I'm just starting out, so I haven't setup my company structure yet.

Will this be considered new construction if I level the entire structure?

I have been trained in Structural, Electric and Plumbing.

My question is how should we structure this so that I'm properly compensated for the risk I'm taking?

If you were the private money and the cash flow was there, would you like this structure?

They can sit down with you and explain the legal benefits between different types of organizational structures; LLCs, Corporations, Professional Liability Corporations, special Statutory Corporations available in your state, limited liability partnerships, general partnerships, etc.There is no one size fits all, and an LLC may not even be in your best interest.

They are outlined in Chapter 12 of the VA lenders handbook: http://www.benefits.va.gov/warms/pam26_7.aspThe appraiser will be looking at the home to determine if it meets the MPRs basically ensuring the home is safe, structurally sound and sanitary.

So how should I ask the bank to structure the contract?

If you know what makes it a win for them then you can structure things in a way that works for both of you. 

If you do not qualify for the 121 Exclusion, you can certainly sell and structure a 1031 Exchange so that you can defer the payment of you taxable gain by reinvesting in two (2) or more other replacement properties.