Fund More Deals With Mike Banks

Episode 437: Fund More Deals With Mike Banks

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The credit system has changed dramatically in the past years, and now people are finding new ways to maximize their credit score range. What if you can fund more deals even if you don’t apply to lending agencies or consume a huge amount of time? This is what Mike Banks aims to do, helping people start more investments in the most convenient and fastest way possible. Mitch Stephen is joined by the COO of Fund&Grow, discussing how his company’s refreshing credit strategy is changing the game for many investors today, allowing them to access a lot of rewarding opportunities. They explain the perks of this process, from its fast turnaround and easier qualification method to the attainable special rewards.

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I’m talking with Mike Banks. He and Ari started a company and they help business people, not just real estate investors, but anybody with a business that needs access to some capital. Who doesn’t when you’re first starting out? When I started out, I was broke. I couldn’t rub two nickels together. If I had something like this, it would have changed. I did what Mike Banks is going to talk to us about. I bought my first 100 houses on credit cards because it was the only lending place I could go that didn’t want to overanalyze what I was trying to do with my money.

I knew what I was doing about my money. I knew I was going to make a profit but trying to explain that to some guy in a silk tie across an Oak desk usually doesn’t work out. I happen to have good credit. I had access to credit cards and back in the day, it was a lot less complicated. If you had good credit and you put in an application, you automatically got the card and you got the full amount of cash withdrawal access by virtue that you had good credit. A lot of people did exactly what I recognized we could do. I could have taken all those credit cards and have gotten about $600,000 on my kitchen room table. It’d taken me about ten days, but I had 45 credit cards.

They weren’t holding that against you either back in the day. You could get as many credit cards. If you had good credit and you turned in the application, they’d give you the car. They didn’t care how many cards you had. That’s different now because they recognize that people like me could get $600,000 on a dining table, take off to Mexico and never pay them back. I guess a certain amount of people did that. Now, there are different kinds of regulations. Mike, how are you doing?

I’m good. How are you doing? Thanks for having me.

I’ve been sitting here talking about buying my first 100 houses on credit cards and Mike is over there nodding his head up and down because literally, I bought my first 100 houses on credit cards. It was many years ago. It was a different time. We’re going to explain some of the differences and why Mike Banks’ company is more important than ever because there are different regulations and algorithms than there ever used to be. The bad apples ruined a good thing and they made it tough for everybody. Years ago, I could buy a house for $20,000. I would walk into the bank and say, “I need $10,000 of this card, $10,000 of that card, $10,000 in the rehab,” and they’d give it to me. I’d have $30,000 in this property, I go fix it up and I would owner finance it for $60,000. I’d sell the note for $53,000 cash plus pick up a down payment. I did this 100 times in a row before finally my bank called me and said, “Would you like a line of credit?”

I have tons of clients doing that.

There are other things to it. I never did wholesaling. Because I had access to this, I went straight to buying the property, fixing it and making the bigger bite out of apple but picture all the wholesalers out there. They need $2,000 or $3,000 sometimes to tie up a property. You could tie up a lot of property with a small amount of credit card and start flipping contracts. In some of the more expensive or nicer properties or when you’re talking to someone who’s a little more savvy, they might want more than $10 or $100 earnest money. They want a substantial commitment from you. If you don’t have any money, you can’t do that.

Mike and Ari have a company that helps anybody in any business. If you’re not in the real estate investing arena, that doesn’t mean that this conversation we’re fixing to have is not for you. I can’t tell you how many businesses I know could use some advance on their payroll or advance on their invoices and not have to go to loan shark city where they’re charging a billion dollars. Tell us a little bit about your background. How did you stumble into helping people gain access to business credit lines or unsecured lines of credit? How did you get in?

The company has been around for many years before we started focusing specifically on business credit. We were more of a mortgage company. The guy that started the company years ago was a mortgage broker in California. He was doing a bunch of high-end loans and he ended up getting into this niche. Many years ago, Ari took over the company. He sold it to Ari. I got with the company several years ago and we’ve been growing steadily since then. We’re at about 40 employees. We bought a new office building in Spring Hill, Florida. We did about $15 million last month in new credit that we originated. Before I got into this company, I was working in a pharmaceutical company as a wholesale distributor. That was what I was doing before here and also going to college.

