Tankless, or on-demand, water heaters have become all the rage the past few years, and for some very good reasons (who hasn’t shouted, “Who used all the hot water?!” at least once?).
For one, if they’re installed and running properly, you never run out of hot water. You turn on the water, the heater automatically kicks in, and (in the better units) the modulator reads the temperature of incoming water and inducts only enough heat to raise the temperature of the water to the ideal level (say, 100 degrees Fahrenheit). That’s savings in your pocket. In addition, because they don’t waste money re-heating water that’s cooled in the tank over the course of the day, tankless water heaters save on energy costs over the long-term, as well—anywhere from about $40 up to $120 annually, on average, depending on whether you go with an electric or natural gas unit.
In addition, the life expectancy of a tankless heater ranges up to 20 years, as opposed to the standard 10 years for a traditional tank heater.
So, with all that going for them, the only knock against tankless water heaters is the initial cost, which can hit you several ways—the unit itself (anywhere between $450 and $3,000), the cost of installation and the additional plumbing and electrical upgrades your home may need to accommodate the new heater.