Buying A Tankless Water Heater? The Pros and Cons

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Tankless Water Heater Myths, Advantages, and Disadvantages
Photo Credit: Home Depot

We rarely think about our water heaters. They are placed out of the way in corners of garages and basements or hidden away in closets and up in attics. They provide hot water faithfully year after year until one day they spring a leak and you come home to a stream of water running out of your house. Then it becomes a major inconvenience that needs to be fixed as soon as possible because no one wants to take cold showers in the middle of winter.

If you are researching residential water heaters, whether because yours is getting old in age, you are upgrading, or yours has died, you’ve probably heard about tankless water heaters.

Popular in Europe and Japan, a tankless or on-demand water heater is exactly what it sounds like. Instead of a giant storage tank holding 30 to 80 gallons of hot water, a tankless water heater circulates cold water through a series of coils called a heat exchanger where the cold water is heated by electric elements or gas burners on demand.

Whether you are looking to replace your current traditional water heater or putting in a tankless water heater in a newly constructed home, here are some myths, advantages, and disadvantages between the two different types of water heaters to get the most value for your money.

Myths of Tankless Water Heaters

Before we get to the advantages and disadvantages of installing a tankless water heater, let’s start with the myths you commonly hear first.

Tankless Water Heaters Save More Money Over A Regular Tank Water Heater

Yes, a tankless water heater is cheaper to operate than a traditional water heater, but the savings aren’t that big.

I took a look at the yellow energy guide label on the side of our 40-gallon Bradford White tank water heater that was made in 2009. This particular model’s estimated yearly operating cost was $277 a year with a yearly estimated usage of 254 therms at $1.09 per therm.

Rinnai V75iN Energy Guide

Comparing this to energy label on the right from the mid-range tankless Rinnai V75iN, which is able to supply 7.5 gallons per minute of hot water. This water heater’s operating cost is $199 with an estimated yearly energy usage of 183 therms.

This is a difference of $78 a year in energy costs or a monthly savings of $6.50.

So if you were going to rip out your old standard water heater from your house and replace it with a tankless, you will definitely see some savings on your monthly natural gas bill, but will you really notice those savings in your pocketbook?

What might happen though if you have kids or a spouse who loves taking long hot showers or baths, you will probably negate any savings due to higher water bills and gas/electric bills after they realize there is unlimited hot water.

You Get Instant Hot Water From A Tankless Water Heater

In today’s society, everyone hates waiting and wants everything right now. This is also true with hot water. Not having to wait to get hot water has another benefit – a lot of water is wasted down the drain while waiting for hot water to arrive. It is estimated 7,000 to 15,000 gallons of water are wasted each year by homeowners turning on the faucet and letting the water run while waiting for hot water.

With a tankless water heater, you do get hot water on demand. But the farther away your faucet or shower is from your hot water heater, the longer you are going to wait for hot water. This doesn’t change with a tankless. You are not going to be able to make the water move any faster through the pipes to the faucet.

In fact, it might take a few more seconds to get hot water than if you had a regular tank style water heater because your tankless water heater needs to detect that you’ve turned on the hot water faucet to fire up the burners or electric heater elements to begin heating up the water.

To truly get instant hot water, you will need to retro-fit a hot water recirculation system if your house doesn’t have a dedicated return line or if your tankless water heater doesn’t have a recirculation pump built-in.

A recirculation system operates by using a pump to move hot water through the supply line to the farthest fixture. The pump can be activated by a timer, a motion sensor, a push button, a smart speaker like Google Home or Alexa, or with a smartphone.   This ensures there is always hot water in the pipes ready to go. The cold water in the pipes is pushed back to the water heater so no water is wasted.

There Is Less Maintenance Needed

Just like flushing your tank style water heater, flushing your tankless water heater regularly keeps it running at peak performance. Failure to flush your tankless system will result in reduced service life and poor heating.