Were you friends with Ari or did you bump into him through business?

It was through business. We weren’t friends at first, but then we ended up becoming friends and grew the company together. When I started, there were two other employees here and we bought the office building we’re in now. We’ve had to upgrade and get a bigger building. We’re doing great. We’re on the Inc. 5000 list again.

I always like the backstory because there are a lot of people wondering when their ship is coming in and you never know.

Having these kinds of relationships, that’s what brought so much success to our company. Paid advertising is great, but it’s these relationships that we’ve developed where we’re taking care of our affiliates group. I’m not sure where you’re at as far as your total credit gain for your group.

I heard there were about 230 people that had gone to your company through my podcasts or my efforts.

We’re up to $13.1 million is the total amount of credit that we’ve established.

Those people got over $13 million for the credit. I’m a real believer in this. I’m a member myself. I have gone through the gauntlet with you guys, picked up lines of credit and stuff and continue to work to make sure that I have lines of credit that don’t even hit my credit bureau, my personal credit report. That’s a new level of freedom.

That’s a super attractive thing. You can carry $50,000 or $100,000 if you’re doing a flip and it doesn’t even show up on your personal credit. It doesn’t bring your personal scores down. We’ve got a lot of clients that are doing that. You were talking about how you used to do it. You would go to the bank and get $10,000 here and $10,000 there. Now, you can send a wire transfer from the credit line to the closing company. You can close on a cash deal as a cash buyer, send them the wire for escrow and then close on the deal.

I used to get advances on credit cards when it started out. They were charging me 3% or something. When you’re doing 3%, it was a hefty little fee, but it was nothing in the big picture. I discovered that you could get the credit card checks and it was $50 for whatever the amount of the check was. It was a flat $100,000 or whatever it was. It made a whole lot more to call the credit card company to get the checks. Do they still do that at all?

They do still offer convenience checks and a balance transfer, which is what you’re talking about with the 3%. Those are still happening with our clients. The other option is the wire transfer where you can have our third-party vendor charge your credit card and then send the wire transfer to whatever place of business it is that doesn’t accept credit cards. You do the wire transfer and pay the third party that charges your card. It costs 2.75% for wire transfer and then for a check or an ACH, it is 2.5%.

When you do the math, it’s a lot cheaper than going out and getting a hard money loan that’s going to cost you 12% and then 2 or 3 points to originate that hard money loan. That’s going to cost you $15,000 to do that. With business credit, you can do it for way cheaper. We’ve had tons of clients do it. That’s what most of our clients are doing is flipping houses. We have a good percentage of clients that are also landlords that are buying rental properties, distress, and then fixing them up.

Let’s say you’re a person who has a full-time job and you’re happy with it, but you’d like to make some extra money. Get some credit with Mike’s company and then loan it out to people like me, who can give you ample collateral. The best thing that would ever happen to anyone who loans me money is that I don’t pay them because of the collateral that I put up. I function off of $16, fixing to be $20 million worth of private people’s money. I got 8% of private money for several years. A lot of those people I can call up and say, “I need to put it this on a ten-year am,” or “I need to put it on a fifteen-year am.”

The old people don’t want to go on a fifteen-year am, but the younger people with an IRA that they can get to for twenty years. They’ll say, “I’ll put it on fifteen years. Let it ride. I don’t want to go in and out. I want to keep making money at 8%.” I use the credit cards and these lines of credit to launch myself and I found a little bit easier ways. It’s not as cheap. Some of these credit cards are 0%, 1%, and none percent. What we’re doing right now and the reason why Mike and I decide to get both get signed up with Mike and Ari is because we’re going to do all our rehabs with low to no interest rate loans.

We’re doing 150 houses. Not all of them got rehabbed and go through rehab, but enough of them will. We calculated that the interest savings alone will be about $37,000 from the amount that we got. We figured that would take him, me and the company on a nice trip and still have money left over. We talked to the company and said, “This is going to be a little bit of an effort. We’ve got to put some effort in to keep track of this way but if you all want to keep track of it, we’re taking you all on a vacation for 4 or 5 days.” Everybody said they were more than willing to keep up with it.

Speaking of vacation, what’s cool about this whole concept is that you can earn rewards points as you’re spending on these business credit lines and you can get free travel and cashback. That’s another perk.

