal

Since the inception of the Company, the number of investment structures currently in use and
available to REITs has grown tremendously. As such, the Board believes that adding the additional
as vehicles for real property ownership , while removing the eighteen month restriction, allows the
Company greater flexibility and the ability to compete with other REITs that currently invest in
these types of structures. Therefore the Board recommends the Shareholders approve this change.

This restriction is not required by any applicable law or governmental regulation. The Company
placed this restriction on equity investments, including the 18 month restriction, in the Bylaws
upon the initial private placement offering in response to the concerns of certain members of our
selling group that the Company might invest in equity securities of other real estate programs
instead of investing directly in real estate. REIT investment structures have since changed and
greatly expanded as a result of federal income tax law changes and industry practices. As a
result, the Board believes that this restriction is no longer necessary or in the best interest of
our shareholders. The Board further believes that providing for specified equity investments and
the deletion of the 18 month restriction will allow our Company greater flexibility and enable it
to better compete with other REITs which take advantage of these types of investment structures.
The Board recommends the Shareholders approve this change.

The Company acknowledges the following:

    •

    The Company is responsible for the adequacy and accuracy of the disclosure in the
filing;

    •

    Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

    •

    The Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

If, after review of this letter and the amended filings, you have additional comments or questions,
please contact Kathryn Richman at (760) 471-8536 at your convenience.

Very truly yours,

/s/ Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

    cc:

    Bruce J. Rushall, Esq.

CORRESP
1
filename1.htm

Correspondence

July 30, 2009

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

    Attn:

    Mr. Tom Kluck, Legal Branch Chief

    Ms. Cicely Lomothe, Accounting Branch Chief

    Ms. Jaime John, Staff Accountant

    Ms. Erin Martin, Attorney-Advisor

    Re:

    NetREIT

Amendment No. 2 to Registration Statement on Form 10

Filed June 26, 2009 (originally filed May 6, 2008, File No. 001-34049)

File No. 000-53673

Amendment No. 1 to Form 10-K for Fiscal Year Ended December 31, 2008

Filed June 26, 2009 (Originally Filed May 29, 2009)

Ladies and Gentlemen:

Registrant’s responses below are responding to the comments in the Staff’s letter of July 14, 2009 regarding the
above-referenced Form 10 and Form 10-K filings and the amended Form 10 and Form 10-K filed on June 26, 2009.

Registrant’s responses below are presented in the same numbers as the Staff’s comments in that letter.

Form 10 and Form 10-K

Item 1A Risk Factors

Our risks of losing property through a mortgage loan default ....page 14

    1.

    On July 29, 2009, Registrant has amended its filings on
Form 10 (pages 35 and 44) and Form 10-K (pages 23
and 51) to revised disclosure regarding the status of the Garden Gateway Plaza loan. Following discussions
with the Staff, Registrant determined not to revise its risk factor disclosure regarding the status of this
loan.

The changes made to both documents are as follows:

Indebtedness

Mortgage Debt

The following table presents
information as of December 31, 2008 on indebtedness encumbering our properties, excluding
advances under any credit facility we may obtain. The Company is
current in its payments on each of these loans.

    Principal

    Current

    Balance at

    Property

    Amount

    Interest Rate

    Maturity Date

    Maturity

    Havana/Parker Complex

    $
    3,459,374

    6.51
    %

    July 2016

    $
    2,844,980

    Garden Gateway Plaza (1)

    $
    10,670,864

    6.08
    %

    April 2014

    $
    9,387,287

    World Plaza

    $
    3,522,227

    5.31
    %

    February 2012

    $
    3,074,416

    Executive Office Park (2)

    $
    20,000

    6.25
    %

    December 2009

    Revolving line

    Waterman Plaza

    $
    3,834,492

    6.50
    %

    September 2015

    $
    3,304,952

    (1)

    Mortgage is cross-collateralized by all three buildings comprising
the Garden Gateway Plaza. Mortgage has release clause for each
building.

    (2)

    Borrowed under the Mile High Credit Facility, a $6,597,500 revolving
line of credit secured by Executive Office Park and Regatta Square.

Our sale
The Company is current in its payments on each of these loans. The deed
of
trust for the loan secured by Garden Gateway Plaza (the Garden Gateway Loan) contains
a 5.99%
covenant not to transfer an
interest in Garden Gateway Plaza resulted
the property. The lender may,
in our breach
its discretion, waive this restriction. We had advised the real estate broker
of our covenant not
intent
to transfer an interest in
thisthe property underat
the Garden Gateway Plaza loan documents
time we negotiated this sale.
We have requested
believed the lender would agree to our transfer and, based on
this belief, we entered the agreement to transfer the undivided
interest in the property. However, we did not receive
the lender’s consent and
written
waiver
of this restriction prior
to this
our transfer. Based on
We have contacted
the lender’s response thus far, we expect to resolve this
matter at a cost of less than $50,000
issue. Should we
If it does
not reach an agreement and
grant its waiver,
the lender accelerates
could claim our breach of this covenant and pursue one or more remedies, including
immediate payment of the entire
loan, we believe we have
balance. In the event that
the financial resources
lender enforces its rights
to pay call
the loan if we are required to do so. Please see Item 2 –
Financial Information – Management
as immediately due and payable that could materially affect
the Company’s
Discussion
ability to repay its obligations
under the revolving line of credit, such that the revolving line of
credit facility may also be considered in default
and Analysis Of Financial Condition
may give that lender similar enforcement rights to call its loan as immediately due
and Results Of Operations – Liquidity
payable. If the lender does not consent to a waiver, we believe we have the ability
and Capital Resources – Financing Activities for further discussion of
resources to cure
this matter
breach and / or financially meet our obligations to the
lenders under these loans.

1

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

At December 31, 2008, we had approximately $4.8 million in cash and cash equivalents compared to
$4.9 million at December 31, 2007. We expect to obtain additional mortgages collateralized by some
or all of our real property in the future. We anticipate to continue to raise additional capital
through the issuance of additional equity securities. We expect the funds from operations,
additional funding from mortgage notes payable and securities offerings will provide us with
sufficient capital to make additional investments and to fund our continuing operations for the
foreseeable future.

Investing Activities

Net cash used in investing activities was approximately $21.4 million in 2008 consisting primarily
of $23.0 million to purchase three properties and property improvements reduced by the proceeds
from seven sales of undivided interests in four properties resulting in cash proceeds received of
$3.9 million and a decrease of $1.7 million in deposits at a bankrupt institution. Net cash used in
investing activities during the year ended December 31, 2007 was approximately $34.8 million, which
consisted of the purchase of 5 properties and improvements totaling $38.4 million and investment in
mortgage receivables of $1.9 million offset by the proceeds from the sale of real estate of $6.0
million.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2008 was approximately
$20.6 million, which primarily consisted of $22.7 million net proceeds from issuance of common
stock, offset by dividend payments of $1.4 million and net pay down of mortgage notes payable of
$0.9 million. Net cash provided by financing activities for the year ended December 31, 2007 was
approximately $33.3 million, which primarily consisted of $19.1 million proceeds received from the
long-term financing of three of our properties and $15.6 million net proceeds from issuance of
common stock offset by $.2 million of principal repayments on mortgages note payables and dividend
payments of $1.1 million.

Our
saleThe Company is in default of a 5.99%
interest incovenant of its loan secured by
Garden Gateway Plaza resulted in our breachwith a balance
outstanding as of December 31, 2008 of our covenant
not to transfer an interest$10.7 million. The
Company is in this property under the Garden
Gateway Plaza loan documents. We soldprocess of requesting
a waiver of default from this undivided interest without
first receiving the lender’s consent or waiver. In
late June 2009, we submitted our written request
toIf the lender
forenforces its consent and waiver both
for this transfer and our proposed transfer ofright to call the loan, the
Company would most likely pay the entire
propertyloan down from available resources to a
newly formed limited partnership, for which welevel
that the lender would be sole general partner
andmore than likely renegotiate the terms on a more
favorable basis to the majority limited
partnerCompany. In its latest
responseIf this
effort is unsuccessful, the Company would attempt to
replace the loan with a loan from anotherlender has requested a waiver fee of one quarter of one percent
(approximately $27,000) and our reimbursement of its legal
expenses. WeIf we are
awaitingunable to find another lender, the
lender’s review ofCompany may be forced to
sell the property’s status and
its requested legal structure for its consent and waiver. Based
onrepay the loan or surrender the
lender’s response thus far, we
expectproperty to resolve this matter at a
cost of less than $50,000. We believe it is in the
lender’s best interests not to declare a default and
accelerate payment of this otherwise fully performing loanthrough
foreclosure proceedings. In the event we cannot reach
agreement andthat the lender does
accelerate payment ofenforces its
rights to call the loan, we believe we haveas immediately due and payable that could
materially affect the financial
resourcesCompany’s ability to
payrepay its obligations
under the loan. We could do so by using our cash on
handrevolving line of credit, additional
borrowings under our presentsuch that the revolving line
of
credit facility may also be considered in default
and ,may give that
lender similar enforcement rights to call its loan as
necessary, funds from additional financing secured by one or more
of our other unencumbered propertiesimmediately due
and payable.

2

The registrant acknowledges the following:

    •

    the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

    •

    staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from
taking any action with respect to the filing; and

    •

    The Company may not assert staff comments as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the United States.

If, after review of this letter and the amended filings, you have additional comments or questions, please contact the
undersigned at your convenience.

Very truly yours,

s/Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

    cc:

    Ms. Jaime John, Staff Accountant

Ms. Cicely Lamothe, Accounting Branch Chief

Ms. Kristina Aberg, Attorney-Advisor

Mr. Tom Kluck, Legal Branch Chief

2

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE
Mail Stop 3010
        July 28, 2009
 Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks place Escondido, CA 92029
Re: NetREIT
 Preliminary Proxy Statement on Schedule 14A
Filed July 15, 2009
 File No. 000-53673

Dear Mr. Heilbron:
 We have limited our review of your filing to those issues we have addressed in
our comments.   Where indicated, we think you should revise your document in response
to these comments.  If you disagree, we w ill consider your explanation as to why our
comment is inapplicable or a revision is unneces sary.  Please be as detailed as necessary
in your explanation.  In some of our comme nts, 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  requirements 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 free to call us at the telephone numbers listed at the end of this letter.
 General

 1. Please disclose the vote required for appr oval or election of the proposals presented
in your preliminary proxy statement.  Please refer to Item 21 of Schedule 14A for guidance.

