Tankless Water Heaters: 7 Pros and 6 Cons You Need to Know

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Tankless water heaters, also known as on-demand or instant water heaters, have many advantages over traditional tank-style water heaters and can be an excellent long-term investment, however, like any product, they have their downsides and are not the right solution for every home.

Unlike traditional tank-style water heaters which constantly use energy to maintain a hot water supply, tankless water heaters do not store any water and only expend energy when you turn on a hot water tap or when appliances, like dishwashers and washing machines, are in use.

The on-demand style of operation results in their biggest advantage; energy and cost savings.

Besides energy and cost savings, there are several other reasons to choose a tankless water heater over a traditional tank-style heater. Tankless water heaters produce an endless supply of hot water, take up less space, have a lower risk of leaking, are safer, and have a significantly longer lifespan on average.

The main disadvantage of tankless water heaters is their upfront cost (unit and installation) is significantly higher than tank-style heaters. In fact, including installation tankless water heaters cost on average 3 times more than tank-style water heaters.

In addition to their high upfront costs, tankless water heaters take longer to deliver hot water, water temperature is inconsistent when multiple outlets are on simultaneously, and they cannot provide hot water during a power outage.

Investing in a tankless water heater is a difficult decision so it’s important to understand all the facts before you make up your mind. In this article, I provide a comprehensive list of the pros and cons of tankless water heaters so you can make a well-informed decision based on your unique situation.

Let’s get right into it. Click the links below to skip to a section.

The Pros of Tankless Water Heaters:

The Cons of Tankless Water heaters:

Pro: Long-term Energy and Cost Savings

The main advantage of tankless water heaters is that they are energy efficient and save you money over the long term.

A tank-style water heater expends energy around the clock to maintain the temperature of a 40 to 50-gallon water supply so that hot water is ready when it’s needed.

Tankless water heaters, as their name suggests, heat water on-demand and do not maintain a supply of water. By only heating water when it’s needed, tankless water heaters do no experience standby heat loss which occurs when heat escapes the water tank and needs constant reheating.

When a tap, shower, or appliance is turned on, cold water passes through the tankless water heater where it’s heated by either a gas-fired burner or electric coils. Once the water is heated (this happens in seconds), the hot water travels through the pipes and out the tap, showerhead, or any other outlet in your home.

So how much energy will you actually save?

Your energy savings depends on the amount of water you use and the efficiency of your previous tank-style system.

According to the U.S. Department of Energy, tankless water heaters can be between 8% and 50% more energy efficient than tank-style water heaters but the actual efficiency depends on the amount of hot water you use.

If you use less than 41 gallons of hot water per day, a tankless heater is 24%-34% more efficient than a tank-style heater. If you use a lot of hot water, around 86 gallons per day, tankless water heaters are only 8% to 14% more efficient since they are running more often. If you install tankless water heaters at each outlet (shower/sink) instead of a centralized system for your entire house, you can save even more; between 27% and 50%.

Switching from a tank-style water heater to a tankless water heater will save a family of four an average of $100 per year or over $1500 throughout the lifetime of the system, according to Energy Star.

Pro: Unlimited Supply of Hot Water

Here’s a scenario; you come home from a family beach day and everyone in the house needs to take a shower. By the fifth shower in a row, the hot water is running low and you’re the one stuck taking a cold shower.

If you have a tankless water heater, you will never find yourself in that scenario. Let me explain.

Each tankless water heater has a maximum flow rate, in other words, they’re only able to heat a certain amount of water at a given time. If you have 5 showers running simultaneously, most tankless heaters won’t be able to keep up.

However, as long as your water usage at any given time is below the maximum allowable flow rate, tankless water heaters provide an endless supply of hot water. Since tankless water heaters work by heating water from the external source on-demand, you could take a shower for 10 hours (or longer) and the water would be as hot as it would be for a 10-minute shower.

Pro: Take Up Less Space

If space in your home is limited, tankless water heaters provide a huge benefit. They are usually mounted to the wall and take up significantly less physical space compared to tank-style water heaters.

To give you an idea of how tankless and tank-style water heaters compare in terms of size, the average 40 to 50-gallon tank-style heater is 54 to 60 inches tall with a 20-inch diameter and is shaped like a cylinder. The average tankless unit is around 27 inches tall, 18 inches wide, 10 inches deep, and rectangular.

tank style vs tankless water heater
Tank-style (left) vs Tankless (right)

Tank-style heaters take up floor space, usually in the basement, while tankless units are mounted to a wall like a circuit breaker and can fit in most closets.

