1. Repair or Replace

Many consumers don't spend a lot of time thinking about their water heaters until something goes wrong: the flow of hot water slows or stops, the unit starts making new and strange noises, or puddles suddenly appear under the unit. Water heaters usually last eight to twelve years, but can last longer or shorter depending on water quality, maintenance, environment, and luck. There are a number of problems that can cause a water heater to stop functioning that can be fixed, including: a broken electric heating element or a leaking drain valve or pressure-relief valve. However, keep in mind the cost of a new water heater.  Additionally, if you are planning to install a tankless water heater as your next water heater, you can also calculate your projected montly energy savings into this equation. A reputable plumber will be able to diagnosis the problem of your existing water heater, provide and estimate if it is repairable, and also provide an estimate to purchase and install a tankless water heater.

2. Get Help or Do it Yourself?

Installing one of these specialized water heaters is a tankless job. Unless you are a plumber or have experience installing major gas or electric appliances, we strongly recommend that you use a qualified professional to install your water heater. A qualified service professional can also purchase a tankless water heater on your behalf, and some of the best water heater brands only sell to service professionals (not direct to consumers). There are many service providers to choose from and we recommend that you get at least 3 quotes to make sure you are getting a fair price for the work to be done. There are also reputable retailers like Home Depot, Sears, and Lowes that sell several of the top brands of water heaters and will also provide an expert to install the unit.

3. Brand

When it comes to purchasing tankless water heaters, you have a wide range of brand choices.  As we mentioned earlier, tankless water heaters have been popular overseas long before they were popular in the United States. Consequently, you see that several of the top brands like Bosch, Rinnai, Noritz, Paloma, and Takagi are based in Europe or Japan, and have decades of experience behind the products they sell in the United States today. Some relatively young U.S.-based companies like Seisco and Eemax have taken an engineering approach to developing innovative products in this growing market sector. Rheem, the largest US manufacturer of storage tank water heaters, was purchased by Japanese appliance corporation Paloma in 1988. Today Rheem also has its own line of tankless water heaters.

(Click here to see our top Tankless Water Heater Brands)

4. Gas vs. Electric Tankless Water Heaters

• Electric tankless water heaters do not heat water as quickly as natural gas or propane tankless water heaters. If you live alone, an electric unit might meet your needs. Check the ratings of the unit to see how much hot water per minute it generates, and do some calculations on how much water is simultaneously used in your home.

  Natural gas is the most common fuel used for tankless water heaters. It heats water quickly and efficiently. To be able to use a natural gas tankless water heater, natural gas has do be available to homes on your street. If you already have gas appliances in your home, running the gas to the new water heater should be straightforward. If gas is available on your street but you are not yet connected, you will need to have your plumber coordinate with the utility company to run a line into your house. A supply of air to support combustion needs to be ensured and the gases created from the combustion of natural gases need to be safely vented from your home.

• Propane heats water quickly and efficiently like natural gas. Unlike natural gas, propane is not piped to homes, but stored in a tank on your property. A supply of air to support combustion needs to be ensured and the gases produced by the combustion need to be safely vented from your home.

5. Configuration

Tankless water heaters are quite versatile in the ways they can be configured to work on their own, with other tankless water heaters, and with other major appliances.

• Whole house application: This is the basic configuration where one tankless water heater works independently to deliver hot water to an entire household. Ideal for small households or households where people have staggered schedules and there is low simultaneous demand for hot water.

• Back-up or booster system: Tankless water heaters can work with a storage tank water heater. During high demand periods, storage tank water heaters will run out of hot water, and need time to heat the next tank. Tankless water heaters can be configured to begin to function just at the time when the storage tank empties, so you will never run out of hot water. This configuration is ideal for households that have recently increased their water usage, or that are regularly running out of hot water.

• Parallel tankless installation: Household that have high peak demand may want to connect two or even three tankless water heaters together in a parallel configuration. As one unit reaches its maximum output, the next unit kicks in. Initial set-up can be pricey, but you'll be able to produce a lot of hot water with relatively little energy.

• Circulating hot water systems: High-end homes can install circulating ot water systems, which continually circulate hot water to all of the hot water outlets in your home: when you turn on the hot water in the sink or tub, hot water comes out immediately with no warm up period.

• Solar back-up: Solar power is an effective way to heat the water in your storage tank. However, if your tank empties, it will take a long time for solar energy to heat another batch of water, particularly if it is evening and you have to wait for the sun to come out.

6. Capacity for Tankless On-Demand Water Heaters

A tankless on-demand water heater saves energy by heating water only as it is needed. These units can provide hot water in unlimited amounts, but it can only provide it in a limited volume. Most whole home units are rated to provide a flow of 2.5 to 3.5 gallons of heated water per minute. These units are a good choice for anyone whose demand does not typically call for hot water at more than two points at a time. If your Peak Water Usage of hot water is higher than 3.5 gallons per minute, refer to the Configuration section to see how tankless water heaters can be configured to deliver more than 3.5 gallons per minute of hot water.

7. Ventilation

Natural gas tankless water heaters run on combustion, and require ventilation (to safely ensure an adequate supply of air reaches the water heater and that waste gases are ventilated from your home). Unless you are very knowledgeable and experienced in installing appliances, you should work with a qualified service provider.

8. Cost

Tankless water heaters are generally more expensive to purchase than storage tank water heaters. However, the cost of generating hot water in your home also needs to factor in energy consumption over the life of the water heater, the cost to install the unit (including running gas lines, installing ventilation systems, and/or modify electrical systems), and maintenance. Several tankless manufacturers claim that your unit will pay for itself in energy savings in the first year of use. Whether or not that is true for you depends on how much you spend to buy and install a tankless unit, how much hot water is used in your home, and energy costs in your area.