# The Development Budget (Sources & Uses)
Every deal is summarized in a **Sources & Uses** statement.
## Uses (what the money is spent on)
- **Land** acquisition
- **Hard costs** — sitework, building construction, utilities
- **Soft costs** — design, engineering, permits, legal, financing fees
- **Contingency** — a reserve (often 5–10%) for surprises
- **Carrying costs** — interest, taxes, insurance during construction
## Sources (where the money comes from)
- **Debt** — a construction loan (commonly 60–75% of cost)
- **Equity** — your cash and investors' cash (the rest)
Sources must **equal** uses. The budget is the backbone of the pro forma and the lender's underwriting.
## Discipline
Underestimating costs is the classic killer. Pad your **contingency**, get real subcontractor pricing early, and don't forget the soft costs and carrying costs that newcomers overlook.
**Takeaway:** Sources must equal uses — and pad your contingency; underestimating cost is the classic killer.
> *Educational content — not legal, engineering, or financial advice. Requirements vary by jurisdiction; always confirm with the local authority and your professional team.*