Jack Heilbron
NetREIT July 28, 2009 Page 2  Proposal 2, page 5

 C. Proposal to Amend the Company’s Bylaws to Require 66 2/3 Majo rity . . . , page 6

2. We note your statement on page 7 that you believe “a super majority vote of
outstanding shares should be required to reduce the number of Directors below the
minimum number of less than five (5).”  However, in the proposed language, you
state that an amendment reducing the fixed number of directors “cannot be adopted if
the votes cast against its adoption at a meeting . . . are equal to or more than sixty-six
and two-thirds percent . . . .”   The propos ed language appears to read that a super
majority is needed to vote against the amendment in order to prevent it from passing,
which is contradictory to your stated intent.  Please  revise your disclosure
accordingly.

E. Proposal to Amend Bylaws to allow a dditional company structures . . . ,page 7
3. Please disclose the reasons for your pr oposal to allow the use of additional
investment structures and the remova l of the eighteen month restriction.

* * * *

 As appropriate, please amend your filing and respond to these comments within
10 business days or tell us when you will provid e us with a response.  You may wish to
provide us with marked copies of the amendm ent to expedite our review.  Please furnish
a cover letter with your amendment that keys your responses to our comments and
provides any requested information.  Detailed co ver letters greatly faci litate our review.
Please understand that we may have addi tional comments after reviewing your
amendment and responses to our comments.    We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
  In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
‚ the company is responsible for the adequacy and accuracy of the disclosure in
the filing;

Jack Heilbron
NetREIT July 28, 2009 Page 3
‚ staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking a ny action with respect to the filing;
and
‚ the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any pers on under the federal s ecurities laws of
the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.     Please contact Erin Martin, Attorney -Advisor, at 202-551-3391 or me at 202-551-
3323 with any questions.
Sincerely,

Tom Kluck
Branch Chief

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE
Mail Stop 3010

        July 14, 2009
 Mr. Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900
Re: NetREIT
Amendment No. 1 to Registra tion Statement on Form 10
Filed June 26, 2009 (originally fi led May 6, 2008, File No. 001-34049)
 File No. 000-53673  Amendment No. 1 to Form 10-K for Fiscal Year Ended
December 31, 2008
 Filed June 16, 2009

Dear Mr. Heilbron:
We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to provi de 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  requirements 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 free to call us at  the telephone numbers listed at  the end of this letter.

Jack K. Heilbron
NetREIT July 14, 2009 Page 2  FORM 10

Item 1A. Risk Factors, page 5
“Our risks of losing proper ty through a mortgage loan default . . . ,” page 14
1. We note your response to comment 1 in our  letter dated June 15, 2009.  We do not
agree with your position that  risk factor disclosure re garding your Garden Gateway
Loan is not necessary or appropriate at th is time.  As disclosed in your response,
there is still uncertainty as to the outcome of your defau lt on this loan.  Therefore,
please include in this risk factor a di scussion of your default and the surrounding
uncertainty as to the final di sposition of your default.  If  you continue to believe that
this disclosure is immaterial, please expl ain to us how the default is not material.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.    We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
  In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
‚ the company is responsible for the adequacy and accuracy of the disclosure in
the filing;
‚ staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking a ny action with respect to the filing;
and
‚ the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any pers on under the federal s ecurities laws of
the United States.

Jack K. Heilbron
NetREIT July 14, 2009 Page 3
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
 You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Erin Martin, Attorney-Advisor, at (202) 551-3391 or me at (202) 551-3233 with any other questions.

Sincerely,
   Tom Kluck  Legal Branch Chief
cc: Bruce J. Rushall, Esq.  Rushall & McGeever  Via facsimile (760) 438-3026

CORRESP
1
filename1.htm

Correspondence

The Contrarian Real Estate Investment Trust

June 26, 2009

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

    Attn:

    Mr. Tom Kluck, Legal Branch Chief

Ms. Cicely Lomothe, Accounting Branch Chief

Ms. Jaime John, Staff Accountant

Ms. Erin Martin, Attorney-Advisor

    Re:

    NetREIT

Registration Statement on Form 10

Filed May 15, 2009 (originally filed May 6, 2008, File No. 001-34049)

File No. 000-53673

Form 10-K for Fiscal Year Ended December 31, 2008

Filed May 29, 2009

Ladies and Gentlemen:

Registrant’s responses below are responding to the comments in the Staff’s letter of June 15, 2009
regarding the above-referenced Form 10 and Form 10-K filings and the amended Form 10 and Form 10-K
filed on June 26, 2009.

Registrant’s responses below are presented in the same numbers as the Staff’s comments in that
letter.

Form 10

Item 1A Risk Factors

Our risks of losing property through a mortgage loan default ...page 14

1. Registrant has commenced discussions with the lender of the Garden Gateway Loan to resolve the
issues disclosed in the filings on Form 10 and Form 10-K. The lender has indicated that it
considers our transfer of the undivided interest in the property to be a covenant breach, but has
not yet declared or acted on its right to declare the loan in default under the loan documents. The
lender has initially requested a $50,000 fee for its consent to a waiver of default, provided the
necessary documentation can be agreed upon. Registrant is discussing with the lender the amount of
the fee and its required form of documentation. Registrant believes that it will reach agreement
with the lender and that the fees and other costs for resolving this issue will not be material in
amount. Accordingly, Registrant does not believe a specific risk factor regarding this matter is
necessary or appropriate at this time.

1282 Pacific Oaks Place, Escondido, CA 92029 · Phone 866-781-7721 · Fax 760-471-0399 · info@netreit.com

The Contrarian Real Estate Investment Trust

Item 3 Properties

Average Effective Annual Rent Per Square Foot for Last 5 Years, page 41

2. The differences between the two filings was the result of reviewing amounts on the tables and
noting some minor mistakes made in certain calculations that affected Casa Grande Apts.,
Havana/Parker Complex, Garden Gateway and Regatta Square. The amounts reported in the Form 10-K
reflect the correct amounts.

The amended filing on Form 10, filed June 26, 2009, was revised to conform to the Form 10-K.

Item 6 Executive Compensation

Compensation of Company’s Directors, Page 60

3. The registrant noted errors made to the Director’s Compensation table between the time of the
two filings. The amended filing on Form 10, filed June 26, 2009, was revised to conform to the Form
10-K. The amounts reported in the Form 10-K reflect the correct amounts.

Item 13. Financial Statements and Supplementary Data, Page 72

Note 4 Real Estate Assets and Lease Intangibles, Page 90

4. The registrant is substantially complete with audited statements of revenues over certain
operating expenses and the unaudited pro forma financial statements with respect to Executive
Office Park, the only significant acquisition and required filing in 2008, and will have the amended filing on
Form 8-K filed shortly.

The one significant acquisition in 2009 was the Morena Office Center. Audit procedures for the
amended filing on Form 8-K commenced last week. We anticipate that this filing will also be
completed and filed shortly.

Note 5 Investment in Real Estate Ventures

5. The ownership of Garden Gateway is as tenants in common with the registrant owning 94% and one
other tenant in common owning 6%.

The same accounting issues were raised in the Staff letter of February 2, 2009 question 9 and were
addressed in our response letter dated March 6, 2009. Page 30 of the amended filing on Form 10,
filed June 26, 2009 was corrected to read that the limited partners and tenants in common also have
substantive participation rights to conform to other related disclosures.

Facts and circumstances particular to Garden Gateway follow:

Paragraph 3 of the Agreement Between Tenants in Common reads as follows:

Nature of Relationship Between Tenants The tenants shall each hold their respective
interests in the Property as tenants in common. The Tenants do not wish or intend by this
agreement to create a partnership or a joint venture, but merely to set forth the terms and
conditions upon which each of them shall hold their respective interests in the Property.

1282 Pacific Oaks Place, Escondido, CA 92029 · Phone 866-781-7721 · Fax 760-471-0399 · info@netreit.com

The Contrarian Real Estate Investment Trust

Paragraph 4 (C) reads as follows:

Acts Requiring Mutual Consent Mutual Consent shall be required to effect (i) any
Disposition of the Property (ii) any lease (iii) any loan (iv) any property management
agreement or amendment thereto, or (v) any expenditure, or series of expenditures for the
same purpose, for Operation of the Property in excess of ($20,000).

The agreement goes on to further state that if the parties cannot mutually agree on a course of
action on a proposal, there are certain directions to take that are the equivalent to mediation.
There are no provisions for the degree of ownership affecting any degree of control affecting the
decision.

EITF 04-5 paragraph 10 states that if the limited partners have substantive
participating rights, the presumption of control by the general partners would be
overcome and each of the general partners would account for its investment using the
equity method of accounting.

Registrant believes that under the provisions of paragraph 3 of the Agreement Between Tenants in
Common, the presumption of control has been overcome. The 6% owner has substantive participating
rights which provide for equal control of the Property. Because of these substantive rights, the
equity method of accounting for this tenant in common relationship is proper.

Note 6 Mortgages Receivable, page 94

6. The registrant obtained a third party independent appraisal in March 2009 supporting the
underlying value of the property securing the loan as well as supporting our statement that reads
in the footnote as follows:

“the Company does not anticipate incurring any losses with respect to these loans”

Further, the interest income accrual policy is disclosed in the Significant Accounting Policies
under “Revenue Recognition”. There have not been any cash receipts with respect to these loans and
the registrant anticipates that if there are any payments made on
these loans it will result in a total
payoff so we have not disclosed the treatment of how cash receipts are recorded.

Last, the registrant discloses the balances as of the end of each period presented and determined
that the disclosure of average recorded investment in the impaired loans and the related amount of
interest income was not material and, as such, was not disclosed.

Item 15. Financial Statements and Exhibits, Page 106

7. Employment agreements have been filed as exhibits with the amended filing on Form 10, filed June
26, 2009.

1282 Pacific Oaks Place, Escondido, CA 92029 · Phone 866-781-7721 · Fax 760-471-0399 · info@netreit.com

The Contrarian Real Estate Investment Trust

FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008

Item 4T. Controls and Procedures, Page 50-51

8. We note that the Staff finds the disclosure unclear. The registrant notes that at the end of
paragraph 3 there should have also been a reference to the quarter ended September 30, 2008.
However, the following paragraph specifically references the material weakness that existed as of
September 30, 2008.

