Water Heater in Rental

Member since 2019 · 11 posts · 0 votes

I am doing a rehab an older house that will be a rental when it is finished and I was wondering, has anyone put an instant water heater in a rental? I have had the electrical upgraded and added a second bathroom to make It 2 bed 2 bath.

I am worried because I don't want to introduce more cost or maintenance in the long run.

What is a good brand of water heater to use on a 850 sq.ft house?

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Mark Fries

Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes

@Quentin Collins

Skip it. Just do the good old fashioned $350 electric water heater...will be good for 10-15 years at least, with zero maintenance.

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Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
I have several on-demand NG systems installed in our properties. All are about 5-7 years now & I haven't had any problems, but they all replaced problem conventional HW tanks. I opted for them to avoid the old CO issues we've had with the older tanks chimney vented & having hot water cooking all day in a 30-60gallon tank. The NG operating cost/yr is so minimal & I do flush them every couple of years depending on the water hardness. I also flushed the old HW tanks annual but they would still fail ALL OVER the floor at the most inopportune moments after 5-7 years.
After we did a complete rehab & upgraded the panel to 200ampI I installed an electric on-demand system at our Lakehouse $698 (I hate the dangers of propane). With a/c & everything electric running during the summer our highest electric bill was $48, of that $22.34 is the std charge regardless of usage. Our daughters still have 30-40 minute showers & we usually have 5-7 people there on weekends. Over winter I run food grade anti-freeze through our entire plumbing including the HW heater & after 5 years not a single problem. In fact I installed it in the wall cavity on one end of the shower stall. 11x14x6 inches.
Our main shower has two heads & controls so we can have a 40+ min shower without losing heat.
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Account Closed
Wholesaler · Jacksonville, FL · Member since 2019 · 55 posts · 47 votes
6y
I have been adding tankless water heaters to all of my rentals as of late. The tenants love it because of how easy it is to use and how clean it looks compared to the "old school" large hot water heater tanks. I have not had any complaints about the cost and they have all been working fine :) However, I'm sure you could use the old school style and not have any issues, possibly even save your tenants some money.
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Emmett Bond
Investor · Bellingham, WA · Member since 2019 · 16 posts · 3 votes
6y
@Quentin Collins, the main pro to having the hot water outside is that you don’t have to use up space inside, which is especially important with smaller properties. The cons are that you would have to build or buy a shed or attachment to the house to hold it in. And, depending on how cold winters get where the properties are, you may have to spend extra on thick insulation so that you’re not paying a fortune for electricity by trying to keep a “hot tee cup” (water heater) hot when it’s sitting outdoors in below freezing weather.

As for tankless vs regular with a tank, I also would opt for regular. Even the cheapest 40 gallon water heaters that Home Depot and Lowes carry are going to be higher quality than some bulk contractor grade water heater. Someone above mentioned Lowes has one for $330. So does Home Depot - plus they have a deal where if you buy 3, they are only $300 apiece.

I bought a Fourplex where 3 of the water heaters were almost 20 years old and showing signs of imminent failure. So I opted for the 3 cheapest Home Depot ones.
Unless your property is going to be rented out to a large family that all takes their showers back to back like a football team, there’s not really any benefit to having a tankless water heater installed.
My advice would be go with a regular 40 gal tank and if tenants ever complain that they are running out of hot water before they finish their World’s Record longest showers, use the option of upgrading to a tankless unit as a reason to raise their rents or get them to sign a longer lease. That’s about the only way it would be a wise investment IMO.

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Laura George
Investor · Pekin, IN · Member since 2017 · 47 posts · 27 votes
6y
@Quentin Collins
Ask any plumber or electrician. Plumbers are constantly replacing the electric ones with gas. And electricians hate them because of the demand. I’m an electrician and I’ve looked at some of the electric instant heaters and almost everyone needs to upgrade their service to be able to use them.
I understand that occasionally a smaller one under a sink for hand washing could be a good option but in general the gas ones are the best option. The heat pump water heaters are a good option for energy consumption. Although I still use the old fashioned electric water heaters. They are easily maintained and anyone can work on them. And they’re inexpensive.
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Laura George
Investor · Pekin, IN · Member since 2017 · 47 posts · 27 votes
6y
@Andrew S.
Yes. I try to keep all water sources as low or close to the dirt as possible. I’ve replaced several floors because of water leaks and I wouldn’t want to replace walls and ceilings because the water heater leaked.
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Travis Gulley
Contractor · Pueblo, CO · Member since 2018 · 11 posts · 10 votes
6y
@Quentin Collins. Plumber here. I would definitely stick with a regular tank for rentals less headaches and cost in the long run. Cost savings is usually low. Only because you end up using more water since it’s endless. Gas cost goes down water bill goes up. Water heater replacement in my area is around 1650$ for standard tank and upwards of 4k$ for a tankless either Rinnai or Navien. We are mostly gas appliances where I am.
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Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
In a rental I would just do a regular water heater. The on demand feature will not increase the rent you can command.
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Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
Originally posted by @Mark Fries:
@Quentin Collins
AO smith from Lowes is just fine. All normal water heaters are just about equal. It's a steel tank with a set of elements and thermostats. You can get one from lowes for $330.00 or less usually.

