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<SEC-DOCUMENT>0001362310-08-005001.txt : 20091005
<SEC-HEADER>0001362310-08-005001.hdr.sgml : 20091005
<ACCEPTANCE-DATETIME>20080904190604
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001362310-08-005001
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20080904

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NETREIT
		CENTRAL INDEX KEY:			0001080657
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900
		BUSINESS PHONE:		760-471-8536

	MAIL ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Filed by Bowne Pure Compliance</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">RUSHALL &#038; McGEEVER</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">BRUCE J. RUSHALL
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">A PROFESSIONAL LAW CORPORATION
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">TELEPHONE: (760)&nbsp;438-6855</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EILEEN L. McGEEVER
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">6100 INNOVATION WAY
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">FACSIMILE: (760)&nbsp;438-3026</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">LUCI M. MONTGOMERY
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">CARLSBAD, CALIFORNIA 92009
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">E-MAIL: rm@rushallmcgeever.com</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">September&nbsp;5, 2008
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
450 Fifth Street NW<BR>
Mail Stop 4561<BR>
Washington, D.C. 20549

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor
</DIV>


<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Re:</TD>
    <TD>&nbsp;</TD>
    <TD>NetREIT<BR>
Form&nbsp;10<BR>
Filed May&nbsp;6, 2008<BR>
File No.&nbsp;001-39049</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This letter is in response to the Staff&#146;s letter of June&nbsp;10, 2008. The responses below are
presented in the same order as the Staff&#146;s comments in that letter. Please note that Registrant is
filing a Form&nbsp;10/A and a Form 10-Q/A in conjunction with this letter, and the references herein to
the Form&nbsp;10/A and the Form 10-Q/A refer to those respective filings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><U>General</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;The Form&nbsp;10/A states that it is filed on EDGAR to register Registrant&#146;s common stock
pursuant to Section 12(g) of the 1934 Act. We inadvertently filed the
Form 10 as a &#147;10-12B&#148; submission. We have requested the EDGAR Management Division to change the filing to the correct
&#147;10-12G&#148; 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&#146;s review as an incorrect &#147;10-12B/A&#148; submission. We will request the EDGAR Management
Division to change it to the correct &#147;10-12G/A&#148; submission.</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;Registrant first had 500 shareholders of record and $10&nbsp;million in assets on January&nbsp;25,
2007.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">3. Registrant notes the Staff&#146;s comment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">4.&nbsp;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&#146;s anticipated liquidity and future intentions. This information is not
intended to constitute an offer, or a solicitation of an offer to purchase, Registrant&#146;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&nbsp;10. We understand that it is the Staff&#146;s
position that the mere filing of a Registration Statement under the 1934 Act or the fact that
Registrant&#146;s securities are registered thereunder does not constitute a public solicitation which
would make the exemption under Rule&nbsp;506 unavailable.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 2

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To place this disclosure in clearer context, Registrant has revised this disclosure to state
that Registrant &#147;anticipates that the company&#146;s capital will increase during 2008 from the proceeds
from one or more private placement offerings of its securities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">5.&nbsp;Registrant
has filed a Form 10-QSB/A which, with revised officer certifications.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">6. The Form 10-Q/A includes the exact form of the required certifications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;1. Business, Page 1</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Our Company, NetREIT, page 1</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">7.&nbsp;The
Form&nbsp;10/A at page 18 includes an expanded discussion of Registrant&#146;s business history under &#147;Our
Company, NetREIT.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Right to Acquire Property Manager&#146;s Business, page 2</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">8.&nbsp;The
discussion in the Form&nbsp;10/A at page 2 under &#147;Right to Acquire Property Manager&#146;s Business&#148;
includes a statement that, &#147;We have no intention to exercise our option to acquire CHG Properties&#146;
property management business.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;1A. Risk Factors, Page 6.</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Our bylaws may prevent our participation in certain business combinations, page 7</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">9.&nbsp;The
discussion in the Form&nbsp;10/A at page 6 includes definitions in Registrant&#146;s bylaws of
&#147;business combination&#148; and &#147;Interested Shareholder.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Private placement offering &#151; compliance with exemption requirements, page 7</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">10.&nbsp;The
Form&nbsp;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&nbsp;D unavailable. The statement is also based on Registrant&#146;s understanding of
Rule 502(a) and the Staff&#146;s published guidelines of when it is appropriate to treat private
offerings as separate offerings.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 3