The disclosure regarding this material weakness is provided in four other filings currently on
file. These include the Quarterly Report on Form 10-Q for the quarters ended March 31, 2009, 2008
and June 30, 2008 and the Annual Report on Form 10-K for the year ended December 31, 2008. The Form
10-K properly includes a reference to all three quarters in 2008. In addition, the registrant will
make the disclosure on two more filings including the Quarterly Reports on Form 10-Q for June 30,
2009 and September 30, 2009. The registrant respectfully requests it should not be held to file an
amended filing for the quarter ended September 30, 2008 for this one issue.

The amended filing on Form 10-K for the year ended December 31, 2008 included the following
conclusion regarding the effectiveness of the registrant’s disclosure controls and procedures:

As of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and our Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008

Item 5. Market Price for Registrant’s Common Equity..., page 31

9. The amended filing on Form 10-K for the year ended December 31, 2008, filed June 26, 2009,
included the information concerning the securities authorized for issuance under equity
compensation plans as required by Item 201(d) of Regulation S-K.

The registrant also noted certain outdated information within the
disclosures that were corrected.

Item 10. Directors, Executive Officers, and Corporate Governance, page 57

Committees of the Directors, page 59

10. The amended filing on Form 10-K, filed June 26, 2009, has been revised to include the
disclosure of the audit committee financial expert in accordance with Item 407(d)(5) of Regulation
S-K.

Certifications

11. The amended filing on Form 10-K, filed June 26, 2009, has been revised to include the reference
to internal control over financial reporting in the introductory language of paragraph 4.

The registrant acknowledges the following:

    •

    the Company is responsible for the adequacy and accuracy of the disclosure in the
filing;

1282 Pacific Oaks Place, Escondido, CA 92029 · Phone 866-781-7721 · Fax 760-471-0399 · info@netreit.com

The Contrarian Real Estate Investment Trust

    •

    staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing;

    •

    The Company may not assert staff comments as a defense in any legal proceeding initiated
by the Commission or any person under the federal securities laws of the United States.

If, after review of this letter and the amended filings, you have additional comments or questions,
please contact the undersigned at your convenience.

Very truly yours,

s/Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

1282 Pacific Oaks Place, Escondido, CA 92029 · Phone 866-781-7721 · Fax 760-471-0399 · info@netreit.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE
Mail Stop 3010

        June 15, 2009
 Mr. Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900
Re: NetREIT
Registration Statement on Form 10 Filed May 15, 2009 (originally filed May 6, 2008, File No. 001-34049)
 File No. 000-53673  Form 10-K for Fiscal Year Ended December 31, 2008  Filed May 29, 2009

Dear Mr. Heilbron:
We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to provi de 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  requirements 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 free to call us at  the telephone numbers listed at  the end of this letter.
FORM 10

 Item 1A. Risk Factors

 Our risks of losing proper ty through a mortgage loan default . . . , page 14

1. Please expand upon this risk factor to specifi cally discuss the default of the Garden
Gateway loan discussed on pa ges 35 and 44 of your filing.

Jack Heilbron
NetREIT June 15, 2009 Page 2  Item 3. Properties, page 39

Average Effective Annual Rent Per Squa re Foot for Last 5 Years, page 41
2. We note that some of the amounts listed in this table are different than the amounts
listed in your Form 10-K for the fiscal year ended December 31, 2008.  For example, in your Form 10, the average effective annual rent per square foot for the year ended
December 31, 2006 for your Havana/Parker property is $6.65, however, in your
Form 10-K, it is listed as $8.07.  Please  explain to us why these amounts are
different.

Item 6. Executive Compensation, page 58

 Compensation of Company’ s Directors, page 60

3. We note that the stock award compensation di sclosure in this section is different
from the stock award compensation disclosure  in your Form 10-K for the fiscal year
ended December 31, 2008.  For example, in your Form 10, the stock award for Mr. Bruce Staller was $35,000 in 2008 and $15,000 in  2007, whereas in your Form 10-K,
it discloses that Mr. Staller receive d as compensation $28,582 in 2008 and $5,250 in
2007 in the form of stock awards.  Furthermor e, we also note that in footnote (3) to
your director compensation table in your Form  10, it states that Mr. Staller and Mr.
Dubose received an additional 5,000 and 2,000 shares, respectively.  However, in
footnote (3) to your directors compensation table in your Form 10-K, it states that
they received an additional 500 and 200 shar es, respectively.  Please explain to us
why this disclosure differs between your Form 10 and Form 10-K.

Item 13. Financial Statements and Supplementing Data, page 72

 Note 4 – Real Estate Assets and Lease Intangibles, page 90

4. Please advise us how you plan to comply with the requirements in Rule 8-06 of
Regulation S-X for any material acq uisitions made during 2008 and 2009.

Note 5 – Investment in Real Estate Ventures
5. Given that you own 94% of the Garden Gate way Plaza joint venture, please describe
your consolidation analysis under SOP 78- 9, EITF 04-5 and ARB 51.  Advise us
what rights are held by the other partners  that overcome the presumption of control
given your 94% ownership interest.  In addi tion, it is unclear how protective rights,
as disclosed on page 30, would preclude  consolidation under EITF 04-5.

Jack Heilbron
NetREIT June 15, 2009 Page 3  Note 6 – Mortgages Receivable, page 94

6. We note the principal and interest due on your mortgage loans were not paid
according to the terms.  Please tell us your evaluation of SFAS 114 in determining
whether these loans were i ndividually impaired and if not, how you considered the
need for a general reserve to address potenti al credit losses inhe rent in your loan
portfolio under SFAS 5.  Also advise us  how you complied with the disclosure
requirements in paragraph 20 of SFAS 114.

Item 15. Financial Statements and Exhibits, page 106
7. We refer to your disclosure on page 59 th at you have employment agreements with
Messrs. Heilbron and Elsberry.  Please file these agreements  as exhibits to the Form
10 or tell us why you believe you are not required to file  the employment
agreements.  Refer to Item 601(b)(10) of Regulation S-K.

FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
 Item 4T – Controls a nd Procedures, page 50-51

8. We note your conclusion that your disclosu re controls and pr ocedures were not
effective as of December 31, 2007, March 31, 2008 and June 30, 2008.  However, your conclusion regarding the effectiveness of  disclosure controls  and procedures is
unclear as of September 30, 2008.  Similarl y we note that your Form 10-K for the
year ended December 31, 2008 did not in clude a conclusion regarding the
effectiveness of your disclosure controls and procedures.  Please tell us and amend
your filings to include your conclusion.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008

 Item 5. Market Price for Registrant ’s Common Equity . . . , page 31

9. Please include the securitie s authorized for issuance under equity compensation
plans table as required by Item 201(d) of Regulation S-K.

Item 10. Directors, Executive Officer s and Corporate Governance, page 57
 Committees of the Directors, page 59

10. Please disclose who is considered your  Audit Committee financial expert in
accordance with Item 407(d )(5) of Regulation S-K.

Jack Heilbron
NetREIT June 15, 2009 Page 4  Certifications

11. We note that your certifications  were not filed in the exac t form as outlined in Item
601(B)(31)(i) of Regulation S-K.  Some of  the discrepancies include omission of
introductory language referring to internal  control over financial reporting in
paragraph 4.  Please amend your annual report  to file certif ications in the exact form
as outlined in Item 601(B)(31) (i) of Regulation S-K.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.    We urge all persons who are responsi ble for the accuracy an d adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
  In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
‚ the company is responsible for the adequacy and accuracy of the disclosure in
the filing;
‚ staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking a ny action with respect to the filing;
and
‚ the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any pers on under the federal s ecurities laws of
the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

Jack Heilbron
NetREIT June 15, 2009 Page 5   You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Erin Martin, Attorney-Advisor, at (202) 551-3391 or me at (202) 551-3233 with any other questions.

Sincerely,
   Tom Kluck  Legal Branch Chief
cc: Bruce J. Rushall, Esq.  Rushall & McGeever  Via facsimile (760) 438-3026

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.   20549-5546

       DIVISION OF
CORPORATION FINANCE
   Mail Stop 5546

              May 18, 2009

By U.S. Mail and facsimile to 760-471-0399

Mr. Kenneth W. Elsberry
Chief Financial Officer NetREIT 1282 Pacific Oaks Place Escondido, CA  92029  Re:    NetREIT (“the company”)  Initial registration statement on Form 10  File No:  001-34049   Dear Mr. Elsberry:     In your letter dated May 1, 2009, as revised May 12, 2009, you requested that
the staff accept audited post-acquisition income st atements for twelve months or more for
six properties acquired in 2006 and 2007 in lieu of the one year of pre-acquisition income statements required by S-X Rule 8-06 in its initial registration statement on Form 10.  You advised me on May 15, 2009 that the compa ny does not plan to make any offerings
of securities within the next twelve months.  The company acquired the six properties for
approximately $44 million.  Each of the pr operties was significant based on the
investment test at the year end prior to acquisition.  Three of the properties remain
significant over the 10% level at Decemb er 31, 2008 and 2007.  The company is unable
to obtain the books and records for the proper ties to facilitate th e required audits.
  The Form 10, as amended, will include the company’s audited consolidated financial statements for the two years e nded December 31, 2008, which will reflect at
least one year of audited post-acquisition financ ial statements for each of the properties.
For the most significant property, the audite d consolidated financial statements will
include one year and nine months of audite d post-acquisition financ ial statements.  The
Form 10 includes separate financial data fo r each property, including the purchase price,
annual gross rent, annual net operating income, and occupancy rate.

Mr. Kenneth W. Elsberry
NetREIT  May 18, 2009 Page 2   The staff would accept the audited post-acquisition financial statements of the six properties as described in your letter in satisfaction of the requirements of S-X Rule
8-06, provided
 the company files its past-due 2008 Form 10-K by June 2, 2009.  The
staff’s conclusion is based solely on the inform ation provided in your le tters.  Different or
additional material facts could result in a different conclusion.   If you have any questions
concerning this letter, please call me at 202-551-3511.
 Sincerely,    Louise M. Dorsey Associate Chief Accountant

CORRESP
1
filename1.htm

Correspondence

The Contrarian Real Estate Investment Trust

May 18, 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:

Registrant requests the Accounting Staff’s comments and guidance regarding Registrant’s responses
below to the comments in the Staff’s letter of May 5, 2009 regarding the above-referenced Form 10
filing. Registrant’s is providing Staff with the disclosures made relative to the land purchase
option within the financial statements for the years ended December 31, 2008 and 2007 and the
quarter’s ended March 31, June 30 and September 30, 2008. In addition to the additional
disclosures, the Registrant has reported the $1,370,000 as a separate line item on the balance
sheet’s as “Land purchase option” for all periods presented.