If you have a water softener or soft water in your area, then you might not need to do it very often. Mineral content from hard water, when heated by the burners causes limescale and calcium to build-up on the heat exchangers. Over time as limescale builds up, the unit will need to work harder than necessary to heat the water to your desired temperature. This ends up shortening the lifespan.

Remember that money you saved each month from switching to tankless? You are going to have to save it to a bank account to pay a plumber to flush it or to do it yourself. Paying a plumber to come out to flush your tankless water system can cost as much as $150 or more.

Handy homeowners looking to save some money can usually flush out the water heater themselves. You can pick up a tankless water heater flushing kit from Amazon for about $150 that has everything you need.

For the even more frugal, you can piece together the kit yourself and save even more money. All you would need is:

You can find the full instructions for the flushing procedure in your owner’s manual, but a quick summary is to disconnect the power from the unit; close the hot and cold shut-off valves; connect a hose from the submersible pump to the cold water service port; connect the second hose to the hot water service port and place into bucket; fill the bucket with vinegar and submerge the pump; open the service ports; and turn on pump and flush for at least 60 minutes.

Other maintenance that you might need to do is regularly checking the water and air filters.

Advantages of a Tankless Water Heater

Unlimited Hot Water

The main benefit of a tankless system is the constant hot water. Never worry about running out of hot water again. There are tankless models that can provide almost 11 gallons of hot water a minute.

If you hate hopping in the shower after your partner only to find lukewarm water, then tankless is your answer. You could probably fill up an entire hot tub or swimming pool if you wanted.


With the median size of a new single-family house built in the United States in 2018 coming in at 2,386 square feet, it is no surprise that the most popular type of water heaters here are the traditional tank water heaters.

Compared to Europe and Japan, where tankless water heaters are more common due to lack of space, houses here have plenty of garage, basement, or closet space to place a large cylindrical tank capable of storing 30 to 50 gallons of water. Our 40-gallon water heater is almost five feet tall and takes up an entire closet in the hall.

Tankless systems have a smaller footprint and are usually mounted on the wall. They can be placed in more locations, including in the attic, a crawlspace, or even outside on the side of the home.

Energy Efficiency

According to the Energy Information Administration, water heating is the second-largest source of energy consumption in the home after space heating. Heating water accounts for 19% of a home’s energy use.

Tankless water heaters are estimated to use 30 to 50% less energy than the units with storage tanks, which translates to lower energy costs.

The energy savings comes from not needing to keep a big tank of 120F hot water that slowly cools over time to the air around it. Nor does a tankless need to have a pilot light lit all the time.

Lifespan and Warranty

A standard tank water heater has a warranty around 6 to 10 years. The average water heater lasts about 10-15 years. You can increase their life by changing out the anode rod regularly.

Gas burning tankless water heaters have warranties up to 12 years and tend to have a lifespan about twice as long, or as much as 20 years. However, electric units have shorter life spans and warranties.

One big advantage of a tankless over a tank type heater is many of the parts are replaceable. On a storage tank water heater, once the tank begins rusting and eventually starts leaking, it has to be replaced.

Ease to Winterize

For people with summer vacation homes, winterizing means draining out all the water from the pipes and the water heater. To winterize a tankless model, all you need to do is take a few seconds to drain it and then unplug it. Draining a tank water heater means waiting for 40+ gallons to empty.

Disadvantages of Tankless Water Heaters

Higher Upfront and Installation Cost

According to Home Depot, the average total cost of a new tank water heater with installation is about $1,308. Tankless water heaters have a higher upfront cost, averaging $2,979.

To find out how long it will take to recoup the costs from switching to tankless, you will have to add in the extra costs from retro-fitting your home to accommodate a tankless style water heater.

When my parents’ traditional water heater sprung a leak and flooded the garage, my father went with a regular water heater as the replacement. All that had to be done was to disconnect the old one from the water lines, remove the ducting from the top, and swap in a new one. It was easy enough that he did it himself.