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>An investment in our Shares may be affected by adverse economic and regulatory changes, page
8</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">11.&nbsp;The
Form&nbsp;10/A starting at page 8 includes separate risk factor discussions regarding economic changes and
regulatory changes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Risks related to Debt Financing, page 14</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">12.&nbsp;The
Form&nbsp;10/A at page 13 states that, &#147;At May&nbsp;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.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>If we enter into financing arrangement involving balloon payment obligations..., page 14</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">13.&nbsp;The
Form&nbsp;10/A at page 13 states that, &#147;We currently have balloon payments of $3.1&nbsp;million due in
2012, $3.1&nbsp;million due in 2014, and $2.8&nbsp;million due in 2016.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Our investment in mortgage loans secured by real estate, page 15</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">14.&nbsp;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&nbsp;10/A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>We do not have substantial experience in making or investing in mortgage loans, page 15</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">15.&nbsp;The
Form&nbsp;10/A at page 13 describes risks associated with Registrant&#146;s lack of experienced loan
underwriting personnel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Our rights and the rights of our shareholders to recover claims..., page 16</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">16.&nbsp;The
Form&nbsp;10/A includes at page 15 a discussion of the possible effects of the limitations in
Registrant&#146;s Charter documents on the liability of its officers and directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Dividends we pay on our securities to tax-exempt investors..., page 17</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">17.
The Form&nbsp;10/A includes at page 15 an expanded discussion of &#147;unrelated business taxable income.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;2. Financial Information</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</U>.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 4

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Overview and Background, page 19</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">18.&nbsp;The
overview under the Form&nbsp;10/A MD&#038;A at page 17 has been expanded to discuss the primary matters
with which management is concerned in evaluating Registrant&#146;s financial condition and operating
results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">19.&nbsp;The
Form&nbsp;10/A MD&#038;A description of Registrant&#146;s fast growth
stage increases at page 17 has been
revised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Financing, page 22</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">20.&nbsp;The
Form&nbsp;10/A at page 20 states that 433,204 Units were sold in the offering which terminated in
October&nbsp;2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">21.&nbsp;The
Form&nbsp;10/A at page 6 includes a risk factor regarding the superior rights of the Series&nbsp;AA
Preferred Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">22.
The Form&nbsp;10/A MD&#038;A at page 21 includes additional details
regarding Registrant&#146;s use of the private offering proceeds.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Net Income Available to Common Stockholders, page 25</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">23.
The Form&nbsp;10/A MD&#038;A at page 23 includes a description of loss from continuing operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Other Liquidity Needs, page 27</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">24.&nbsp;The
Form&nbsp;10/A MD&#038;A at page 25 discusses Registrant&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Non-GAAP Supplemental Financial Measure: Funds From Operations (&#147;FFO&#148;), page 28</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">25.
The Form 10/A at page 26 clarifies the FFO determination under NAREIT guidelines as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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&#146;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.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 5