Registrant’s responses below are presented in the same numbers as the Staff’s comments in that
letter.

Financial Statements and Notes

Note 2 — Significant Accounting Policies

Property Acquisitions, pages 62-63

The following are excerpts from the Significant Accounting Policies that have been changed to
reflect the suggestions contained in the Staff letter:

To the points of (a) that we did not acquire land but rather a purchase option to acquire
land at a future date; (b) that the $1.4 million allocated represents the portion of the
purchase price allocated to the option; (c) our basis for assigning an indefinite useful
life; and (d) the probability of exercising the option we have disclosed the following:

The land lease acquired with the World Plaza acquisition in 2007 has a fixed purchase
price option cost of $181,710 at the termination of the lease in 2062. In accordance
with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) management
valued the land option at its residual value of $1,370,000, based upon comparable
land sales adjusted to present value. The difference between the strike price of the
option and the recorded cost of the land purchase option is approximately $1.2
million. Accordingly, management has determined that exercise of the option is considered probable. The land purchase
option was determined to be a contract based intangible asset associated with the
land. As a result, this asset has an indefinite life and is treated as a
non-amortizable asset. The amount is included as land purchase option on the
accompanying condensed balance sheets.

1282 Pacific Oaks Place, Escondido, CA 92029 • Phone 866-781-7721 • Fax 760-471-0399 • info@netreit.com

The Contrarian Real Estate Investment Trust

Further to the point of clearly stating that the land purchase option is an allocation of
the purchase price paid for the World Plaza an excerpt from Note 4 to the financial
statements — “REAL ESTATE ASSETS AND LEASE INTANGIBLES” reads as follows:

In accordance with SFAS 141, the Company allocated the purchase price of the
properties acquired during the years ended December 31, 2008 and 2007 as follows:

    Land

    Tenant

    Tenant

    Total

    Purchase

    Buildings

    Improve-

    In-place

    Leasing

    Relation-

    Purchase

    Land

    Option

    and other

    ments

    Leases

    Costs

    ships

    Price

    $
    1,370,000

    $
    6,006,891

    $
    118,803

    $
    65,211

    $
    89,774

    $
    7,650,679

To the point of disclosing the Company’s impairment policy under paragraph 17 of SFAS 142
our disclosure remained unchanged and for the financial statements as of and for the years
ended December 31, 2008 and 2007, read’s as follows:

Intangible Assets — Lease intangibles represents the allocation of a portion of the
purchase price of a property acquisition representing the estimated value of in-place
leases, unamortized lease origination costs, tenant relationships and a land purchase
option. Intangible assets are comprised of finite-lived and indefinite-lived assets.
In accordance with SFAS 142, indefinite-lived assets are not amortized. Finite-lived
intangibles are amortized over their expected useful lives. The Company assesses its
intangibles and goodwill for impairment at least annually.

In accordance with SFAS 142, the Company is required to perform a test for impairment
of goodwill and other definite and indefinite lived assets at least annually, and
more frequently as circumstances warrant. Based on the review, no impairment was
deemed necessary at December 31, 2008 or 2007.

Other intangible assets that are not deemed to have an indefinite useful life are
amortized over their estimated useful lives. The carrying amount of intangible assets
that are not deemed to have an indefinite useful life is regularly reviewed for
indicators of impairments in value in accordance with SFAS No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets.” Impairment is recognized only if
the carrying amount of the intangible asset is considered to be unrecoverable from
its undiscounted cash flows and is measured as the difference between the carrying
amount and the estimated fair value of the asset. Based on the review, no impairment
was deemed necessary at December 31, 2008 or 2007.

Conclusion: The disclosures regarding the land purchase option are transparent to the reader and
conform with GAAP.

1282 Pacific Oaks Place, Escondido, CA 92029 • Phone 866-781-7721 • Fax 760-471-0399 • info@netreit.com

The Contrarian Real Estate Investment Trust

The Company filed its amendment No. 3 to its Form 10 last Friday, May 15, 2009. A copy of the
amendment marked to show changes since amendment No. 3 is enclosed herewith.

Very truly yours,

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

    cc:

    Ms. Jaime John, Staff Accountant

Ms. Cicely Lamothe, Accounting Branch Chief

Ms. Kristina Aberg, Attorney-Advisor

Mr. Tom Kluck, Legal Branch Chief

1282 Pacific Oaks Place, Escondido, CA 92029 • Phone 866-781-7721 • Fax 760-471-0399 • info@netreit.com

Mail Stop 3010

        May 5, 2009  Mr. Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900

Re: NetREIT
 Form 10
Filed May 6, 2008, as amended on September 5, 2008 and  December 31, 2008
 File No. 001-39049

Dear Mr. Heilbron:

We have reviewed your response letter dated May 1, 2009 and have the following
additional 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 comment is inapplicable or a revisi on is unnecessary.  Pleas e be as detailed as
necessary in your explanation.  In some of our comments, we may ask you to provide us
with information so we may better understand your disclosure.  Af ter 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  requirements 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 free to call us at  the telephone numbers listed at  the end of this letter.
 Financial Statements and Notes

 Note 2 – Significant Accounting Policies

 Property Acquisitions, pages 62-63

  1. We have read your response to comme nt three and note that you have not
acquired land but rather a purchase option to acquire the land at a future date,
which is contract-based intangible as set.  Please confirm and amend your
disclosures to clearly state that the $1.4 million represents the portion of the
purchase price allocated to this purcha se the option.  Provide your basis for

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT May 5, 2009 Page 2

assigning an indefinite life  and clarify the asset unde rlying the purchase option is
a non-amortizable asset.  In addition, provide the required disclosures for
indefinite-lived intangible assets , including your impairment policy under
paragraph 17 of SFAS 142.  In this regard, you should also address how the
probability of exercising this purchase opt ion is included in your consideration of
fair value.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.   You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Kristina Aberg, Attorney-Advisor, at (202) 551-3404 or me at (202) 551-3233 with any other questions.

Sincerely,

Tom Kluck  Legal Branch Chief
 cc: Bruce J. Rushall, Esq.  Rushall & McGeever
 Via facsimile (760) 438-3026

CORRESP
1
filename1.htm

CORRESP

May 1, 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:

Registrant requests the Accounting Staff’s comments and guidance regarding Registrant’s responses
below to the comments in the Staff’s letter of April 27, 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.

Note 1 — Organization, Page 62

    1.

    Registrant will add to the disclosure the fact that the tenant’s in common and limited
partners have substantive participating rights.

Note 2 — Significant Accounting Policies

Property Acquisitions, pages 62-63

    2.

    Registrant will remove any reference to property tax assessments

    3.

    Registrant has determined that terms of the ground lease approximate market value
rates. The Registrant is accounting for the ground lease as an operating lease and the
building and improvements are being accounted for as capital assets depreciated over a 39
year life. The Registrant has accounted for its right, within the ground lease, to purchase
the land at a fixed price that was determined in 1963, the original inception of the ground
lease. This is a right to purchase prime real estate that has appreciated substantially
since the purchase price was established approximately 47 years ago.

The ground lease relates specifically to leasing the land for a 99 year term with rights to
improve on the property with buildings and property improvements. The Registrant purchased
the rights to the ground lease which contain a provision to purchase the land at a fixed
price determined to
be substantially below market at the date of our acquisition. In addition, the Company
purchased the building and property improvements on the land subject to the ground lease.

The allocation of the purchase price as the fair value of the land purchase option within
the terms of the ground lease was based upon a third party appraisal. A section of the
appraisal reads as follows:

Conclusion of the Discounted Cash Flow Analysis

The cash flow result is $5,840,397. We have then added the value of the ground lease
purchase option ($1,370,000) to arrive at a sandwich estate value under the
controlling ground lease. This results in a total value of $7,210,397, or a rounded
value of $7,210,000.

The appraisal concluded and states that the value associated with cash flow from the
building and building improvements of $5.8 million was separate from the value associated
with the right to purchase the land which the appraiser valued at approximately $1.4
million. The land value was based on comparable properties without any consideration given
to future appreciation.

    4.

    The Registrant believes that it has a contract based intangible associated with the
land. When the land purchase option is exercised in 2062, the party exercising it will be
acquiring land. This right, and the value associated with this right, is separate from both
the depreciable assets attached to the land and the contractual lease term. If at the end
of the lease term, the land were to be recorded at the option strike price of $181,710,
that would represent an improper assessment of the cost of the land to us. In 2007, we
actually paid $1,370,000 representing the present value of the excess of the fair value of
the land over the strike price of the option. To demonstrate, if you were to shorten the
time frame from the date of our purchase of the buildings and assumption of the lease to
the date the option could be exercised, we think the impropriety of amortizing the “value
of the option” over the option period would perhaps be more obvious. If one were to assume
that we entered this transaction one month before the option could be exercised, if we were
to amortize the intangible asset over the term of the option, we’d have amortization
expense of $1,370,000 and land recorded at $181,710 when we know that we are actually
paying the current fair value for the land of $1,530,000. The value of the land determined
the price we paid for being able to assume the purchase option and in our minds that is
what we are paying for the land.

For your convenience, we have included the response to comment 10 of the letter dated March 31,
2009 as a exhibit 1. This comment related to the same issues as comments 3 and 4 to the letter of
April 27, 2009.

Conclusion

In conclusion, the Company believes that it has properly treated the accounting for the land
purchase option as an indefinite lived intangible asset separate and distinct from any other
components of the lease contract.

Very truly yours,

/s/Kenneth W. Elsberry

KENNETH W. ELSBERRY

CHIEF FINANCIAL OFFICER

    cc:

    Ms. Jaime John, Staff Accountant

Ms. Cicely Lamothe, Accounting Branch Chief

Ms. Kristina Aberg, Attorney-Advisor

Mr. Tom Kluck, Legal Branch Chief

Exhibit
1

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.

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.

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 an intangible asset to be amortized shall be the amount initially assigned to that
asset less any residual value. The residual value of an intangible asset shall be assumed to be
zero unless at the end of its useful life to the reporting entity the asset is expected to continue
to have a useful life to another entity and (a) the reporting entity has a commitment from a third
party to purchase the asset at the end of its useful life or (b) the residual value can be
determined by reference to an exchange transaction in an existing market for that asset and that
market is expected to exist at the end of the asset’s useful life.

