There is nothing that can torpedo your day so quickly as expecting a piping-hot shower and getting blasted by a spray of freezing water instead. Such is life when you have a traditional hot water heater and lots of residents under your roof. Most newer hot water heaters have extended capacity, but if you are trying to soak in the warmth and relax your day away while someone is washing dishes and there’s also a load of laundry going, your appliance may just become overworked. You’ve undoubtedly heard of tankless hot water heaters and the endless hot water that they promise. Sounds pretty good, right? Well, you should know all the details before you commit.

What does “tankless” mean? 

A regular hot water heater uses gas or electricity to heat up a large amount of water at a given time (the size of your tank, basically). As space becomes available, cold water comes in and is heated gradually. If your hot water consumption exceeds the capacity of the tank, you’ll get nothing but cold. A tankless hot water heater, on the other hand, gives you hot water on demand. There is no storage tank (hence the name), and the water heats quickly when you turn on the tap thanks to a powerful jolt of heat en route. These heaters are about the size of a suitcase and can pump out between two and five gallons of hot water per minute.

Are they cost-effective?

According to “The U.S. Department of Energy says that if you use 41 gallons or less of hot water each day, tankless water heaters can be 24% to 34% more energy-efficient than conventional hot water storage tanks. If you use 86 gallons a day, the efficiency drops to 8% to 14%. The energy ratings institution Energy Star estimates a typical family can save $100 or more a year with a tankless water heater.”

All of this sounds great, but you need to factor into matters the reality that a tankless heater is far more expensive to purchase and install than a traditional model. All said, going tankless can cost up to three times the price of just replacing your old hot water heater. The unit itself sells for between $800 and $3,000, and installation and updating old fixtures can cost just as much. It could take you decades to reap the financial benefits of going tankless. 

What else should you consider?

Tankless hot water heaters are pricey to maintain; much more so than traditional heaters. It’s not unusual for a run-of-the-mill service call to cost you hundreds of dollars. And some appliance repair pros find them hard to deal with. Is the money you save monthly worth extra maintenance costs?