Pro: Lower Risk of Leaks and Water Damage

One of the biggest risks with tank-style heaters is, over time, minerals from hard water build up within the tank which leads to corrosion and eventually leaks. Since tankless water heaters don’t have a tank, there is no risk of leaks or flooding.

This doesn’t mean that tankless water heaters are immune to issues. They can and will run into problems that could result in leaking, but the chances of having a major leak that floods your entire basement and causes significant damage are slim.

Pro: Zero Risk of Tank Exploding

Today’s plumbing code requires all tank-style water heaters to have a temperature and pressure relief valve that opens to release pressure and eliminate the possibility of the tank exploding.

water heater temperature and pressure relief valve
Temperature and Pressure Relief Valve

Over time, minerals and sediment from the water can clog up the valve and prevent it from functioning properly. When this happens, a dangerous amount of pressure can build-up and put you at risk. If you have a tank-style water heater, experts recommend testing the valve at least once a year. Here’s how you can test it:

Although it rarely happens, explosions are a serious risk with tank-style water heaters. Fortunately, since tankless heaters do not have a tank, there is absolutely zero risk of an explosion ever occurring. One less thing to stress out over.

Pro: Lower Risk of Burns and Exposure to Toxic Metals

Many experts argue that tankless water heaters are safer than tank-style heaters.

Besides the fact that they don’t have a tank that could explode, they also provide more precise control over the temperature so you’re less likely to be burned by hot water.

Also, as I mentioned earlier, tank style heaters break down over time due to hard water causing the inner lining of the tank to rust and corrode. Those minerals and particles eventually make their way into your water lines and expose your family to harmful toxins. Since tankless water heaters don’t maintain a supply of water in a corroding tank, the water they distribute throughout your home is more pure and safer on your skin.

Pro: Life Expectancy of Over 20 Years

I recently published an article that covers the topic of how long water heaters last and explains how to extend the life of your water heater.  On average, tank-style water heaters last between 8 and 12 years, however, tankless water heaters usually last over 20 years.

If you’re already in your “forever home” or plan to stay where you are for a while, investing in a tankless water heater will save you from needing a replacement for a very long time.

Con: High Upfront Cost of the Unit and Installation

The biggest downside of tankless water heaters by far is the high upfront cost of the unit and installation.

According to HomeAdvisor, the average cost of a 40 to 50-gallon tank-style water heater including installation is $889. The average cost of a tankless water heater including installation is $3,000.

Tankless water heats are more expensive primarily due to higher installation costs. Often times, special wiring needs to be installed in order to handle the increased load and/or a new vent pipe needs to be installed. Also, since tank-style heaters have been around longer and are more common, more professionals are capable of installing them and the labor costs are lower.

Use the links below to compare prices of popular tank and tankless water heaters. Please note that these prices do not include installation.

Tankless Water Heaters (links open listings on Amazon)

Tank-Style Water Heaters (links open listings on HomeDepot.com)

Con: Take Longer to Deliver Hot Water

Another downside to tankless water heaters is the fact that they take longer to generate and deliver hot water compared to tank-style heaters.

Remember, tankless water heaters don’t keep a supply of hot water ready to flow immediately when you need it.

When you turn on a hot water tap, the idle water in the pipes is cool or, at best, room temperature. Once that cool water is flushed out, heated water comes through, however, it can take between a few seconds and a minute depending on the distance between the heater and the tap.

Tank-style heaters don’t produce hot water instantly either but since they have a supply ready to go and don’t need to kick on, it reaches the outlet more quickly.

Con: Cold Water Sandwich

In researching tankless water heaters you’ve likely come across the term “cold water sandwich”. A cold water sandwich occurs when intermittent use of hot water causes you to feel an initial surge of hot water, followed by cold water, which quickly turns hot again.

When you turn the hot water off and on quickly, like you would when you’re hand washing dishes, the pipes have hot water in them from moments ago. The short delay between when the water starts to flow and when the heater kicks on causes a short burst of cold water before turning hot.

The cold water sandwich sensation isn’t a major issue but it can throw you off if you’re not used to it.