FAS 142 Paragraph B58 states the following:

The Board reasoned that an intangible asset that is separable or is subject to contractual or
legal-based rights will have an observable market or will have identifiable cash flows associated
with it. The Board noted that Concepts Statement 7 (issued after issuance of the 1999 Exposure
Draft) provides guidance for using cash flows to determine the fair value of an asset in the
absence of an observable market. Because there are different ways to determine fair value, the
Board concluded that it was not necessary that there be an observable market for an intangible
asset in order for that asset not to be amortized. Therefore, any intangible asset that is
determined to have an indefinite useful life should not be amortized until that life is determined
to be no longer indefinite.

Facts

With respect to classification of the lease:

It is the Company’s position that the unmodified land lease from 1963 would have been classified as
an operating lease as the lease does not meet any of the criteria under paragraph 7 of SFAS 13.

    •

    To effect the transfer of ownership, the purchase price to buy the land is $181,710
which the Company’s believes was far greater than a nominal fee for the land at lease
inception in 1963.

    •

    The lease does not contain a bargain purchase price.

    •

    The lease relates to land. Therefore, the 75% of economic useful life and the present
value of the lease payment provisions of these paragraphs do not apply.

With respect to application of SFAS 142:

The Company believes that this land purchase option value is separable from the components of the
contract as stated under paragraph B58 of SFAS 142. We also believe that the useful life of this
asset under SFAS 142, paragraph 11 is indefinite as it relates to the acquisition of the land and
that under paragraph 13 its residual value is at least equal to its market value. In addition, the
likelihood of exercising this land purchase option by the Company or subsequent assignees is
probable. Further, should the Company decide to sell its property rights to World Plaza, the value
of the land purchase option would be a material and separate consideration to the selling price
just as it was to our acquisition price considerations.

Mail Stop 3010

        April 27, 2009  Mr. Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900

Re: NetREIT
 Form 10
Filed May 6, 2008, as amended on September 5, 2008 and  December 31, 2008
 File No. 001-39049

Dear Mr. Heilbron:

We have reviewed your response letter dated April 10, 2009 and have the
following additional 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 comment is inappl icable or a revision is unnecessary.  Please
be as detailed as necessary in your explanat ion.  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  requirements 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 free to call us at  the telephone numbers listed at  the end of this letter.
 Financial Statements and Notes

  Note 1 – Organization, page 62

 1. We note that your revised disclosure in response to comment 5 states that 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.  Under EITF 04-5 the general presumption of control by the
general partner can be overcome if the limited partners have substantive
participating rights.  Please clarify yo ur disclosure to indicate whether your

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT April 27, 2009 Page 2

limited partners have substantive partic ipating rights which supports your use of
equity method accounting.
 Note 2 – Significant Accounting Policies

 Property Acquisitions, pages 62-63

 2. We note that your revised disclosure in response to comment 7 continues to refer
to your usage of property tax assessments to determine the fair value.  Your
disclosure does not appear to be in compliance with paragraph 36 of SFAS 141
which states that the tax ba sis of an asset or liability  shall not be a factor in
determining its estimated fair value.  Please revise your disclosures to comply
with paragraph 36 of SFAS 141.
 3. We have considered your response to co mment 10.  Please clarify if the terms of
the land lease are at market, below-mark et or above-market.  We note that you
represent that the lease does not meet the de finition of a capital lease.  As such, it
is not clear that the operating lease for the land should be accounted for separately
from the building.  To the extent that ther e is a purchase option or if the terms are
below-market, there may be some value that should be given separate accounting treatment.  In this regard, the value w ould be not be on the underlying land itself
but the value of the cont ract-based intangibles acquired as determined under
SFAS 141.  Clarify how you determined the fair value of the option and possible
below-market terms of the lease.

4. We remain unclear of your basis for acc ounting for the land purchase option as an
indefinite lived intangible asset.  Please  tell us your consideration of paragraph 11
of SFAS 142.  Items to consider when de termining the useful life should be the
time period in which you plan to use the a sset, the expected us eful life of other
related assets (i.e. the build ing acquired) and contractua l provisions that may limit
the useful life (i.e. the lease term).  Pl ease tell us how you evaluated each of these
aspects in determining the useful life.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT April 27, 2009 Page 3

 You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Kristina Aberg, Attorney-Advisor, at (202) 551-3404 or me at (202) 551-3233 with any other questions.

Sincerely,

Tom Kluck  Legal Branch Chief
 cc: Bruce J. Rushall, Esq.  Rushall & McGeever
 Via facsimile (760) 438-3026

CORRESP
1
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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

Mail Stop 4561

        March 31, 2009  Mr. Jack K. Heilbron Chief Executive Officer NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900

Re: NetREIT
 Form 10
Filed May 6, 2008, as amended on September 5, 2008 and  December 31, 2008
 File No. 001-39049

Dear Mr. Heilbron:

We have reviewed your response letter dated March 6, 2009 and have the
following additional 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 comment is inappl icable or a revision is unnecessary.  Please
be as detailed as necessary in your explanat ion.  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  requirements 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 free to call us at  the telephone numbers listed at  the end of this letter.
 General

 1. It does not appear that y ou have included a response to our comment 2 from our
letter dated February 2, 2009.  Please advise.
 2. Please update your financial statements  in accordance with Rule 8-08 of
Regulation S-X.
 3. We note that you have filed on Form 8- K information concerning certain recent
acquisitions since the filing of your last Form 10.  Please advise us how you will

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT March 31, 2009 Page 2

comply with the requirements in Rule 8-06 of Regulation S-X for any material
acquisitions.

Financial Statements and Notes
 Note 1 – Organization, page 62

 4. With respect to comment 8, we will complete our final review of your proposed
changes upon receipt of the fully restated financial statements to be included in
your amended Form 10 and Forms 10-Q for the periods ended March 31, 2008 and June 30, 2008.
 5. We read your response to comment 9, please update your accounting policy
disclosure to indicate yo ur consideration of EITF 04-5 in determining the
appropriate accounting for your jo int ventures.
 6. We read your response to comment 10.  Please confirm you will update your
accounting policy disclosure with respect to  gain recognition of partial sales to
reflect your consideration of  paragraph 33 of SFAS 66.

Note 2 – Significant Accounting Policies

 Property Acquisitions, pages 62-63

 7. Your policy in Note 2 to your audited fi nancial statements, states that amounts
allocated to land, buildings and impr ovements are derived from recent tax
assessments.  Please tell us how your po licy complies with paragraph 36 of SFAS
141 and revise as appropriate to clar ify how you determine fair value.
 8. We read your response to comment 12.  Pl ease file your required Item 4.02 Form
8-K.   The Form 8-K should include th e date of the conclu sion regarding non-
reliance, the financial statement years and periods that should no longer be relied
upon, a brief description of the facts underlying your conclusion, a statement
whether your audit committee or its alternative has di scussed this matter with
your independent accountants, and your time frame for filing the restated financial
statements.
   9. We read your response to comment 13.  It does not appear that you filed a request
with Division of Corpora tion Finance’s Office of Chie f Accountant.  Please note
that that we are unable to clear this comment until all financial statements required under Rule 8-06 of Regulation S-X are provided or waivers for each
property are submitted for consideration to  the Division of Corporation Finance’s
Office of Chief Accountant.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT March 31, 2009 Page 3

 10. We read your response to comment 14.  Y our representation that there was not a
provision for the transfer of ownership under the terms of the lease seems
contradictory to the notion that there is some value ascribable to an option to
purchase the land.  Please confirm that th e terms of the origin al ground lease were
not modified through your acquisition of  the property and that a new lease was
not executed between you and the ground le ssor, otherwise it would seem that you
should re-evaluate the classification of  the lease under SFAS 13.  Reference is
made to paragraph 15 of FIN 21.  Also pl ease clearly disclose the terms of the
lease arrangement including any purchase opt ions.  With respect to your proposal
to reflect the option as an unamortized intangible asset, provide your basis in
GAAP for this treatment under SFAS 141 and 142 and disclose the assumptions used in determining fair value of the option.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.   You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Kristina Aberg, Attorney-Advisor, at (202) 551-3404 or me at (202) 551-3233 with any other questions.

Sincerely,

Tom Kluck  Legal Branch Chief
 cc: Bruce J. Rushall, Esq.  Rushall & McGeever
 Via facsimile (760) 438-3026

CORRESP
1
filename1.htm

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

March
 6, 2009

United States Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

    Attn:

    Ms. Kristina Aberg, Attorney-Advisor

    Ms. Jaime John, Staff Accountant

    Re:

    NetREIT

    Form 10

    Filed May 6, 2008

    File No. 001-39049

Ladies and Gentlemen:

By this letter, Registrant requests comments and guidance regarding Registrant’s proposed
responses below to certain comments in the Staff’s letter of February 2, 2009 regarding the
above-referenced Form 10 filing. The proposed responses below are presented in the same numbers as
the Staff’s comments in that letter.

Once the Staff confirms Registrant’s proposed restatement of its financial statements,
Registrant will file an initial Form 10 as a 10-12G submission in response to Comment 1 of the
Staff’s letter and a complete response to the Staff’s letter.

General

Management’s Discussion and Analysis of Financial Condition...page 17

RESPONSE
TO COMMENT 1. Registrant proposes to add the following phrase “see Item 1A above” to complete the sentence.

    ITEM 2.
     FINANCIAL INFORMATION

    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to our financial statements and should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this report. Statements
contained in this “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” that are not historical facts may be forward-looking statements. Such statements are
subject to certain risks and uncertainties, which could cause actual results to materially differ
from those projected. Some of the information presented is forward-looking in nature, including
information concerning projected future occupancy rates, rental rate increases, project development
timing and investment amounts. Although the information is based our current expectations, actual
results could vary from expectations, actual results could vary from expectations stated in this
report. Numerous factors will affect our actual results, some of which are beyond our control.
These include the timing and strength of national and regional economic growth, the strength of
commercial and residential markets, competitive market conditions, fluctuations in availability and
cost of construction materials and labor resulting from the effects of worldwide demand, future
interest rate levels and capital market conditions. You are cautioned not to place undue reliance
on this information, which speaks only as of the date of this report. We assume no obligation to
update publicly any forward-looking information, whether as a result of new information, future
events or otherwise, except to the extent we are required to do so in connection with our ongoing
requirements under federal securities laws to disclose material information. For a discussion of
important risks related to our business, and an investment in our securities, including risks that
could cause actual results and events to differ materially from results and events referred to in
the forward-looking information. See Item 1A for a discussion of
material risks.