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;3, Properties, page 32</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">26.&nbsp;The
table on page&nbsp;29 of the Form&nbsp;10/A includes a column for average annual rental rate
per square foot or unit for each of the previous 5&nbsp;years (or, if shorter, from the date of
acquisition).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">27.&nbsp;The
table on page&nbsp;29 of the Form&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Mortgage Debt, page 36</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">28.&nbsp;The
table on page&nbsp;34 of the Form&nbsp;10/A includes a column for the balance of the loan at
maturity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Co-Ownership of Properties, page 42</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">29.&nbsp;The
discussion on page&nbsp;40 of the Form&nbsp;10/A clarifies that, as of December&nbsp;31, Registrant
owned 100% of all but one of its properties and subsequent thereto, Registrant sold an undivided
interest in a second property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;6. Executive Compensation, page 49</U>. <U> </U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">30.&nbsp;The
Form&nbsp;10/A at page&nbsp;46 includes a table setting forth outstanding equity awards for named executive
officers as of December&nbsp;31, 2007, Registrant&#146;s most recent fiscal year end.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">31.&nbsp;The
Form&nbsp;10/A at page&nbsp;47 includes the disclosure required by Item 402(r) of Regulation
S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">32.&nbsp;The
Form&nbsp;10/A at page&nbsp;45 discusses monthly call allowances under &#147;All Other Compensation&#148;
in the Summary Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;7. Certain Relationships and Related Transactions and Director Independence, page 53</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">33.&nbsp;The
Form&nbsp;10/A at page 50 under this subheading discloses the management fees paid to CHG Properties,
Inc. during Registrant&#146;s past two fiscal years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">34.&nbsp;The
Form&nbsp;10/A at page&nbsp;50 includes a description of the standards Registrant used to determine
director independence.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 6

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;9. Market Price and Dividends on Registrant&#146;s Common Equity..., page 54</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">35.&nbsp;Item&nbsp;9
of the Form&nbsp;10/A at page 52 states that as of May&nbsp;15, 2008, Registrant had a total of 1,041
holders of its common stock and 31 holders of its Series&nbsp;AA Preferred Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">36.&nbsp;Item&nbsp;9
of the Form&nbsp;10/A at page 42 under &#147;Compensation and
Analysis&#148; describes Registrant&#146;s 1999 Flexible Incentive
Plan, as required by
Item 201(d) of Regulation&nbsp;S-K. The Form&nbsp;10/A at page 49
discusses equity awards Registrant has made under its 1999 Flexible
Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;10. Recent Sale of Unregistered Securities, page 55</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Securities Issued in Private Placement Offerings, page 55</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">37.&nbsp;Item&nbsp;10
of the Form&nbsp;10/A at page 53 includes disclosure regarding sales of unregistered securities
and the application of Regulation&nbsp;D, Rule&nbsp;506 to these sales as required by S-K Item&nbsp;701.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Issuances of Securities in Compensatory Transactions, page 56</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">38.&nbsp;Item&nbsp;10
at page 53 of the Form&nbsp;10/A at page 53 includes the following discussion of the basis on which the
compensatory issuances under Registrant&#146;s 1999 Flexible Incentive Plan were exempt under Rule&nbsp;701.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Issuances of Securities in Compensatory Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Since January&nbsp;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&#146;s Liquidity Participation Plan of 1999. These
securities were sold pursuant to the exemption under Rule&nbsp;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&#146;s outstanding common stock,
all as determined under Rule&nbsp;701. Registrant may also claim an exemption under Section&nbsp;4(2) of the
1933 Securities Act for these sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Item&nbsp;11. Description of Registrant&#146;s Securities to be Registered, page 56</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">39.
Item&nbsp;11 of the Form&nbsp;10/A at page 54 states the rights of the Class&nbsp;A common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">40.&nbsp;The
discussion under Item&nbsp;11 at page 54 of the Form&nbsp;10/A cross-references legal restrictions on Registrant&#146;s payment
of dividends.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 7

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Financial Statements and Notes</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Note 1. Organization, page 64</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">41.&nbsp;As the Staff noted, Registrant sold a 48.601% interest in its 7-Eleven property during
2007 and footnote 3 in Item&nbsp;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&#146;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&#146;s business and operations. After giving consideration to SOP 78-9, and
Registrant&#146;s accounting policy, Registrant will include the entire entity in its consolidated
statements and such statements will reflect the minority interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Note 2. Significant Accounting Policies</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Property Acquisitions, pages 64-65</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">42.&nbsp;Registrant&#146;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.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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 have leases significantly over or below market
rents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">43.&nbsp;Registrant understands that Item&nbsp;8-06 of Regulation&nbsp;S-X only applies to significant
acquisitions acquired by a reporting company. At the time of the subject acquisitions, Registrant
was not a reporting company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">44.&nbsp;Registrant purchased the World Plaza property subject to a ground lease. The ground lease
is not the typical ground lease that expires worthless at the expiration date. Under this ground
lease, Registrant has the option to purchase the leased land and improvements in 2062 for a price
of $181,710. Accordingly, Registrant allocated a portion of the purchase price to the land based
on the value of the land less the present value of the future scheduled payments.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 8

