Energy efficiency & renovation costs: Is the purchase really worthwhile?

Foreclosure auctions are considered excellent opportunities to acquire real estate at favorable prices. However, with older buildings, the question quickly arises as to whether future renovation and energy costs will negate the price advantage. This guide shows how buyers can accurately assess the energy condition of a property, calculate typical renovation packages, and secure their return plan with funding.

1. Why Energy Efficiency is Crucial in Auctions

Ongoing Costs: Heating and hot water account for up to 70% of the operational expenses of a house.
Value Appreciation: A good energy performance rating (note → Energy Certificate) increases market value and rental viability.
Legal Requirements: The EU renovation wave and national climate goals are tightening limits for existing buildings.

2. Reading and Interpreting the Energy Certificate

Heating Demand (HWB): Kilowatt hours per m² per year. Benchmark for new builds ≤ 50 kWh/(m²·a).
Overall Energy Efficiency Factor (fGEE): Ratio to reference building. Target value ≤ 1.0.
CO₂ Emissions: Important for future levies and grants.

If the HWB of a foreclosure property is 200 kWh/(m²·a), it indicates uninsulated exterior walls, old windows, and a fossil-fueled heating system, while also presenting the greatest potential for savings.

3. Typical Renovation Packages and Costs

Measure	Costs €/m² of Living Area*	Energy Savings
Facade Insulation (16 cm EPS)	120 - 150	▼ 25 - 30 % HWB
Roof Insulation / Cold Roof	60 - 90	▼ 10 - 15 % HWB
Triple-Glazed Windows	450 - 600 per unit	▼ 10 % HWB + Comfort
Air-Water Heat Pump	18,000 - 28,000 flat rate	▼ up to 75 % heating costs (oil → heat pump)
Photovoltaic 10 kWp	13,000 - 16,000	▶ up to 9,500 kWh electricity/year

*Benchmark values Austria 2025, excl. VAT. Regional deviations are possible.

4. Funding and Tax Leverage

Federal Funding "Get Out of Oil & Gas": Up to 75% of heat pump costs, max. €18,000.
Renovation Voucher: 20% grant for insulation, window replacement, and solar thermal energy.
Tax Special Expenses: Landlords can depreciate energy investments over 15 years.
Subsidized Housing Construction Loans: Regions offer 0.5 - 1.0% interest rates for comprehensive renovations.

5. Economic Evaluation, Example Calculation

# Parameters
Purchase Price (Bid)   = 240,000 €
Renovation Package      = 70,000 €
- of which Funding      = 22,000 €
Effective Investment    = 48,000 €
Energy Savings         = 2,600 €/year
Value Increase Expert   = 55,000 €

# Amortization
Return = Value Increase + 10 Years Savings - Investment
       = 55,000 + (2,600 × 10) - 48,000
       = 33,000 €
IRR    ≈ 9.3 % p.a.

Even with conservative assumptions, an attractive internal rate of return emerges that significantly exceeds the risk of the older construction year.

6. Strategies for Bidders

Thoroughly Review Reports: Are there indications of moisture, mold, or thermal bridges?
Outline Your Own Renovation Concept: Set priorities (Envelope → Technology → PV).
Obtain Cost Estimates: At least two contractors per trade.
Check Funding Requirements: Compatibility, application deadlines, energy advisor obligation.
Adjust Maximum Bid: Purchase price + effective renovation costs ≤ 75% of future market value.

7. Minimizing Risks

Construction Physics Report: Clarifies load-bearing capacity for roof insulation or PV.
Repayment Structures: Choose installment plans where energy savings cover a large part of the loan rate.
10% Buffer: Cushion unexpected deficiencies or price increases.

8. FAQ

Can I apply for funding despite foreclosure?

Yes. Once the bid decision is legally effective and registration in the land register has occurred, there is nothing stopping the application.

Is there an obligation to renovate after purchase?

No. However, a future obligation may arise for very poor energy classes. Early renovation protects against subsequent pressure to retroactively upgrade.

How do I find the true renovation costs?

With energy consulting (≈ €600), you receive an individual renovation roadmap and reliable cost estimates.

Conclusion, Purchase or Cost Trap?

Foreclosure auctions offer excellent opportunities to transform energetically outdated properties into profitable investment objects thanks to low entry prices and attractive funding environments. A honest cost-benefit analysis is crucial: Those who read the energy certificate correctly, professionally calculate renovation packages, and take advantage of funding can not only halve heating costs but also significantly increase market value. With a clear plan, the perceived renovation case quickly becomes a future-proof energy highlight in the portfolio.