Overview and Background, page 17

RESPONSE
TO COMMENT 5. Registrant
proposes to add the following language to present a more balanced discussion.

OVERVIEW AND BACKGROUND

We operate as a self-administered
real estate investment trust (“REIT”) headquartered in San
Diego County, California, formed to own and operate income producing real estate properties. During the years ended December 31, 2007 and 2006, we built our operational and administrative
infrastructure, including hiring a staff of quality employees, to give us the capability to become
a large real estate investing company. In the process, our general and administrative expenses have
increased at a greater rate than our operating income, resulting in losses from continuing
operations of $775,365 and $455,506 in 2007 and 2006, respectively. However, as the Company
continues to make additional property acquisitions and we expect revenues less rental operating costs
to increase at a greater rate than our general and administrative
costs. Therefore, we expect our loss
from continuing operations to decline in the future. During the last two years we experienced fast growth, having increased
capital by approximately 1,200% to $29.3 million at December 31, 2007 from
$2.2 million at December 31, 2005, and our investment
portfolio by approximately 1,100% to $45.9 million at December 31, 2007 from
$3.8 million at December 31, 2005. During
these two years, the primary source of the increase in capital was
the proceeds of approximately $26.7 million from
the sale of additional equity securities. The increase in our investment portfolio was
also funded from proceeds from mortgage notes payable of
approximately $22.7 million.

At December 31, 2007, we owned 2 office building properties, 2 retail strip centers, 1 single user
retail store, 1 residential apartment building, 2 self storage properties and one mortgage loan.
Our properties are located primarily in Southern California and Colorado. These areas have above
average population growth. We do not develop properties but acquire properties that are stabilized
or that we anticipate will be stabilized within one year of operations. We consider a property to
be stabilized once it has achieved an 80% occupancy rate for a full year as of January 1, or has
been operating for three years. Our geographical clustering of assets enables us to reduce our
operating costs through economies of scale by servicing a number of properties with less staff. We
actively seek potential acquisitions through regular communications with real estate brokers and
other third parties.

Most of our office and retail properties we currently own are leased to a variety of tenants
ranging from small businesses to large public companies, many of which do not have publicly rated
debt. We have in the past entered into, and intend in the future to enter into, purchase
agreements for real estate having net leases that require the tenant to pay all of the operating
expense (Net, Net, Net Leases) or pay increases in operating expenses over specific base years.
Most of our leases are for terms of 3 to 5 years with annual rental increases built into the
leases. Our residential and self storage properties that we currently own are rented pursuant to a
rental agreement that is for no longer than 6 months. Our self storage properties are located in
markets having other self storage properties. Competition with these other properties will impact
our operating results of these properties, which depends materially on our ability to timely lease
vacant self storage units, to actively manage unit rental rates, and our tenants’ ability to make
required rental payments. To be successful, we must be able to continue to respond quickly and
effectively to changes in local and regional economic conditions by adjusting rental rates of these
properties within their regional market in Southern California. We depend on advertisements,
flyers, websites, etc. to secure new tenants to fill any vacancies.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

    Attn:

    Ms. Kristina Aberg, Attorney-Advisor

    Ms. Jaime John, Staff Accountant

March  6, 2009

Page 2

Liquidity and Capital Resources

Non-GAAP Supplemental Financial Measure: Funds from Operations (“FFO”), Page 26

RESPONSE
TO COMMENT 6. Registrant proposes to revise its FFO calculation table to exclude the 2007 gain on sale of
real estate of $2,886,131. With this change, Registrant’s calculation of FFO will comply with
NAREIT’s definition of FFO. Registrant will remove the $47,712 gain included in the 2006 as it was
incorrectly included. Registrant proposes to revise the totals in the table accordingly. As
revised, the table will have correct totals. Below is the proposed revised table.

Non-GAAP Supplemental Financial Measure: Funds From Operations (“FFO”)

Management believes that FFO is a useful supplemental measure of our operating performance. We
compute FFO using the definition outlined by the National Association of
Real Estate Investment Trusts (“NAREIT”). NAREIT defines
FFO as net income (loss) in accordance with GAAP,
plus depreciation and amortization of real estate assets (excluding amortization of deferred
financing costs and depreciation of non-real estate assets) reduced by gains and losses from sales
of depreciable operating property and extraordinary items, as defined by GAAP. Other REITs may use different methodologies for
calculating FFO, and accordingly, our FFO may not be comparable to other REITs.

Because FFO excludes depreciation and amortization, gains and losses from property dispositions
that are available for distribution to shareholders and extraordinary items, it provides a
performance measure that, when compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates, operating costs, development activities, general and
administrative expenses and interest costs, providing a perspective not immediately apparent from
net income. In addition, management believes that FFO provides useful information to the
investment community about our financial performance when compared to other REITs since FFO is
generally recognized as the industry standard for reporting the operations of REITs.

However, FFO should not be viewed as an alternative measure of our operating performance since it
does not reflect either depreciation and amortization costs or the level of capital expenditures
and leasing costs necessary to maintain the operating performance of our properties which are
significant economic costs and could materially impact our results from operations.

The following table presents our Funds from Operations, for the years ended December 31, 2007 and
2006:

    Year ended December 31,

    2007

    2006

    Net income (loss)

    $
    2,308,990

    $
    (331,515
    )

    Adjustments:

    Preferred stock dividends

    (87,850
    )

    (66,606
    )

    Depreciation and amortization of real estate assets

    970,478

    183,278

    Gain from
sale of real estate

    (2,886,131
    )

    —

    Funds From Operations

    $
    305,487

    $
    (214,843
    )

FFO should not be considered as alternative to net income (loss), as an indication of our
performance, nor is FFO indicative of funds available to fund our cash needs or our ability to make
distributions to our stockholders. In addition, FFO may be used to fund all or a portion of certain
capitalizable items that are excluded from FFO, such as capital expenditures and payments of debt,
each of which may impact the amount of cash available for distribution to our stockholders.

Our Objectives and Policies, page 38

RESPONSE TO COMMENT 7. Registrant proposes the following revision to “Our Objectives and Policies.”

Liquidity of our Common Stock

An investment in our common stock is illiquid. There is no public market for our common stock. We have no current plans to register our stock on a
national exchange or securities market. However, we intend to do so prior to 2014. Also we do not have a redemption or repurchase plan for our common stock and we have no current plans to offer one to our shareholders.

Registrant proposes to add the following revised Risk Factor.

It will be difficult for our shareholders to sell their common shares because there is currently no
public market for the shares and we do not intend to list the shares on a stock exchange. If our
shareholders are able to sell their shares, they will likely have to sell them at a substantial
discount.

There is no public market for our common shares, and we do not expect one to develop. We currently
have no plans to list the shares on a national securities exchange or over-the-counter market, or
to include the shares for quotation on any national securities market. Moreover, our charter
contains restrictions on the ownership and transfer of the shares, and these restrictions may
inhibit our shareholders’ ability to sell their shares. We do not have a share redemption program,
nor do we plan to adopt one in the near future. Any share redemption program we may adopt will be
limited in terms of the amount of shares that may be redeemed annually. Our board of directors will
be able to limit, suspend or terminate any share redemption program. It will probably be difficult
for our shareholders to sell their shares promptly or at all. If our shareholders are able to sell
their shares, they likely will only be able to sell them at a substantial discount from the price
they paid. In part, this is because the amount of funds available for investment we received when
we sold their shares was reduced by our payment of our sales costs, including selling commissions.
Until our investments increase in value to compensate for these costs and expenses, which may not
occur, it is unlikely that our shareholders will be able to sell their shares, pursuant to any
share redemption program or otherwise, without incurring a substantial loss. We cannot assure that
their shares will ever appreciate in value to equal the price our shareholders paid for their
shares. Thus, our shareholders should consider the shares an illiquid and long-term investment, and
they must be prepared to hold their shares for an indefinite length of time.

Financial Statements and Notes

Note 1 — Organization, page 62

RESPONSE
TO COMMENT 8. Registrant proposes to restate its accounting for its 48.601% in the Escondido 7-Eleven
property using the equity method in conformity with the disclosure requirements of SFAS 154.
Registrant will incorporate SFAS 154 paragraphs 25-26 in the following footnotes.

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

During 2008, the Company determined that certain adjustments and reclassifications of previously
issued financial statements were required to correct certain errors
relating to application of Statement of Financial Accounting
Standards 141 “Business Combinations” (“SFAS 141”). Pursuant to SFAS 141, the Company allocates the purchase price of
acquired properties to land, buildings, tenant improvements and identified tangible and intangible
assets and liabilities associated with in-place leases, unamortized leasing commissions, value of
above or below market leases, tenant relationships and value associated with a land purchase option
based upon respective market values. We have determined that our initial process of estimating fair
values for acquired in-place leases did not include all components of such valuation and we did not
value the tenant relationships.

There is no effect to the
total acquisition costs included in the balance sheet. However, the effect of the restatement will
be to increase the depreciation and amortization since the values have been reclassified to shorter
lived assets.

In
addition, the Company did not properly account for its remaining interests in its 7-11
property following the sale of an undivided 48.66% interest in the property. Due to the protective
rights of the tenant in common, the ongoing accounting for the Company’s investment should have
been under the equity method of accounting. In the previously issued statements, the Company had
used the proportional interest consolidation method.

The corrections to the financial statements as of and for the year ended December 31, 2007 are as
follows:

Bala

Mail Stop 4561

        February 2, 2009  Mr. Jack K. Heilbron, CEO NetREIT 1282 Pacific Oaks Place Escondido, CA 92029-2900

Re: NetREIT
 Amendment No. 2 to Form 10
Filed December 31, 2008
 File No. 001-39049

Dear Mr. Heilbron:

We have reviewed your response letter  dated December 30, 2008 and have the
following additional 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 comment is inappl icable or a revision is unnecessary.  Please
be as detailed as necessary in your explanat ion.  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  requirements 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 free to call us at the telephone numbers listed at th e end of this letter.  Please
note that references to prior comments refer to our letter dated September 26, 2008.  General

1. We note your response to prior comment two and we reissue the comment.
Please file your next amendment as an initial Form 10 under Section 12(g) of the
Exchange Act.  Please note that after you file your next amendment under 12(g), and if you choose not to withdraw your Form 10 under Section 12(b), your Form
10 under Section 12(g) become s effective by lapse of time 60 days after the
original filing date of May 6, 2008, pursuan t to Section 12(g)(1)  of the Exchange
Act.  At that time, you will be subject to the reporting requirements under Section
13(a) of the Exchange Act.   In addi tion, please note that if you choose to
withdraw the filing made under Secti on 12(b), the Form 10 filing made under
Section 12(g) will be considered a new filing and it will not go effective until 60 days from the recent date that it is filed.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT February 2, 2009 Page 2  2. Please update throughout the registrati on statement, where appropriate,
information as of a recent practicable date.  For example, we note on page 21
under “Mortgage Loan Receivables” that you r describe several loans as due and
payable that appear to have been re paid.  On page 21 under “Revenues,” you
discuss acquisitions that you expect to have completed in June and July 2008.