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Federal Income Taxes, page 68</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">45.&nbsp;Registrant
has revised the disclosure in footnote at page 65 of the Form 10/A for Federal Income Taxes to disclose
that the tax status of distributions has been a return of capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Earnings (Loss) Per Common Share, page 68</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">46.&nbsp;Registrant omitted the disclosure of diluted EPS from the Statement of Operations since
there was a Loss from Continuing Operations. Pursuant to FASB 128, paragraph 96, the &#147;control
number&#148; for determining whether to include potential common shares in the diluted EPS computation
should be income from continuing operations. As a result, since there was a loss from continuing
operations, diluted EPS would be computed in the same manner as basic EPS, even though Registrant
reported net income after adjusting for discontinued operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Note 7. Stockholders&#146; Equity</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Common Stock, page 73</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">47.&nbsp;Registrant&#146;s common stock is not subject to Registrant&#146;s redemption rights. However,
Registrant has repurchased shares in negotiated transactions from shareholders when it determined
such purchases were to its benefit. Most of these purchases involved small amounts of the shares
purchased from shareholders suffering hardship, and the purchases were at price less than the net
proceeds received by the Company on new sales of shares. Registrant has changed the description of
these transactions in the Statement of Changes in Stockholders&#146;
Equity at pages 60 and 61 of the Form 10/A to delete the word
&#147;redeemed&#148; and substitute the word &#147;repurchased&#148; to avoid the confusion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Subsequent Events
note on page&nbsp;77 of the Form&nbsp;10/A discloses that the accrued distribution declared by Registrant
referenced in the Statement of Stockholders&#146; Equity was paid in January 2008. A total of $251,438
of this distribution was reinvested in January 2008 (not a stock
dividend as the staff&#146;s comment stated). Registrant confirms that 26,439 shares were issued in
January 2008 in consideration for these reinvested distributions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The dividends paid of $1,584,193 per the Statement of Stockholders&#146; Equity are reconciled as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per Statement of Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,584,193</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reinvested Dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(670,067</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends accrued in 2006 paid
In 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,217</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Per Statement of Cash Flows</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,078,063</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">RUSHALL &#038; McGEEVER<BR>
A PROFESSIONAL LAW CORPORATION

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">United States Securities and Exchange Commission<BR>
Attn: Ms.&nbsp;Kristina Aberg, Attorney-Advisor<BR>
September&nbsp;5, 2008<BR>
Page 9

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Note 9. Restatement of Previously Issued Financial Statements, page 77</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">48.&nbsp;Registrant included additional disclosure of the adjustments to previously issued
financial statements of Cash Flows for 2006 and 2005 on the Statement
of Cash Flows to Footnote 9 at page 74 of the Form&nbsp;10/A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Note 10. Segments, page 80</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">49.&nbsp;The
capital expenditure expense does not agree with acquisitions per the Statement of Cash
Flow by the amount assigned to the land lease. Registrant has revised
Footnote 10 at page 77 of the Form 10/A to include a
subtotal of acquisition of operating properties and capital expenditures and tenant improvements
that agrees to the Real Estate Investments shown on the Statement of Cash Flows.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Registrant acknowledges that:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Registrant is responsible for the adequacy and accuracy of the disclosure in the
filing;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Registrant 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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If, after your review of this letter, the Form&nbsp;10/A and the Form 10-Q/A, you have any
additional questions or comments, please contact the undersigned at your convenience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Very truly yours,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">&nbsp;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">BRUCE J. RUSHALL
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">BJR/cak</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">cc:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kenneth Elsberry
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jack Heilbron</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



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