Tankless vs traditional hot water system

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Tankless vs traditional hot water system

Account Closed
Bronx, NY · Member since 2020 · 94 posts · 27 votes

Good evening bp family.  I would like to get opinions on hot water heaters vs tankless heaters. We have a 3 unit building with 3 separate water heaters for each unit. There is only 1 meter for the house so we have to pay for water. 1 of the heaters need to be replaced.  Some say I should replace it with a tankless system because of the energy efficiency.  Others say to put a regular hot water heater in to keep the replacement cost down. What are your thoughts?

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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
4y

@Steven Jefferson I’d stick with conventional hot water heaters. Tried and true, pretty set cost and lasts a good while.

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    4y

    @Account Closed My experience with tankless was not good. 3 tanks in 5 years. Leaking and resetting the programming is not something to put in a rental. I'll stick with conventional water heaters.

    4Reply
  • Seth Borman
    Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
    4y

    The most efficient water heater you can buy is a heat pump water heater. It uses a tank and heat from the unit to heat the water. You can get 15 amp 220v, or even a unit that plugs into the 110v plug that a gas water heater uses.

    2Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    4y

    @Steven Jefferson I’d stick with conventional hot water heaters. Tried and true, pretty set cost and lasts a good while.

    5Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Thanks guys. I was trying to get the least amount of money coming out my pocket towards the water bill. You know tenants will abuse water when they not paying for it. 

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    I just read an article about the financial benefits of tankless water heaters. Average savings was $108 per year for gas and $44 for electric heaters. Installation of tankless is higher and more expensive, so the average break-even point was over 20 years!

    I've had a few tankless in new construction homes. They've all had problems. I would personally stick to a traditional water heater.

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    4Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Thanks Nathan. Seems like the consensus is traditional water heater

    1Reply
  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    4y

    We have had them in homes we bought or homes we manage but never installed one.  We have found the systems to be okay until they are not.  Getting them repaired is far, far more costly then a hot water heater and if you have to replace one they are silly expensive.  Nathan's numbers above assume they work flawlessly and never need maintenance, in truth, the cost/benefit is much worse.  

    You may have other motives that drive you to install one but it shouldn't be for a financial motive.  

    3Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Thanks scott. I saw a video on YouTube of a investor that put them in all his rental properties because he says the efficiency justifies the cost

    0Reply
  • Andrew S.
    Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
    4y

    I have installed a tankless in one of my rentals, but it was driven exclusively by space considerations.  This is a small 3/1 and every square inch is precious.  Old water heater was sitting in the kitchen pantry taking up half of that space.  Replaced it with a tankless system mounted to the outside of the back wall.  So far, no issues after 3 years.  Tenants do like the "endless stream of hot water", but did not notice any real difference in their gas/water bills.  I got the system (installed) for exactly $2000 which I felt was an outstanding deal in 2018.  I can easily get THREE 40 gallon conventional heaters for that amount, so I seriously doubt tankless would EVER break even - even if the tankless lasted 20 years (which I highly doubt, but will gladly take if it does happen).

    3Reply
  • Seth Borman
    Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
    4y
    Originally posted by @Account Closed:

    Thanks guys. I was trying to get the least amount of money coming out my pocket towards the water bill. You know tenants will abuse water when they not paying for it. 

     If you're trying to save water, not energy to heat it, then you need to install a tank water heater with a smaller tank. 

    1Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Thanks alot guys. Really great input from everyone. I think I know what direction I should go. 

    0Reply
  • Rachel Murphy
    Member since 2021 · 21 posts · 7 votes
    4y

    I think you've already made your decision, but just to give you my experience from having one on a house we built. If you are on a well, little pieces of sediment can get in the line and mess up a tankless.  The great thing about the tankless was that we didn't run out of hot water. Since you are paying the water bill, you might not want everyone taking long showers though.

    2Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    4y

    @Account Closed suggesting a heat pump tank water heater makes sense because they cost alot more upfront and I am wondering on the payback time. They are supposed to cost less to run and  they dehumidify but I was surprized at how cold it made the surrounding air.  Jury is still out on if the heat pump water heater saves any money. 

    0Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    I'm going against the majority here. Get a tankless.