3. We read your response to our prior comment 4 and will review once the revised
certifications are filed.
Item 2. Financial Information

 Management’s Discussion and Analys is of Financial Condition…, page 17

 4. We have reviewed your response to our prior comment 9; however, the last
sentence of the preamble beginning “For a discussion of importan t risks related to
your business….” still appears to be incomplete.  Please revise.
 Overview and Background, page 17

 5. We have reviewed your response to our prior comment 10 and reissue the
comment in part.  Please revise your di sclosure here to include balancing
language noting that you have had a loss fr om continuing operations in your last
two fiscal years.
 Liquidity and Capital Resources

 Non-GAAP Supplemental Financial Measure: Funds from Operations (“FFO”), page 26

6. Based upon your response to comment 12 and the disclosure included in your
amended Form 10, it appears that you added $2.9 million and $48,000 in gains from the sale of real estate to net in come in your calculati on of FFO for 2007 and
2006, respectively.  Tell us your basis for th is presentation.  Additionally, tell us
where the $48,000 gain is reflected on your Statement of Operations for 2006.
Lastly, we note that the total FFO reported  in the table does not appear to be the
sum of the line items.  Please revise your disclosure accordingly.
 Our Objectives and Policies, page 38

 7. Please disclose here or in another sec tion whether the company intends or is
required to have its securities listed on an  exchange or to become publicly traded.
If not, please disclose whether the comp any has or intends to adopt any stock
repurchase or redemption plan.   Also, th e company may want to consider a risk
factor that discusses in more detail th e illiquid nature of its securities.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT February 2, 2009 Page 3   Financial Statements and Notes

 Note 1 – Organization, page 62

8. Based upon your response to comment 21, it appears that you propose to restate
your December 31, 2007 financial statements to reflect the equity method upon the sale of 48.601% interest in your 7- 11 property and have characterized the
restatement as a change in accounting policy.  As this appears to be a correction of an error, please confir m that you will account for it as such and provide the
relevant disclosures in accordance wi th paragraphs 25-26 of SFAS 154.
 9. We note that during 2008 you and the co-o wner of the 7-11 property contributed
your respective interests to a limited partnership, of whic h you are the general
partner.  Per your response to comment 21, you intend to record your interest in
the limited partnership using the equity  method, rather than consolidating the
limited partnership as indicated in your previous response.  Based on paragraph 9
of SOP 78-9, general partners are presum ed to control the li mited partnership.
Please describe your analysis under EITF 04- 5 and advise us what rights are held
by the limited partners that overcome th e presumption of control by the general
partner.   Additionally please tell us how the contributions of the 7-11 property interests were recorded by the limited partnership.
 10. We read your response to comment 22.  Pl ease further expand to clarify how your
gain recognition policy complies with SFAS 66.  In this regard, tell us how your
continuing involvement with the property is  considered in the timing and extent to
which a gain was recorded.

Note 2 – Significant Accounting Policies
 Property Acquisitions, pages 62-63

11. We have reviewed the schedule included  in your response to comment 23.  Please
substantially revise to incl ude footnotes to disclose th e amortization periods used
to derive the adjustments to your Statem ents of Operations.  Explain how these
assets were depreciated under the original  accounting treatment and how that has
been corrected in the proposed restatement.  Lastly, it does not appear that the subtotals in your proposed schedule 3 fo r accumulated depreciation agree to the
balance sheet schedule of adjustments.  Please advise.
 12. We note that you filed an Item 7.01 8-K to discuss your poten tial restatements
instead of under Item 4.02.  Please advise.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT February 2, 2009 Page 4  13. We read your response to comment 24.  Pl ease note that to the extent you are
unable to provide the financial informa tion for your acquisitions, requests for a
waiver on financial statements required by Rule 8-06 of Regulation S-X must be
made through the Division of Corporation Finance’s Office of Chief Accountant.
 14. We read your response to comment 25 and your proposal to reflect the option as
an intangible asset. To the extent that  you believe this is an intangible asset,
please clarify how the value ascribed to the asset is consistent with SFAS 141 and
tell us the amortization pe riod that you plan to assi gn to this intangible.
Alternatively, given that you estimated the fair value of the option at $1.4 million
but are only required to pay $181,710 to purch ase the land at the end of the lease
term, tell us how you evaluated whether th is is a bargain purchase option as
defined in paragraph 5(d) of SFAS 13 a nd if so, tell us what consideration was
given to recording the transaction as a capital lease under paragraphs 10 – 14 and
25 of SFAS 13.  Lastly, tell us what speci fic amount was paid for the purchase of
the option.

Federal Income Taxes, page 65

15. We read your response to comment 26.  Give n that you reported a gain from sale
of real estate, please explain to us wh y a portion of your distributions were not
considered to be a capital gain.  Similarly advise why no portion of your
distributions was characterize d as ordinary income.

*  *  *  *
As appropriate, please amend your filing and respond to these comments within
ten (10) business days or tell us when you will provide us with a response.  You may
wish to provide us with marked copies of th e amendment to expedite our review.  Please
furnish a cover letter with your amendment th at keys your responses to our comments
and provides any requested information.  Deta iled cover letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
amendment and responses to our comments.

Mr. Jack K. Heilbron
Chief Executive Officer NetREIT February 2, 2009 Page 5   You may contact Jaime J ohn, Staff Accountant, at (202) 551-3446 or Cicely
Lamothe, Accounting Branch Chief, at ( 202) 551-3413 if you have questions regarding
comments on the financial statements and related matters.  Please contact Kristina Aberg, Attorney-Advisor, at (202) 551-3404 or me at (202) 551-3233 with any other questions.

Sincerely,

Tom Kluck  Legal Branch Chief
cc: Bruce J. Rushall, Esq.  Rushall & McGeever
 Via facsimile (760) 438-3026

CORRESP
1
filename1.htm

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

December 30, 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 September 26, 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-2 in response to that letter. References in this letter to the
“Form 10” refer to that filing.

General.

1. Enclosed with this letter is a Certificate executed by Mr. Kenneth Elsberry, Registrant’s
Secretary, making the requested representations on behalf of Registrant.

2. We have filed the subject Amendment No. 2 as a 10-12B submission. EDGAR will not accept a
10-12G submission amendment if a 10-12G submission was not filed. As previously stated, 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. We have been advised by the Staff by
telephone that they cannot grant our requested post submission
change. We have requested the Staff’s guidance as how to best resolve
the error. We await the EDGAR Management Division’s response and will
proceed accordingly.

3. Registrant acknowledges the Staff’s comment regarding the requirements for Registrant’s
disclosure in its Form 10-QSB filing for the three months ended March 31, 2008 and the correction
to future filings will be made.

4. Registrant will be filing a 10-QSB/A-2 which includes revised certifications in compliance
with Item 308 of Regulation 8-K.

5. Set forth below is our analysis of (A) Registrant’s previous securities sales, (B) why
Registrant’s previous securities offerings should not be integrated, and (C) our analysis of
compliance with the 1933 Act should the offerings be integrated.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 2

A. Prior Offerings of Securities.

1. Issuances Prior to 2005.

For the 6 months prior to January 1, 2005, Registrant issued securities only under its
Dividend Reinvestment Plan (“DRIP”). Registrant has sold its common stock to DRIP participants in
a continuous private offering which commenced in 2000 (the “DRIP PPO”). Prior to January 1, 2005,
sales in the DRIP PPO were made to a total of 69 different participants. We refer to these
participants as the “Original Participants”. These Original Participants are comprised mainly of
shareholders of CI Holding Company, an original
promoter of Registrant and an investor in Registrant’s common
stock. They were generally accredited investors and/or were registered
representatives and/or registered principals. These Original
Participants received common stock of Registrant in 2001
when CI Holding distributed Registrant’s common stock it owned as a dividend to its own common
stockholders. Original Participants also include Registrant’s officers and directors and
certain of its key employees. Registrant determined that 54 of the
Original Participants were
accredited investors and 15 were non-accredited investors. We refer to “accredited investor” as
being an accredited investor within the meaning of Reg. §
230.501 (a) of Regulation D and we refer to a
“non-accredited investor” as a person who is not an accredited investor.

2. Issuances Since January 1, 2005.

Since January 1, 2005, Registrant has issued its securities pursuant to one of four private
offerings as follows:

(a) Issuances under Registrant’s 1999 Flexible Incentive Plan (the “1999 FIP”).
Registrant issued securities under its 1999 Flexible Incentive Plan
(the “1999 FIP”) in a continuing private placement offering (the
“1999 FIP PPO”) as follows:

In
2005, Registrant issued Warrants for the purchase of
18,000 shares were issued to Registrant’s five (5) directors, including Mr. Heilbron who is also
Registrant’s CEO, and to Mr. Elsberry, its CFO. The Warrants were issued to Registrant’s
independent directors as compensation for services and to the other issuees as incentive
compensation. Mr. Elsberry is an accredited investor by reason of his income and net worth, and
each director is an accredited investor by definition under Rule 501.

Registrant issued no securities under the 1999 FIP PPO in 2006.

On January 1, 2007, Registrant issued a total of 14,237.35 shares of its restricted common
stock as follows: 1575 shares to each of its then 5 directors, including Mr. Heilbron, and its
CFO, Mr. Elsberry. Registrant issued the remaining 4,787.35 shares in varying amounts to 10 of its
employees.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 3

On January 1, 2008, Registrant issued a total of 27,871 shares of its restricted stock as
follows: 3,000 shares to each of its then 5 directors, including
Mr. Heilbron, and to its CFO, Mr.
Elsberry. Registrant issued the remaining shares in various amounts to 9 of its employees.

The restricted common stock issued under the 1999 FIP is subject to a 3-year to 5-year vesting
schedule. Registrant relied on the exemption under Rule 701 and Section 402 of the 1933 Securities
Act for its issuances of securities under the 1999 FIP.