We figured that all the airline tickets were going to be free because we’re going to have enough air miles. I have over a million air miles. We’re right at a million air miles. Flying in the continental US, the contiguous United States of America is not an issue. I never pay for any of that unless I do something last minute, but it’s even covered in. The only thing that it wouldn’t help me is I want to go overseas. Sometimes it even helps with that. Plane tickets are not an issue for me. If I want to go somewhere, I go. It doesn’t cost anything. You had a website that you could go and people would plug in their social and you’d give them a pretty quick snapshot. They’d fill out a little questionnaire. Can you give a snapshot of what you could do for them in a short period of time? Do you still have that going?

We do. For this link that we’re using, we’re going to keep it simple, not ask for people’s social and have them tell us what their credit score ranges. When they go to that link, it will ask them, “What’s your credit score range?” We’ll call them and ask them a few questions about their credit, business and all that. We’ll give them a pre-qualification amount and say, “Here’s what you qualify for in the next two weeks.” We’ll get them started and move them forward as a client.

Go to 1000houses.com/grow and you’ll have an opportunity to get a snapshot of what your available credit could look like in a short period of time. Is it 30 or 60 days?

We used to promise 30 days and that was our turnaround time, but we changed some things up internally. We deleted this one week of waiting time where people would be waiting to get on a consultation call. Now, as soon as they sign up, we go in there. We review their credit and we respond within 2 to 3 days. In many cases, we’re applying for credit within the first week that they signed up. That’s why I was saying before, two weeks is a new turnaround time. You guys can have up to $150,000 in the next two weeks.

It doesn’t matter what business you’re in. You need to have this in waiting. You don’t want to wait until that opportunity of a lifetime comes by because it’s too late then. You need to be ready with your lines of credit and with your availability. You don’t have to use it, but when something comes by, normally the greatest deals on the planet are happening because there’s some huge backpressure for the guy that has to liquidate. There’s some time pressure, a foreclosure. Something imminently, not good is going to happen if they don’t do something soon about some situation. If you like to start, you have to have this availability and be ready to strike. If you’re in a business that opportunities roll around from time to time, you need to get in and get ready.

I wrote this book called, My Life & 1,000 Houses: Failing Forward to Financial Freedom. At one point in this book, my wife was going to divorce me because she found out I had $250,000 worth of credit card debt that I didn’t tell her about. We’d only been married about 30 days and she thought she’d a complete nut job, that I was one of those made for TV show specials. I was sitting there trying to explain to her that I had $500,000 worth of houses free and clear. This was what I had bought them with. We ended up going to a marriage counselor.” For 36 hours, we were at a counselor because that was part of her demands. The guy’s name was Dr. Love. He was a marriage counselor and he’d been married three times.

My wife tells the story about how she’s petrified and then I’m going to ruin her future and her credit knowledge stuff. She told her story and it was very convincing. I was looking at her to tell the doctor about credit card debt. I have a point to this because credit card debt is supposed to be the enemy but there’s good and bad debt. It doesn’t matter how you get it, whether it’s through a credit card or a line of credit. I had good debt, but it didn’t look good on the outside. She explains it to the doctor. I’m listening to her telling the good doctor and I’m thinking, “That is convincing.” If I was him, I would believe all that.

He got over to me and I started explaining to him, how I bought these houses, what these houses are worth, why I knew what these houses were worth for, and my method of how I did it. The fact that I didn’t have any money, I didn’t have any choices, but if I was going to let this deal walk past me, or I could get out my credit card and I could take it off the market, I could control it for a certain amount of time. I didn’t have to take it even all the way down. I didn’t even have to own or possess it. I had to control it for a certain amount of time of the contract and I can make all this money.

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About halfway through my explanation of it, I noticed a paradigm shift in the conversation and I’m now giving him financial advice. Into the conversation, he wants to know if he can loan me money. My wife loses the collective crap right there. I’m walking out the door, she’s pissed and she’s getting on the elevator because I had turned the psychologist into a potential investor. On the way down I said, “I’m sorry that I’m screwed up that even the doctor wants to invest with me. Give me 60 days and let me show you what happens.” The point is people are petrified of credit card debt, but if you could get $100,000 on credit card debt at 18% or 25%. That’s annual interest and you can make $50,000 or $100,000 in 2 or 3 or 5 days. It doesn’t matter what the interest rate is and where you get the money, just get the damn money.

