Reuben's Home Inspection Blog


Tankless Water Heater? Not Your Best Option.

When I replaced my first water heater, I was excited to get something larger, more efficient, and maybe even a little sexier.  As it turned out, getting a different type of water heater wasn't my best option, and now I end up telling my customers the same thing.  If you're in need of a new water heater, chances are pretty good that you have a 40 - 50 gallon gas water heater, and your best option for replacement will be with the exact same type. 

A standard gas water heater is a pretty simple device - there's a tank that holds water, a burner at the bottom of the tank, and a vent that takes the exhaust gas out of the house through gravity (the warm air rises).  There are several other types of water heaters, and I'm going to list some pros and cons of each type.

Standard Gas - This is what makes up the bulk of water heaters in Minneapolis and Saint Paul - I would estimate 95%.  They have a low cost, they're easy to replace, and they recover hot water relatively quickly.  On the downside, energy is lost by keeping water heated all day.  If you're replacing a standard water heater and there is a problem with the chimney or flue (which usually means it's not up to code), it can be very expensive to repair the chimney or bring it up to code.

Powervent - These are similar to standard gas water heaters, but instead of the exhaust gases rising up and out of the house, a fan forces the exhaust gases through a plastic pipe out the side of the house.   The biggest advantage is that the exhaust gases don't need to rise up the house through the roof - these water heaters can be vented right through the side of the house.  These are a great option if there are problems with an existing standard water heater vent.  Unfortunately, they cost about twice as much as a standard water heater.  I've also noticed that they are frequently installed wrong; I would guess that about 50 - 75 percent of the powervent water heaters that I inspect are incorrectly installed.

Tankless - This type of water heater definitely generates the most interest.  These water heaters only heat the water that you use, so you're not wasting money by keeping 40 gallons of water hot all day.  They use about 20% less energy, take up less space, and provide an endless supply of hot water.  Unfortunately, they cost about three times as much as a standard water heater, and it's very expensive to convert from a standard water heater to a tankless - so much so that getting a payback in energy savings typically won't happen.  Tankless water heaters also provide a limited volume of hot water; a standard tank will give you all the hot water you want until it's gone, but a tankless water heater produces a limited amount at once.  There are many other reasons not to buy a tankless water heaters - click the following link for an in-depth research paper on tankless water heaters.

Electric - Electric water heaters are probably the easiest to install and easiest to replace.  There is no venting required, so they can be installed in small places or in places where it would be difficult or impossible to run a vent.  The biggest downside to electric water heaters is that they take a long time to recover hot water.  Once you're out of hot water, you're out for a long time.  I don't recommend electric water heaters if you have the choice of using gas instead.

Reuben Saltzman, Structure Tech Home Inspections - Email - Minneapolis Home Inspections

Reuben Saltzman, Structure Tech Home Inspections


Comment balloon 19 commentsReuben Saltzman • March 09 2009 06:22AM


Reuben, thanks for the information.  Tankless hot water heaters seem to be the rage around here - I'll have to check into your link.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 11 years ago

Nice post Rueben.  I agree with Gabe it seems that the tankless is the sexier trend right now with the high end new construction. 

Posted by Larry Story, Total Care Realty, LLC, Greensboro, NC Real Estate (Total Care Realty) over 11 years ago

Gabe and Larry - I think tankless has become a buzzword that sells.  Kind of like 'granite' and 'stainless'

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) over 11 years ago

Great info.  I have found that when people have hot water heaters in their attic, replacement by tankless becomes an option they highly consider.  I have heard mixed reviews by some that have done that. 

Posted by Connie Goodrich, CRS ABR (McKinney Realtor)Texas (Keller Williams Realty) over 11 years ago

GOOD MORNING REUBEN!  A few months ago I was in a situation where my water heater went bust.  In researching the tankless the number one reason I chose not to get it was simple the cost of hidden expenses vendors don't tell you right away.  In my case - by the time I would have relocated it, installed larger gas lines, etc., I was in it thousands.  And that was before buying the unit!  Great advice!  Gabrielle

Posted by Gabrielle Kamahele Rhind, Broker/Owner (KGC Properties LLC, Tucson Property Management & Real Estate) over 11 years ago

Great post and I read the article however if one was to install the device in a new home would it make a difference?  Replacement is not a good idea as stated in the paper but if the engineering was done in the beginning just a thought? 

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty) over 11 years ago

Reuben, I installed a tankless Bosch water heater in a property that I own, thinking it would make economical sense, but since I have installed it I have had problems with it maintaining temperature.  It's gets scalding and then cold.  I've been on the phone forever and still don't think it's anywhere near where it should be.  I wish I had gone with the powervent for the same money.  Have a great day.