Con: Inconsistent Water Temperature When Multiple Taps/Showers/Appliances Are in Use

Earlier in this article, I talked about the scenario when your family comes home from a beach day and everyone needs to take a shower.

The benefit of tankless water heaters in that scenario is that your whole family can take showers back-to-back without worrying about running out of hot water.

The downside is that, if you have multiple showers running at the same time, tankless water heaters are not able to keep up. This isn’t just a problem with showers, depending on the size of your water heater, you can run into issues by having a shower and the dishwasher running at the same time.

When your shopping for tankless water heaters, the key metric you want to look at is flow rate. Flow rate is the amount of water that a tankless unit can heat at a given time. It’s measured in Gallons Per Minute or GPM, the higher the GPG, the more water can be heated at the same time.

The chart below gives you an idea of the average flow rates for each type of outlet.

OutletAverage Flow Rates (GPM)
Bathroom Faucet.5 - 1.5
Dish Washer1 - 1.5
Kitchen Faucet1.5
Washing Machine (Clothes)1.5 - 3
Shower2.5 - 3

Bottom line— tankless water heaters come in many different sizes with some equipped to handle households that use a ton of water to smaller units built for low water usage.

It important to determine what you need for your household and buy the appropriate size heater. Just remember, if you run too many taps/showers/appliances at once and exceed the flow rate capacity of your water heater, the water won’t be hot.

Here’s a quick guide to help you determine which size tankless water heater you need.

Con: Difficult to Achieve a Lukewarm Temperature

One of the lesser-known downsides of tankless water heaters is that they have difficulty achieving a lukewarm water temperature.

Since tankless water heaters need a minimum amount of water flow before activating, there’s a gap between completely cold water and the coolest warm water that you can create with a hot and cold water mix.

Not the end of the world since there are very few scenarios where you won’t be able to reach the temperature you need, but it’s worth mentioning if you’re the type of person that really enjoys cool showers.

Con: No Access to Hot Water During a Power Outage

When a storm comes and knocks out power in your home, it also knocks out the hot water. Tankless water heaters can be powered by gas or electricity but even gas powered tankless water heaters rely on an electric control panel to operate the system. So regardless of the type of tankless water heater you have, you’ll be out of hot water in the event of a power outage.

This is an area where tank-style water heaters have a significant advantage over tankless. Regardless of the power source, the water stored in their tank will remain hot for several days.  

Bottom Line: Is a Tankless Water Heater Worth It?

Tankless water heaters have several advantages over traditional tank-style water heaters. They save energy (and save you money), they provide unlimited hot water, they’re small and compact, they never leak and don’t contribute to harmful metals in your water. Best of all, they last twice as long as tank-style water heaters.

On the flip side,  you’ll have to invest around $3,000 upfront, they provide inconsistent water temperature in many situations, and leave you without any hot water during a power outage.

The best way to decide whether a tankless water heater is right for you is to audit your situation.

Here are some simple questions to ask yourself:

  • Do you have $3,000 to invest in an appliance that won’t provide a return on your investment for several years?
  • Is your house new construction or are you planning on staying in it for a long time (10+ years)?
  • Do you often run out of hot water due to several showers back-to-back?
  • Could you benefit from extra space in your basement (who couldn’t?)?

If you answered “yes” to one or more of these questions, a tankless water heater might be right for you. If you answered “no” to one or more of these question, especially, question #1, you should probably hold off and stick with a tank-style heater.

To learn more and check out the latest models, check out tankless water heaters on Amazon and HomeDepot.com.

To get a sense of the installation costs in your area, you can get free, no-obligation quotes from professionals on HomeAdvisor.com. You’ll get quotes from several professionals instantly and so you can compare them side-by-side and get the best rate possible.

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  1. My husband and I want a new water heater, so we wanted to see our options. I didn’t know tankless water heaters give you an unlimited supply of hot water. My husband and I use a lot of water, so we’ll look more into tankless water heaters!

  2. It’s great that this article explains how tankless water heaters cost more upfront and they have an endless supply and also takes up less space. When choosing a system, it would probably help to consider your budget and where you want it to be installed to determine if a tankless one would be best or if you want a different option. Once you’ve figured out which one to get, it might be a good idea to research local water heater installers in order to find out which one can provide the type of system you choose and install it correctly so it works.


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