Everything we apply for comes with 0% for an average of twelve months.

When I was doing it, some of these cards were 18% annual interest. I wasn’t going to own this property in 30 days. You had to take the annual interest. You find a daily rate and figure out what you’re going to pay. For the month, I was going to pay for $2,000 or $3,000 but I was going to make $28,000. If you don’t have the damn credit card at 18%, you weren’t going to make anything. You’re talking about 0% interest, which is exactly why Mike and I got together and said, “We’re going to start doing our rehabs. We looked at our rehab budget and we thought it’s a lot easier to borrow money from a private lender.”

Let’s say you want to borrow a $100,000 house. That’s what it’s worth and what I can sell it for. Let’s say I want to borrow $50,000 to buy it and $20,000 for the rehab. I need to borrow $70,000 on a 100,000 house. I want the readers to put themselves in my shoes. You’re talking to a private lender about borrowing $70,000 on a $100,000 house. Wouldn’t it be a lot easier lending you $50,000 on a $100,000 house? You used the $20,000 off of your credit cards to do the rehab, which is 0% interest which is a good reason. This is how you raise private money. Part of how you get successful at connecting with potential private lenders is you use your credit cards to limit the amount that your private lender has to give you to get into the house.

This house is worth $100,000 and I needed $70,000. It has nine days on the market. I’m going to take $50,000 to buy it and then I needed $20,000 to fix it. I’m asking this private lender for $70,000, but the house is worth $100,000. It’s a disparity. It’s good enough. You can find some people to do that deal. It’s not out of the realm, but it’s so much easier to say, “Give me $50,000. I’ll spend $20,000 of my own money.” You don’t have to tell them where it comes from. I’ve spent $20,000 on my own money on the repairs, but you loan me $50,000 on this house $100,000. It’s a 50% LTV. This is how you start raising private money. If you have access to money like this, it makes it simple for a private lender to go, “Why the hell wouldn’t I do that?”

You turn something that they have to contemplate into a no-brainer decision because you’re going to get $20,000 from a different source. It doesn’t encumber your $50,000 private lender’s first lien position. Now you’ve got a first lien with only $50,000 on a $100,000 house. There’s a reason why I got $20 million with private money. When I find a big fish out there that I want to get to know that he doesn’t know my name, but I do know him and I do know he’s a big fish. I create no-brainer deals like this using my own money, credit card money or using some other money, make it easy for him to do one deal with me. That’s all I want is for them to do one deal with me.

It’s for the beginners because it’s hard to find a deal with so much meat on the bone until you get the hard money lender to agree to do the deal. I’ve heard before, you have to have multiple deals under your belt before you can even get some lenders to work with you. What you’re saying is you can find a deal that’s not the greatest spread, but it’s still a deal and you can make that one happen by having the credit lines available to supplement the amount that you’re getting from the lender.

Let’s say the house needed no rehab and it was a $70,000 house. You could take $20,000, put it towards the house and you can borrow the $50,000 from the lender. You’re making it easy for this guy. At some point, it’s not about you when you’re trying to find private money. That’s one of the biggest obstacles. When I’m trying to teach people to find private money lenders, they say, “I don’t have good credit. I don’t have a track record. I don’t speak the language that well.” It’s not about you, boys and girls. It’s about the collateral. What are you going to give this man as security in case you don’t perform? Is it good enough? Is it a no-brainer? How you make no-brainers is this example. That’s how you do it. It has nothing to do with you.

Charles Manson should have been able to get these loans. He’s going to bang on the bars with this metal cup until the warden showed up and he said, “I want to borrow $50,000 from you.” The warden says, “No. Why the hell would I do that?” He says, “I’m going to pledge $100,000 on a house and I’m going pay you. You’re going to get my $100,000 house.” All of a sudden, I don’t care how many murders Manson had committed. I’m going to loan him $50,000 and if he doesn’t pay me, I’m going to get $100,000 on a house. He can’t come to get me and kill me because he’s in jail. That’s a bad example. I’m trying to drive this home in the worst scenario possible. Anybody should be able to get these loans. It doesn’t matter about your track record or any of that. It matters with the pledging. This is a way to make your collateral look good.