Posted by Kevin Cavanaugh, Lic. Associate Broker, ABR, GREEN (Keller Williams Hudson Valley Realty) over 11 years ago

Reuben, I am with you on this to a large degree.  There are a lot of down sides to these tankless heaters even if they are all the rage.  They can be sized to produce all the hot water you need but that makes them even more expensive.  I am seeing a lot of townhouses where they heat both the domestic hot water and the hydronic heating systems.  I think the jury is still out on these systems----in ten years we will know:)

Posted by Charles Buell, Seattle Home Inspector (Charles Buell Inspections Inc.) over 11 years ago

James - Installing a tankless water heater in a new construction could be worthwhile.  The initial installation costs would be similar to a standard water heater.

Kevin - sorry to hear about your troubles!

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) over 11 years ago

We love our tankless water heater. It was about the same cost as a high efficiency PowerVent, and the energy savings rebate by the utility company brought the cost down. Our utility bill has decreased by about 29%, but we think some of that is CFL light bulbs and a conscious effort to save energy in these economic times. We also have a lot more storage space in the garage.

I'm also wondering why you say that a "tankless water heater produces a limited amount at once." I get all the hot water I need for as long as I need it, something I can't say about the old 40-gallon tank water heater. It's very easy now to take a long, relaxing sauna shower now if I want to, something that could never be done with the old tank heater.

Posted by Jim Frimmer, Realtor & CDPE, Mission Valley specialist (HomeSmart Realty West) over 11 years ago

Jim - did you get a chance to read the research paper?

A tankless water heater will only produce a limited amount of gallons per minute.  Standard water heaters don't have this issue.  If you want to do laundry and take a shower, it probably won't keep up.  If yours does... you're lucky.  Part of it might have to do with the fact that your ground water is much warmer than what we have up here in Minnesota.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) over 11 years ago

Reuben----I think some of the supply issues has to do with the BTU's of the unit in relation to the points of use.  The ones that put out 200,000 btus would be very difficult to get ahead of in the average house.  But like you said---even at that size it could happen if the intake water was really, really cold----like Minneapolis cold:)

Posted by Charles Buell, Seattle Home Inspector (Charles Buell Inspections Inc.) over 11 years ago

Reuben--Would you have the same recommendation for someone building new construction??

Posted by League City, TX - Worrell Team, REALTORS, GRI, CNE (RE/MAX 1st Class) over 11 years ago

Tankless water heaters might make sense for new construction, but I personally wouldn't do it.  I've heard about way too many problems.  Some people are happy, but if even 1 in 10 aren't, that's a way bigger risk than I would be willing to take for the return, which might be nothing.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) over 11 years ago

I think all of the major new construction builders here use tankless water heaters now. I can't remember the last time I saw a water tank in a newly built home.

I can vouch for their effectiveness here in California and in Houston, Dallas, Austin, San Antonio, Corpus Christi, and Kingsville, Texas.

Some of the newer ones go up to 480,000 BTU, I believe it is, and are extremely effective for running the dishwasher, washer, and four showers all at the same time in the morning. The first generation American models were usually of 98,000-180,000 BTU, which wouldn't adequately handle such a job, but the solution there was simply to install a small one for the kitchen, another small one for the laundry, and a large one for the bathrooms. It worked very well.

Some of my family, friends, and I have been tankless for many years now. I'd never go back to having a huge tank of hot water sitting in my garage that always had to be maintained at that hot temperature. I also have more storage space in my garage now, which is where I feed Zoey the Cool Cat and put her litter box.

Posted by Russel Ray, San Diego Business & Marketing Consultant & Photographer (Russel Ray) over 11 years ago

I have to disagree with you on the tank-less water heaters, I have two in my home and it provides us with all of hot water that we need....and with the tank type heaters...we were always running out of hot water... yes, it is a jump in cost over a standard water heater, but the fuel that I have saved being on LP Gas has been worth the switch and money.

Posted by Jack Climer (Jack Climer Realty, LLC) about 11 years ago

Jack - you have TWO tankless water heaters?  Wow.  Yes, I'm sure they provide you with all the hot water you need.  I couldn't imagine using so much hot water at one time that two tankless water heaters couldn't keep up.  Then again, I'm sure you wouldn't run out of hot water if you installed two 80 gallon gas water heaters.

How does the cost of LP gas compare to natural gas?   I'd be very interested in seeing your numbers showing how tankless water heaters have saved money, after factoring in the cost of the water heaters and the installation costs.

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) about 11 years ago

Reuben...a lot of homeowners install multiple smaller water heaters so they can locate them closer to the point of use. This way- youre saving water since youre not having to let the water run while waiting for the hot water. In the case of replacing a water heater...most consumers would likely benefit more from installing an inline hotwater recirculating continously loops hot water from the water heater to the plumbing fixture farthest from the heater. This eliminates the hot water delay...

Posted by Mike Hogan, MBA (The Hogan Group at Keller Williams Realty) about 11 years ago

Great points Mike.  I've been meaning to install a pump on my own house, but I just haven't been able to justify the $200 + that the pumps cost.  I don't think I'd ever get a payback. 

Posted by Reuben Saltzman, Delivering the Unbiased Truth. (Structure Tech Home Inspections) about 11 years ago