    Yes, they are more expensive up front, but not by a ton. They are rated to last 20 years. Tank water heaters are rated to last 5-10 years. I find that the tank heaters seem to break down exactly after the warranty expires. 

    Many of the complaints about tankless breaking down is due to them not being serviced. They need to be flushed and a lubricant needs to be run through them every 1-5 years depending on your water condition. 

    Tankless use significantly less energy. You will generally consume less water. They are safer. They take up less room. Tenants are less likely to tinker with them as they're basically a computer. Never run out of hot water. Why buy old technology when tankless is clearly the future. 

    With tankless you have a much smaller chance of flooding when it fails. I say that after literally getting a call from a tenant this week about a tank water heater that failed and poured water all over.

    4Reply
  • Jeff T.
    Rental Property Investor · Culver City, CA · Member since 2014 · 221 posts · 79 votes
    4y

    @Steven Jefferson

    Tankless gas water heater require 3/4” gas line and a separate 110v electrical outlet.

    Tankless electric requires 240v electric.

    So it’s not just the cost of the water heater but the retrofit gas and electric costs, none of which you will recoup.

    I’ve had a gas tankless in my house and it’s been great for 14 years. But I added it as part of a remodel along with gas and electric .

    FYI

    1Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Wow. Now it's getting interesting. Greg is making very good points.   Thanks for your input. So the debate continues. I guess it's a matter of preference as much as it is dollars and cents

    0Reply
  • Wesley I.
    Investor · San Diego, CA · Member since 2019 · 286 posts · 135 votes
    4y

    @Steven Jefferson

    Gas tankless wh have more BTU/hr consumption compared to a regular 40 gallon Wh. Depending on the size and run of your houseline, you might need to upgrade your lines.

    0Reply
  • Paul Dillon
    Rental Property Investor · LA · Member since 2014 · 16 posts · 6 votes
    4y

    @Steven Jefferson I would say conventional heaters. In my opinion tankless is more expensive and use more gas to run. Also conventional should be a lot less expensive to install labor wise.

    0Reply
  • Casey WalkerPro Member
    Contractor · Member since 2019 · 51 posts · 21 votes
    4y

    In my personal house, when my old hot water heater needed replaced I upgraded to a tankless and love it, we can run all three showers at the same time for as long as anyone wants and never run out of hot water.  Looking at the monthly gas bill I think it is the same as before.  

    For my rentals I just replace hot water heaters with the old kind.  They are cheap, last a long time and it doesn't require any new gas lines.

    Thanks

    0Reply
  • Paul Vail
    The Triangle, NC · Member since 2021 · 189 posts · 117 votes
    4y

    Ouch, the deeper one thinks about your question, the harder it is to answer.   My experience is similar to Greg's -- but I must have overlooked where you said what kind of water heater.  Gas or Electric (or some other fuel)?     You mentioned you are on one water meter, so that's not a well situation.  Presumably you don't have sediment issues otherwise you would be whole-house/building filtering.  So that's not a mark against tankless.  Yes, for longevity, 15 minutes of maintenance/backflushing of a tankless per year is a good idea.  Particularly with well water sources or hard water.  Cost is $100 for a recirc pump, 5 gallon bucket, a set of washing machine water hoses and a few gallons of white vinegar.  Not expensive.

    Personally, I love my NG tankless. I've had it for seven years when I converted from electric 50gal to gas. My next door neighbor has had theirs for 21 years (and hasn't maintained it at all). I have another neighbor who got his the same time we adopted gas -- again, no issues. However -- my examples are all from SFR, not multifamily. I have a house of estrogen -- the missus and two teen girls. Lots of long showers - before and after my heater conversion. Now, the showers don't require a rest period in between to keep everyone happy. But I'm on a well -- so no h2o bill. It's less costly now on tankless gas than with the old electric tank. I have tracked my energy use for 20+ years -- a tankless gas unit is very efficient cost-wise, much more so than my electric tank was. And I moved a tank that took up 1/2 of a bedroom closet to an exterior wall where it tanks up very little space.