I’m doing a rehab on a house and the house I got is worth about $150,000. I got it for around $65,000. It’s not the best spread, but it wasn’t like it needed a new roof. It needed AC and cosmetics. I tried wholesaling and finding a buyer. Everyone I could find wanted it for what I had it for, but I couldn’t get the seller down because he already had a contract from another guy who was going to come in and do this. I used my credit and my own money, but I could have gone to a hard money lender. The only thing is I didn’t feel confident because it wasn’t a good enough spread. I would have to go and pay the hard money lenders for 10%. I use my own money credit and that’s how I’m getting it done. Whether you’re using a lender and the credit, your own money, and the credit, either way, it gave me this extra confidence of being able to spend more money on marketing, direct mail, and having that extra drive to get my feet wet. Before, all I did was wholesale a few houses like five.

This is what we want you to do. I want you to go to 1ooohouses.com/grow. This virtue of using that link, you’re going to get $500 off the traditional price. I know this is a true discount because I’ve been doing this. Two hundred thirty of my students have used this company. They’ve done a great job. It’s helped them a lot. You have to apply yourself. You get a free consult. Let them talk to you. You need about a 720 credit score to shoot right out of the barrel. If you don’t have a 720 credit score, they can help you fix that too. This is another thing that your company does so well, Mike. The credit repair business is a crappy business. It is one of the most crappy-written on the planet. There are a lot of shysters in that business because they take the money and they don’t ever do anything. You guys are not charging very much for this. I know people that charge a ton for it. It’s easy to handle and you actually get it done. You’ve got a bigger reason for doing this.

We have a lot of clients that come in through Fund & Grow on a webinar or a video like this. They sign up and they’ve got 650. They thought they had better credit. We need to do credit repair for them and we need to perform so we can get them to qualify as soon as possible to keep them as a client. We transitioned to a pay-per-delete model. Before that, we had a six-month refund period. We weren’t doing a monthly thing. A lot of the other companies get you on this monthly recurring payment and you’re still in the program for a while. Our goal and the way our model was set up was to perform as quickly as possible or we had a six-month refund period. Now we’re doing pay-per-delete on that. It’s usually a 680 score and up. Some people in that 680 to 720 range still have strong credit, but they might add the time. They might have some high balances that need to be paid down to around 35% because a lot of people fluctuate from 680 to 750 a month.

What you do is go there and get your $500 discount. If you choose to go the long haul, you’ll get a $500 discount. They’re going to get you on a free phone consult when you get out there. They’ll answer all your questions, figure out where you’re at, get a game plan, and tell you what’s possible. The other thing we talked about is that people don’t understand how much it costs them when they don’t have good credit. When you don’t have good credit, you are paying extra for all kinds of things that you have no idea like car interest rates, even health insurance or any kind of insurance. With car insurance, you’re going to pay more for it. You don’t get a favorable rate anytime you want to do an installment. I bought a car at 1.75% because my credit was good. It’s free money.

Get out there. Get you some credit and find you some deals. If you’re paying too much for something, make that be your goal. Get your credit up and refinance your house at a lower rate. There are 100 ways to save money with this. It starts with your credit. Beyond that, be ready when an opportunity presents itself that you can go someplace and grab the funds to capitalize on it. It might be a Corvette for half a price, a Rolex that you could pick up for pennies on the dollar or it might be a house that’s in your business, but it doesn’t matter what it is. When there’s over a top deal on something, you’ve got to move. Cash is king.

Not only the people with bad credit but people with better credit can get funding right away. Something that we’ve seen happens a lot is people with 750 credit scores try to get access to business credit lines on their own and the bank denies them because they don’t have any previous business credit history. We see that come up a lot when we apply for people. When we apply, we get on the phone with a decision-maker. We talk to the underwriter and we have those decisions overturned into an approval 99% of the time. That’s what’s happening. We have a whole team of people here that are on the phone with each bank, talking about each application and making sure it gets approved. Even people with 750s, when they go and they try to do this on their own, they get $5,000, $10,000, but they’re not getting $50,000, $75,000, or $100,000 like we get. That’s because we do so much volume. We have relationships.

