Can I Buy/Sell A House To/From Myself?

[Charles May]

I have a private lender who is willing to "lend" me X amount of money to build my real estate portfolio, at a cost to me of 20% of course. He would deposit a check for the purchase price AND the rehab costs up front into our LLC. We were throwing some ideas around and came up with this scenario:

Purchase price: $50,000 + $20,000 in rehab costs = $70,000 Total Investment

$70,000 Investment + 20% Interest = $84,000 Owed back to private lender

Now, would we be able to pull out a traditional home loan for this property, use that money to re-imburse the private lender and then make regular payments to the bank?

The reason we are even considering this is that my investor wants little/nothing to do with the real estate side of this and does not want his capital tied up long term in rental properties. So using the above scenario we could pay him back within a few months and still keep/add an updated income property to our inventory.

I'm open to questions/comments/ideas/dumbest thing I've ever heard......etc