I agree, you can't go wrong with an AO Smith gas water heater however, id go with the better grade that isn't sold at big box stores.

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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
Stay away from those $300 gas water heaters. They are going to last 5-7 years before they start leaking, based on personal experience. Guaranteed they will not last 20 years like the old ones people are replacing. Upgrade to the $600 ones with 12 year tank warranties. It is more money up front but prevents problems and expense down the road.
As far as tankless, I read up on that and decided against it because of repair and leak issues. Plus the install cost here in the USA is crazy.
As far as gas versus electric tank heater. Gas will cost less money to operate than electric, but electric generally last longer. Electric has slower recovery time so they generally recommend a larger tank size. So you could get by with 40 gallon for gas and equivalent would be 50 gallon for electric.
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Quentin Collins
OP
Member since 2019 · 11 posts · 0 votes
6y
Thanks everyone for all,of the input. I learned a lot from this thread. I think I am going to replace the standard water heater.
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Jake Silverman
Investor · Jersey City · Member since 2020 · 51 posts · 9 votes
5y
Hi everyone,

I am just reading this post and love the info. The water heater on my property is electric. I think the tank is around 17 years old and Most likely needs a new element. The water heater is still in good condition. I will probably replace the water heater and element to save on double labor costs and a mess later on. I am brrrring my property and MY QUESTION IS will a new water heater get me a higher ARV?
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Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
5y
Originally posted by @Joe Splitrock:
Stay away from those $300 gas water heaters. They are going to last 5-7 years before they start leaking, based on personal experience.

I've heard again and again the only difference between the 6 year and 12 year is the warranty. The extra money is for "insurance", the unit is the same. And they don't cover labor.
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Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
5y
Originally posted by @Johann Jells:

I've heard again and again the only difference between the 6 year and 12 year is the warranty. The extra money is for "insurance", the unit is the same. And they don't cover labor.

& they ALWAYS fail after the warranty expires & they are not the same quality anymore, we just replaced our 17 yr old electric HW heater in our FL home. I've replaced a LOT of them over the years & have gone to on-demand systems in most of our properties. Most are NG but one is an electric unit & it is far more efficient & less expensive if you have the service panel capacity & know what you're doing. Plus the annual flushing is 10 mins without having to dump an entire tank of hot water. Then you have the pressure relief valves bleeding by & getting corroded to slightly open when the tenant jacks the heat up to max 24/7. The latter can sometimes compromise the expansion tanks as well.

One deciding factor for me was the CO intrusion issue with back drafting on the old gravity vented units & we have had several in the past trigger the required CO alarms. The hi efficiency units, with direct venting, are more expensive & we have had a couple of blowers fail.
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Tim Bellnier
Rental Property Investor · Wilkes County, NC · Member since 2019 · 56 posts · 39 votes
5y
I agree with Plumber Travis. I’m a former plumber and would definitely go with the basic 40 gal Electric from Lowe’s or Home Depot. Brand does not really matter. Your choice on physical size is limited but if height is an issue you can get one that is shorter with a greater diameter.
Put in a tankless on demand and you have limitations on who can service it Any plumber can replace or work on a regular water heater but not all are skilled enough to service a tankless. You also will have to order parts for a tankless. Want your tenant to be without hot water for a couple days?
Be sure to put a drain pan under it and plumb the drain to a safe location if at all ossicle.
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Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
5y
Keep it simple for a rental you don't live in. Just do a conventional electric or natural gas water heater. Tenants don't choose rentals based on whether it has an on demand water heater, most won't have ever even seen one.
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Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
5y
@Quentin Collins
Bradford white from a plumbing supply house. I pay around $405 for a 50 gal electric, 40 gal a few $ cheaper. Same warranty lengths as big box stores but no hassle dealing with corporate and shipping for warranty claims. If my elements go out, I go right to my supply house and get new ones at no cost.
Every quality plumber I deal with uses these.
40 gal gas is about the same price, 50 gal gas is more as it requires a power vent
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