    I used to work in a retail big box store. The electric water heaters are designed to basically disposable after their warranty period. Buy a 6 yr unit, maybe get 6-8 years. Buy a 12 yr unit, maybe 14 years, maybe 10. Tankless isn't any different, properly maintained, but they typically have a 20+ year warr.  What I saw returned to the retail store was disproportionately electric tanked units (% sold vs % returned).  Most of the tanked returns were for bad manufacturing or transport (how do you ship a water heater with smashed controls, dents the size of bowling balls, caved tops, or missing internal piping without a scratch on the shipping carton?  Tankless returned was not knowing how to install (some plumbers are thick).

    So you have some choosing to do: are you attempting to make your rental units more appealing to current/future residents by having 'more efficient' appliances?  Maybe that will translate into a better rental price point?  Because the only benefit of going tankless to your tenants is their energy/fuel bill (and endless hot water -- which may counter your cost savings by using hot water longer...)   

    From my experience, the benefit of going tankless to you beyond marketing would be the probability of longer service use before it rots out, 20+ years -- with the drawback of a bit more maintenance annually or every few years.  How long are you going to keep these rental units?   If you are flipping this triplex in a handful of years, and you are already plumbed for tanked units, unless you think the new owners would pay more for tankless, or be scared away because tankless is unfamiliar to them -- then factor that in.   'oh, tankless is so much more expensive' -- maybe.   How much does a 6yr warranty tank unit cost (x3) vs a 20 year tankless?   Be sure to include plumber labor in your calculations.

    But you threw in the 'I pay for water' demon.  Some people above suggested going with a smaller tanked unit to limit the hot water availability.  Unless tenants then get pissed at your unit for not being able to take a 1/2 hr shower.  Will that create unwanted turnover?

    Damn, you have a puzzle.

    Have you considered metering each unit -- put a meter in to each unit feed, maybe a clause in the new rental contract, and going over x gal/mo is a surcharge?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    As a high-end builder, I installed plenty of tankless units over the years....because they were better? No, because they were they 'in' thing to have. Most people aren't aware that in order to keep the warranty in effect, you need to have the unit serviced, acid-flushed and cleaned, every year. Nobody does that. Tankless units are generally finicky and really not a money saver. They are considered more efficient, but do some research and you will find that is not true. They are only more efficient if you use less than 40 gallons per day...ahaha.

    Standard tank heaters have an expected life span of 10-15 years, but they will usually last up to 30 years with even occasional maintenance. The new models are very efficient compared to older ones.

    So if you want to be less efficient and spend a lot of time and money on a water heater, go for a tankless.

    2Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    4y

    @Steven Jefferson

    I’ve heard nothing but horror stories of tankless. And the electric ones take 4 spaces in your panel.

    1Reply
  • Paul Vail
    The Triangle, NC · Member since 2021 · 189 posts · 117 votes
    4y

    It's not a decision-maker for the OP, but if anyone is curious, here is some real-world cost data for converting from an electric 50 gal tank water heater to a tankless NG unit. The graph is my sad attempt to show our SFR family-of-four energy use. Red line is monthly $ total spent on all utilities. Green is a 12 month running average of the same. I've noted the starting value in 2011, the point where NG water heater was installed replacing the electric unit in late 2013, a furnace/AC replacing a heat pump in mid 2015, and a sample running ave in 2018. Utility rate hikes were minor. Use patterns roughly the same, although as the girls got older, the showers got longer and the laundry more frequent. So even with the inflation of use and cost, the actual bills went down ~$25/mo for hot water. Break-even for the water heater was $450 cost delta/25= 18 months.

    This really has no immediate bearing on the OP's dilemma.  My circumstance changed a number of variables.   Happy to share my data with anyone interested.  There's a lot of BS out there -- real numbers are hard to come by.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    @Paul Vail Interesting, but you went from an electric tank unit to the NG tankless. It would be more relevant if you had gone from NG to NG I would think...

    0Reply
  • Account Closed
    OP
    Bronx, NY · Member since 2020 · 94 posts · 27 votes
    4y

    Never in my wildest dreams I thought there would be so many opinions on this subject. And paul you brought up another subject that was on my mind. I was gonna mention this in another topic post but since you brought it up. The subject of metering each unit. As I said I have one water meter entering the house from street. I read that it is possible to install a meter for each unit. How would that work as far as billing each tenant.   How much is the cost associated with this. 

    0Reply
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