If he had gone with a tankless, he may have needed to increase the size of the gas lines from 1/2 inch to 3/4 inch due to the higher gas requirements of the tankless. A traditional water heater may use 40,000 BTU of heat. Since a tankless needs to heat up the water almost instantly as it passes through the unit, it can use up to 199,000 BTU depending on how cold the water is and how much water demand is needed.

Other things you might need to change to put in a tankless heater is running a new exhaust vent out the side of the house or up to the roof. If there isn’t an available electrical outlet nearby, you might need an electrician to put in one unless you are handy.

Should you decide to go with an electric tankless water heater, you will likely need to add in more circuit breakers to your breaker panel or upgrade the entire panel for more amperage to the house.

No Hot Water During A Power Outage

Should the electricity ever go out at your house, forget about hot showers until the power comes back on. Even if you have a natural gas tankless water heater, electricity is still needed to run the unit.

They have circuit boards and sensors to know the water is on and to activate the burners or heating elements. Most natural gas and propane tankless water heaters don’t use a pilot light but an electric ignition.

Peak Water Usage Need To Be Calculated

If you have a 6-bathroom mansion and expect to have enough hot water when everyone is using the shower at the same time in the morning while running the dishwasher or washing machine, you might be in for a cold surprise.

This means when planning an install, you will need to calculate the peak hot water usage for the household. You can find tankless models that can supply up to 11 gallons per minute of hot water. If you need more hot water than that, you will need to install multiple units in parallel or separate ones for appliances that use a lot of hot water.

Water Flow Requirements

If you have low flow faucets and showerheads installed in your house in an attempt to reduce your water usage or if the aerators are clogged with sediment, be aware that if the water flow is too low, the tankless water heater’s flow sensor might not be triggered to turn it on.

Some tankless manufacturers state that they need a demand of at least .4 gallons per minute to ignite and at least .3 gallons per minute to stay in operation.

Closing $ense

Many people first look into tankless water heaters after hearing they can save money. As seen from the costs to install one, the amount of money saved monthly, and the maintenance costs if you need a plumber to flush it regularly, it might take decades to recoup the difference.

The biggest benefit of tankless water heaters is limitless hot water, But a frugal household might not see the reason to need unlimited water if they are going to save money on water usage by taking shorter showers and limiting water usage in the first place.

Then consider the cost of the water heater itself – you can buy two tank style water heaters for the price of one tankless. The estimated life span of two tank units is about equal to one tankless.

Due to all those considerations, it’s no big surprise if most people stick with replacing a tank water heater with another when the old one goes. Now if you are building a house from the ground up, putting in a tankless right from the get-go might be worth considering.

What type of water heater do you have? Do you have a tankless water heater? Have you thought about getting one?

4 thoughts on “Buying A Tankless Water Heater? The Pros and Cons”

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  1. It was very helpful to read the part of your article that stated that tankless water heaters provide a steady supply of hot water and that they’ll never run out. There have been many times when my kids would argue over who gets to have a hot shower over the other, and they’ve even developed a sort of turn system that can help them decide this. I wouldn’t want them to argue any further, especially since it can make the house pretty noisy, so I’ll find a plumber in my area that can help me install a tankless unit.

    • Hi Afton, a tankless water heater might not save you money over a traditional one, but the convenience of unlimited hot water and the peace and quiet can be priceless!

  2. Wow, I had no idea that tankless water heaters allow you to have instantaneous hot water whenever you need it! I have a friend who finds it hard to enjoy his morning baths without warm water. Hopefully, he’d try looking for a plumber that can install one of these on his new lakeside home.

  3. I found it very helpful when you explained how tankless water heaters take less space than regular ones! A couple of days ago, my sister said something was wrong with her water heater since it stopped working! My sister wants to buy a new water heater since the one she has it’s too old, so I’ll be sharing your buying tips with her now! Thank you so much for the advice on tankless water heaters and the major benefits of having one!


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