My Take: The Other Housing Crisis In Los Angeles

Featured in the November 2024 Edition of "Apartment Age" by the Apartment Association of Greater Los Angeles

The housing crisis in Los Angeles is no secret. However, a less discussed, but equally painful housing crisis looms in Los Angeles, and that is the inability for Angelenos to secure housing because they do not meet the minimum qualifications required to rent a property. To address this, the City and County of Los Angeles should create an insurance fund that landlords can tap into if they are forced to evict a tenant for nonpayment of rent. This will allow landlords to take a chance on those who might not meet traditional rental qualifications.

I am what you’d call a “mom and pop” landlord. That means I own a few units, and I don’t make my living on the property I own. In the past five years I’ve had to evict two tenants for non-payment of rent. The only time a tenant can legally stop paying rent is if there is a habitability issue, meaning some part of the unit, or the entire unit is not habitable. In neither of these two cases was habitability an issue. The first eviction cost me $50,000 between lawyer’s fees, payment to the tenant to vacate, lost rent, and damage to the property. The second eviction was not contested by the tenant and still cost $20,000 between lawyer’s fees and lost rent.

Because the price to evict is so expensive, landlords like me must be extremely cautious when approving a tenant applicant. When screening applicants, I’m trying to determine whether they will pay their rent consistently. The most important piece of data to me when screening a tenant is the credit score. While it is by no means a perfect indicator of whether one will pay rent, it is the best indicator out there for determining whether one pays their bills. The second piece of data is a potential tenant’s income. This can be verified through bank statements and Form W-2s. Anyone who has been looking for a rental unit these days can tell you requirements around minimum credit scores and proving income have become almost universal. And this is where the current crisis lies.

There are currently almost one million undocumented immigrants in Los Angeles County. None of these individuals has a social security number and therefore none have a credit score. While not all of these individuals are adults, that is still a daunting number of people who will not be able to rent a home from a traditional rental provider who has credit score requirements. In addition, in 2023, 21%

of the individuals with a credit score in Los Angeles County had a “subprime” credit score of 660 or below. Once again, these individuals will likely not be able to rent from a traditional rental provider with a credit score requirement. Then there are those who might have a decent credit score but cannot prove their income. In 2019 just over 7% of Los Angeles households were “unbanked,” meaning they do not have a bank account, and therefore could not furnish bank statements to a

rental provider who requires these as a condition of approving an application. Numerous other individuals get paid cash under the table and therefore cannot demonstrate that they meet the income requirements needed to rent a home.

When considering these statistics, we must acknowledge there is a crisis among Angelenos who cannot qualify for rental housing based on the basic standards most housing providers use to evaluate potential tenants – a crisis of qualifications. The vast majority of these individuals are good, hard-working members of our society who would make excellent tenants if only given the chance. Unfortunately, given the price of evictions, I can no longer afford to give people the chance.

There is however a solution which I hope our elected officials at the City, County and State levels consider establishing - a tenant eviction insurance fund. If a tenant does not meet the basic requirements needed to rent a home, either because they have no credit or their credit score is below a certain threshold; or they cannot demonstrate their income, they could apply for this eviction insurance. If a housing provider is forced to evict them for nonpayment of rent and is successful in the eviction, the landlord would then recoup all lost rent from the fund, plus a portion of attorney’s fees. In this scenario the landlord still has skin in the game as they are paying some attorney’s fees in order to evict the tenant. As a landlord, I can tell you I’d be much more likely to rent to a tenant with a low

credit score, or who could not prove their income if I knew I would be reimbursed for any lost rent due to an eviction. This would also create a larger pool of qualified applicants and shorten the duration of vacancies. It is my sincere hope that a program like this is created so that the hundreds of thousands of Angelenos who cannot currently qualify for housing are able to finally find a home.

Joshua Kamali is a landlord in Los Angeles and a member of the Apartment Association of Greater Los Angeles. He worked for almost 10 years in Democratic politics and policy in Washington, D.C. and in California before becoming a nonprofit fundraiser. He now works in property development and construction and owns twelve units in Los Angeles County.