It’s different between being an amateur and a pro. You know that you do this every day. You know the algorithms, how they want it presented, what they want to hear, what they don’t want to hear, and how to talk to them. To go out there yourself, I can completely understand it.

We have that confidence. We know this person qualifies. We’ve seen them get approved and that type of a scenario thousands of other times. We’re able to enforce that when we get on the phone. When you apply on your own, that’s a computer systematically responding to the application and it does the algorithm. Whatever that decision is, that’s what sticks. By having our team speak with the decision-makers every day on your behalf, going over those applications, we do get a lot more credit. When we do a webinar and we show you the credit gain view, you can see the initial auto-approval columns, always zeros, a couple of $2,500, $5,000 and $10,000. It’s mostly zeros in that initial column on the auto decision. That’s what most people get when they do it on their own. Having our team do it for you will bring in way more in a shorter period of time.

From my own personal experience, when I ask you to do something, you’ve got to do it. I went down and showed up at Bank of America because they have some stricter policies. They wanted two forms of ID to make sure that it wasn’t a scam. I drove by the first Bank of America I saw. I walked in. I got an appointment. They had some key case number, I gave it to the lady, and they looked it up on the computer. We got in touch with the right person. I showed them my ID. I was off and running and that resulted in an extra huge bump in my credit line. You’ve got to do your part.

That’s more on the rare side. That’s not something that’s happening for every client, but in some cases, it does happen. Some things like that will happen here and there.

I’m very happy because I said, “How much can I get on this card?” They said, “We’ve uncapped you.” I said, “What do you mean by uncapped?” They said, “There’s no limit.” I said, “I could buy a house for $100,000.” They said, “Let me see,” so they plugged it in, and they said, “Yes. It would go through if I hit this button.” I said, “What about $150,000?” They said, “It would go through if I hit this button.” I said, “What about $200,000?” They said, “Yes, it will go through if I hit this button.” I said, “I’m glad I stopped by here.”

We love American Express. They approve a lot of our clients. We’ve had a great relationship and we’ve been working together with them for a while. We get a lot of approvals, sometimes $75,000 or $100,000 on one account. In some cases, we have those no limit cards that are getting approved as well. We worked with all of them.

When they said there’s no limit, I thought it was BS so I was trying to push them. I didn’t want to go any further than that, but I did take it to $200,000. I said, “That’s good enough. If I need more than that, I’ll call them.” It was a good deal. I want to thank you for taking the time to come on. Is there anything you want to say or did I miss any points that we need to cover?

Not really. Just basic stuff. We’ve been working together for years. We’ve referred to each other clients. We’ve done over $13 million or $15 million that we did for your pool.

It was $13 million. I know for a fact it was over 230 students. I talk to most of them every Tuesday.

We’ve gotten tons of reviews from your clients also. If anyone wants to pre-qualify, go to that link and we’ll give you a call.

Go to 1000houses.com/grow and get a $500 discount. Get your phone consultation and get prepared for when the opportunity matches this money. You can take advantage of it. I told people the fee that you charge compared to what you can do with these lines of credit is a no-brainer stupid decision. It shouldn’t be even on your radar if you’re making any deals at all.

If you compare it to hard money, it’s much cheaper. It costs you 2.75% to send the wire transfer and you’re at zero interest for twelve months. It costs you $2,750 to use that $100,000 to buy a house. Send those wire transfers over to the closing company versus paying a hard money lender $12,000 to $15,000 because of the 12% interest plus the 2 to 3 points.

Hard money lenders sometimes are not that fast.

They won’t approve every deal like the deal I did. I would’ve had to let that go and let the next guy get it who had the money to do it.

If you miss one deal because you don’t have this and you’re going to be kicking yourself down the road and they won’t happen again, save yourself the frustration. Mike, I’d like to thank you for taking the time to stop by. I’d like to thank the readers for taking the time to stop by and get you some Mike Banks and learn about these unsecured lines of credit and business credit. Take advantage of it.

Thanks, Mitch.

Bye, Mike.

Important Links

• 1000houses.com/grow
• My Life & 1,000 Houses: Failing Forward to Financial Freedom

• Here’s How »

• 1ooohouses.com
• Real Estate Investor Summit Facebook
• Real Estate Investor Summit Twitter
• Real Estate Investor Summit YouTube
• Mitch Stephen LinkedIn