tankless water heater questions answered

Imagine receiving a dreaded midnight call from your resident telling you their water heater has exploded, they didn’t know how to turn off the water, and now their home is flooded. Even if it’s not as dire, a leaky water heater can be a pain point for mold and flooring damage. These are not pretty thoughts but water heater incidents happen every day. 

Routine rental inspections are an important task for a landlord but even with inspection and property maintenance, water heaters can go awry.  Whether from inspection or an emergency, every property manager or landlord will need to decide to replace or repair a hot water heater at some point in time as seventy-five percent of well-maintained water heaters fail by year twelve

Knowing your options and being proactive in the maintenance or replacement of a hot water heater can help avoid those misfortunate events. This article outlines the seven most common questions regarding tankless water heaters for your consideration. 

What is a Tankless Water Heater? 

As the name implies, it is an appliance to heat water on demand. Without a tank, it is incapable of storing water.

Three Types of Systems

There are three types of instantaneous hot water heaters depending on the fuel type (electric, natural gas, or propane) available at your property with many pros and cons to consider (see below). Regardless of the fuel source, they all operate similarly. 

Names and Sizes

Other names for a tankless water heater include inline, continuous flow, instantaneous, flash, or instant-on.

As they have no tank, they are much smaller in size than a traditional water heater and come in many shapes and sizes to fit spacing needs.  The actual size is not always an indicator of the flow rate or efficiency so size shouldn’t be the first consideration.

How Does a Tankless Water Heater Work?

A traditional water heater pulls in gallons of water into a large tank and heats that water all at once, similar to a tea kettle or a pot of water on the stove. A tankless water heater operates by rapidly heating water on-demand in a seemingly instantaneous manner as it flows over a burner or heating coil; similar to how an on-demand coffee pot brews by the cup. 

Tankless Operations

  1.  A hot water tap is turned on.
  2.  Then cold water enters the heater.
  3.  A flow sensor detects the flow.
  4.  That sensor triggers the burner to ignite or a heating coil to engage.
  5.  Water circulates through piping around the heat exchanger.
  6.  As the water journeys, it is heated to the programmed temperature and flows to the tap.
  7.  Unit shuts-down when a tap is turned off.

How Much Is a Tankless Water Heater? 

The overall costs depend on the type of fuel source, equipment choice, contractor fees, and other considerations.

Equipment and Installation Costs

Researching gas, electric, or propane tankless hot water heaters you’ll come to notice that they can cost upwards of double the traditional water heater. Gas units, although less expensive to operate, are more expensive than an electric tankless water heater to purchase. 

Although some apartments, condos, duplexes, etc may currently be able to share one large water heater; larger spaces, homes, complexes may need more than one tankless water heater to accommodate usage adding to the initial total purchase price. 

In addition to the upfront equipment purchased, if necessary you might also need to upgrade your electrical system, redesign how the unit is vented or piped, and take into account the labor costs. 

Operating Costs

A more energy-efficient water heater solution may cost you more initially but in return could save you more money in the long run. Heating water accounts for almost 20 percent of our home energy use and one can expect up to thirty percent more energy savings with an on-demand solution and up to fifty percent if installed at each hot water outlet. 

Overall, continuous flow units that heat by natural gas will provide larger savings on utility usage over an electric unit. 

It may also qualify you for a rebate. Check with your tax advisor about potential tax rebates available. Also, check with your local energy provider for energy rebates and incentives. 

If utilities are included in the rent for your residents, The Department of Energy offers instruction on how to calculate a unit’s annual operating cost and a worksheet to determine payback. If the tenant is responsible for utilities, knowing the operating cost would allow you to market the potential cost savings; not to mention the draw of the environmentally conscious.  

How Long do Tankless Water Heaters Last? 

An on-demand water heater life span is approximately 20 years and typically comes with a much better warranty than tank water heaters. Remember to read the manual and ask your vendor for tips on specific maintenance recommendations as periodic water heater maintenance can extend the life and minimize efficiency loss.  

What Are the Benefits of a Tankless Water Heater? 

  • Environmentally friendly for water and energy conservation.
  • Significant cost savings on fuel usage.  
  • Last longer and typically have a better warranty than a regular water heater.
  • Unlimited hot water on-demand as capacity isn’t a concern. If you have cold water and a fuel source, there is no limit to the amount of hot water available (no more cold showers). 
  • Fits into smaller spaces which may be ideal for apartments and other tight living quarters.
  • Eliminates traditional concerns such as bursting and flooding.
  • Less maintenance is required as there is no need to routinely flush a tank to remove sediment. 
  • More sanitary than traditional water heater in which temperature fluctuations encourage bacterial growth.
  • Location flexibility as gas water heaters require venting through the roof but on-demand gas water heaters allow for either roof or wall venting. 

What is the Downside of a Tankless Water Heater? 

  • The initial cost for the equipment is higher. 
  • It does not accommodate multiple simultaneous uses efficiently. Directly related, installing additional units at each water source is a solution but costly. 
  • Hot water is not instantaneous, as the name may imply. First, the colder the climate and closer to the ground the piping, the longer it takes to bring the colder water up to the desired temperature. Secondly, factor in the time it takes to heat the water and transport to the desired spout.
  • Using an electric tankless water heater in colder climates may not be cost-effective depending on the cost of electricity required to heat extremely cold water. 
  • More time consuming to install and typically needs a licensed contractor. 
  • The piping upgrade potentially needed adds to the cost of installation. 
  • Flow rates can be demanding so it is important to purchase the correct size tankless water heater (see next question).   

What Size Tankless Water Heater do I Need to replace a 50 Gallon Water Heater? 

The size and type of unit needed to replace a traditional water heater is not a one-to-one comparison. It is a bit complex and requires you to calculate the total flow rate in gallons per minute (GPM) at each tap, determine total flow rate of sources that might be used simultaneously (taking a shower while running a dishwasher), groundwater temperature, temperature rise, and fuel source. 

It might be easiest to speak to a vendor or reach out to a manufacturer to determine the size of the on-demand water heater for your rental before replacing your current unit. Having said that, you can do the calculations yourself using some online tools and resources. 


Tankless water heaters can be environmentally friendly, save on energy costs, are less likely to malfunction to the point of flooding, space savers, and requires less maintenance. On the other hand, it might not be suitable for colder climates, are more expensive to purchase, and have some other limiting factors to consider.

Even the best maintained hot water heater can malfunction either due to defect or age. If you are well informed about your options and are proactive with maintenance and replacement you might just get to rest easy one more night.