(b) Issuances of Common Stock, Series AA Preferred Stock and common stock purchase options
under a private placement offering which commenced on February 15, 2005 and terminated in October,
2007 (the “2005 PPO”). In the 2005 PPO, Registrant sold a total of $9,350,000 of its
securities to a total of 316 investors, eighteen (18) of whom were
non-accredited investors.

(c) Issuances of Common Stock under a private placement offering which commenced
immediately upon termination of the 2005 PPO in October 2007 and is continuing (the “2007
PPO”). In the 2007 PPO to date, Registrant has sold a total of $42,528,170 of its securities
to a total of 1,411 investors, one (1) whom is a
non-accredited investor.

(d) Issuances of Common Stock under Registrant’s DRIP PPO. From January 1, 2005
through October 31, 2008, Registrant issued a total of 231,904
shares of its common stock common under its DRIP PPO to the 69 Original
Participants, 15 of whom were non-accredited Investors, and to an additional 353 participants who purchased common stock in the 2005 PPO and the 2007 PPO (“New
Participants”). These issuances are summarized in the following table.

    Total No. of

    Total

    Total

    Total No. of

    Total No.

    New Non-

    No. of

    No. of New

    Different

    Common

    of New

    Accredited

    Original

    Non-Accredited

    Non-Accredited

    Year

    Shares Issued

    Participants

    New Investors*

    Participants

    Original Participants

    Investors

    2005

    717

    6

    None

    69

    15

    15

    2006

    15,328

    129

    9

    69

    15

    24

    2007

    96,949

    287

    None

    69

    15

    24

    2008
(through November 15)

    118,910

    353

    None

    69

    15

    24

Thus, from
inception of the DRIP PPO to the present, there have been a total of
422 issuees in the DRIP PPO, 24
of whom are non-accredited investors. We determine this as follows: From inception of the Plan in
2000 to the present, Registrant has sold common stock to a total of 69 Original Participants and
353 New Participants who purchased common stock in the 2005 PPO and/or the 2007 PPO. Of the
Original Participants, 47 were accredited investors and 15 were non-accredited investors. Of the
New Participants, all except 9 were accredited investors.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 4

B. Argument against Integration of the Offerings.

(i) Integration of the 2005 PPO with the 2007 PPO. Registrant’s argument for not
integrating the 2005 PPO and the 2007 PPO is not strong based on the criteria for
integrating offerings set forth in Rule 502(a).

    •

    These offerings involved a similar plan of financing.

    •

    The same or similar class of equity securities was issued in both
offerings.

    •

    Securities were sold in the two offerings for the same type of
consideration, i.e, cash.

    •

    The financing plan for each offering was for the same general purpose; and

    •

    There was not a significant delay between the end of the first offering
and the start of the second.

(ii) Integration of the DRIP PPO with the
2005 PPO and the 2007 PPO. Registrant
believes that the DRIP PPO should not be integrated with the 2005 PPO and/or the 2007 PPO as it is a
separate and distinct offering because, among other factors:

    •

    The DRIP PPO involved a different plan of financing. The
securities were sold to existing shareholders.

    •

    Registrant did not pay commissions in the offering.

    •

    The purpose of the DRIP PPO is to save administrative costs of
paying cash distributions and to provide incremental amounts of cash to offset
operating costs. The purpose of the 2005 PPO and the 2007 PPO were to raise
substantial amounts of capital to expand Registrant’s capital investments.

    •

    The plan of distribution, plan of marketing and price for the
common shares under the DRIP PPO are different from both the 2005 PPO and the
2007 PPO.

    •

    The DRIP PPO is not part of a single plan of financing with
either the 2005 PPO or the 2007 PPO.

(iii) Integration of the
1999 FIP PPO with one or more of the other three PPOs. Registrant believes
that integration of the 1999 FIP PPO with any of the other PPOs is not warranted because:

    •

    The issuances of warrants and restricted stock under the 1999
FIP PPO are
not part of a single plan of financing with either the 2005 PPO or
the 2007 PPO;

    •

    Securities sold in the 1999 FIP PPO either did not include the same class of securities
(i.e., warrants versus immediate stock purchase) or included common
stock subject to
substantial restrictions (i.e., a multiple year vesting period);

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 5

    •

    The consideration for the securities sold is substantially
different. The other PPOs required cash consideration, while consideration for
the restricted stock was service compensation and incentive for services; and

    •

    The sales of securities in the 1999 FIP PPO was for a different
purpose. Sales under the 1999 FIP PPO were for the sole purpose of providing
compensation or providing incentive for future services to Registrant’s board of
directors, chief executive officer, and chief financial officer. Sales of
securities in the other PPOs were generally for the purpose of raising capital to
fund Registrant’s investments and/or operations.

Registrant believes that issuances made under the 1999 FIP PPO prior to Registrant’s
registration under Section 12 of the 1934 Act were also exempt pursuant to Rule 701.

C. 1933 Act Compliance if Offerings Integrated.

The only securities Registrant issued during the 6 months prior to January 1, 2005 were under
the 1999 FIP PPO and the DRIP PPO. From January 1, 2005 to the present, Registrant has continued
to issue securities in each of these offerings and under the 2005 PPO and then the 2007 PPO. Thus,
these four offerings constitute all of the offerings which are subject to possible integration
since January 1, 2005.

    •

    1999 FIP PPO. For reasons discussed above, the 1999 FIP
PPO should not be integrated with the others. Also, sales under the FIP PPO should not be integrated with one of more of the other PPO’s by reason
of Rule 502(a) of Regulation D as they constituted sales under an employee benefit plan defined under Rule 405 under the 1933 Securities Act.

    •

    DRIP PPO. As described above, sales of common stock under
the DRIP PPO have been made from its inception to the present to a total of
fifteen (15) non-accredited investors, not including the non-accredited investors
who purchased securities in the 2005 PPO and/or the 2007 PPO.

    •

    2005 PPO. There were a total of eighteen (18)
non-accredited investors.

    •

    2007 PPO. There was a total of one (1) non-accredited
investor.

Based
on the foregoing, Registrant believes that only the DRIP PPO, the
2005 PPO and the 2007 PPO could potentially be
integrated. If these 3 offerings are integrated, the combined offering would still have been made
to no more than 35 non-accredited investors in total, that is 15 non-accredited purchasers under
the DRIP PPO, 18 non-accredited purchasers under the 2005 PPO and one non-accredited purchaser under the
2007 PPO.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 6

Moreover, the other requirements of Rule 506 would have been met for each sale of securities
because:

    •

    Participants in the DRIP PPO and the 2005 PPO and 2007 PPO received
a Private Placement Memorandum meeting the requirements of Rule 501.

    •

    The private placement memorandums for both the 2005 PPO and the
2007 PPO described and covered issuances of additional common stock under
the DRIP.

    •

    A copy of the DRIP was included as an exhibit
to each of the private placement memorandums.

    •

    Each of these 3 offerings is being made and/or was made in
compliance with each of the other requirements of Rule 506 of Regulation D.

6. The Form 10 includes updated information, where appropriate, to a recent practicable date
under Risk Factors, Business Risk Factors, Directors and Executive Officers, Description of
Registrant’s Securities to be Registered and elsewhere.

Item 1A. Risk Factors.

Our common stock is subordinate to our Preferred Stock in rights to distributions, page 6.

7. The Form 10 now correctly and consistently refers to the liquidation of Series AA Preferred
Stock as $25.00 plus accrued dividends.

Terrorist attacks, such as the attacks that occurred in New York . . . ., page 11.

8. The Form 10 includes a discussion specific to risks to Registrant from the war on terrorism
and possible future terrorist attacks.

Item 2. Financial Information.

Management’s Discussion and Analysis of Financial Condition . . ., page 17.

9. The last sentence of the preamble of the MD&A at page 17 of the Form 10 is completed.

Overview and Background, page 17.

10. Page 17 of the Form 10 includes an explanation that the increase in Registrant’s capital
was due to the sale of Registrant’s stock and that the increase in Registrant’s investment
portfolio was due to Registrant’s use of funds provided by the increase in its capital and the
increase in notes payable.

RUSHALL & McGEEVER

A PROFESSIONAL LAW CORPORATION

United States Securities and Exchange Commission

Attn: Ms. Kristina Aberg, Attorney-Advisor

December 30, 2008

Page 7

Other Liquidity Needs, page 25.

11. Page 25 of the Form 10 includes an explanation that the cash distributions Registrant paid
during the year 2007 did not exceed net cash Registrant realized from operating activities and
proceeds Registrant received from the sale of real estate. During the year 2006 and prior periods,
Registrant paid cash distributions in excess of cash p

Mail Stop 4561
         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

CORRESP
1
filename1.htm

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

CORRESP
1
filename1.htm

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

    August 12, 2008

    Via E-Mail

    and U.S. Mail

U.S. Securities and Exchange Commission

450 Fifth Street NW

Mail Stop 4561

Washington, D.C. 20549

           Re:

    NetREIT; CIK NO. 001080657

FILE NO. 001-34049

SUCCESSION NO. ACC-NO: 0001019687-08-002036 (34ACT)

(FILING DATE MAY 6, 2008)

CORRECTION OF 10-12B SUBMISSION

Attention: Ms. Kristina Aberg, Attorney Advisor

Ladies and Gentlemen:

Pursuant to the Notice Regarding Division of Management EDGAR Issues, the purpose of this
letter is to request a change in the above-referenced “10-12B submission” to a “10-12G submission”.
The reason for this change is that Registrant inadvertently filed its registration statement on
EDGAR as a 10-12B submission when it intended to file it as a 10-12G submission. The body of the
initial filing will confirm Registrant’s intent.

Registrant hereby requests that the filing submission type be changed to “10-12G”. We note
that the header page is correct, but the document form type was incorrect. We believe this is a
post-acceptance correction that can be made, as the two submission types have the same technical
characteristics. The change requested will not require a new 1934 Act file number.

We thank you in advance for your expeditious attention to this matter. As we are anxious to
file a Form 10/A and a response to the Commission’s comments regarding the initial filing, we
request that the Staff act on this letter as soon as practicable. Please contact the undersigned,
legal counsel for Registrant, with any questions or comments.

Very truly yours,

/s/ Bruce J. Rushall

BRUCE J. RUSHALL

    BJR/cak

    cc:

    Jack K. Heilbron

    Kenneth W. Elsberry

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