My home, my castle: Tankless water heater

Today begins a regular feature I'm calling "My home, my castle" where I'll be highlighting some renovations and/or improvements I've either made or am considering making to my home. Today's topic is on tankless water heaters.

Five years ago when my water heater died, I had three options: 1) replace my 40 gallon natural gas-fueled water heater with another one, 2) go tankless, or 3) incur the wrath of my wife. After much research, I opted to install a tankless water heater.

There are several benefits to going with a tankless water heater over a traditional tank water heater. The first benefit is green, both environmental and fiscal. Tankless units use less energy and therefore save you money. Most estimates show that a tankless water heater will use 25 to 45 percent less energy than a tank water heater. While a tankless unit only heats water when a hot water spigot has been opened, a traditional tank water heater is constantly heating water regardless of whether you're using hot water or not. I've personally found the energy savings to be about 20%.

Another benefit to going with a tankless unit is that you never run out of hot water. We have a garden tub in our master bathroom, and our old 40 gallon tank water heater would fill the tub about half way before running out of hot water. With our tankless unit, we never run out of hot water.

And as a real estate investor, I highly recommend replacing tank water heaters with tankless units because they require less maintenance and therefore last longer (often twice as long). It is recommended that homeowners drain a gallon of water once every three months with a standard tank water heater to reduce sediment, whereas tankless units have no tank to drain! And there is little risk in a tankless unit rusting through and flooding a home or basement as can happen with a tank water heater.

One of the few and yet frequent complaints of a tankless water heater is that multiple hot water-using appliances can't be used simultaneously. This, however, isn't a limitation of the tankless water heater itself; rather, this situation is the result of installing a unit too small for one's household use.

I'm guilty of this, but we're making it work for now. Fortunately the situation is pretty easily remedied. The unit I purchased is a Bosch AquaStar 125B-NG and is rated for 3.2 gallons per minute (gpm) at a 55 degree rise (the water flowing out of the unit will be heated 55 degrees above the temperature of it flowing into the unit). This particular model is recommended for 1 major application at a time. That was fine when it was just my wife and I, but having doubled the size of our household, we now take more baths, wash more clothes, and wash more dishes. I ultimately need to either install a second identical unit in parallel or simply swap my Bosch 125B-NG for a Bosch AquaStar 2400E, which is rated for 5.2 gpm at a 55 degree rise and supports 2 major uses at a time.

A very real drawback to tankless units is their cost. A 40-gallon tank water heater will cost around $300 whereas the higher-flowing tankless units will cost around $1,000. In addition to the cost of the appliance, most will need to pay a plumber to install these units. If you're swapping a tank water heater for tankless, expect to pay ~ $500 for installation because of the need to run additional copper water lines (since the tankless mounts to a wall). Installation for a tank water heater used to run ~ $200, though it's now code to install an expansion tank before the water heater which typically pushes the cost to over $400. There is currently a $300 tax credit for gas water heaters having an energy factor (efficiency rating) of .8 or greater, and several Bosch units qualify.

Another reason I opted for the Bosch AquaStar 125B-NG is because I was able to buy a reconditioned unit for $399 with no tax or shipping and with the original manufacturer's warranty from HouseNeeds.com (which still has this same price). And since I installed the unit myself, my labor costs were zero while parts ran me ~ $25 for 1/2" copper elbows, couplings, and pipe.

In hindsight, I look at my move to a tankless water heater as an investment in my home, my castle. And I wouldn't change a thing. I would still go with the smaller unit knowing that I can upgrade later... and knowing I have several rental properties where I can install the smaller unit should I choose to upgrade. If you're a do-it-yourself person or are planning on living in your existing home for a long period of time, I'd definitely go tankless whereas if you're planning on moving anytime soon, I'd save my money to go tankless at the next house.