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. 

Thanks all for your informative responses, so besides tasks with physical nature what kind of office work tasks that consume much of a Landlord precious time? 

With regard to a rehab, is a permit required if you are not doing anything structural? 

I love your physical property example.

The thought of seeing an actual physical property as a form of investment rather than dumping money into stocks is very exciting to me.

But be ready to answer the question of how the ownership/business will be structured.