Do tankless hot water heaters make sense for typical Chicago homeowners?

Your Guides find themselves in the position to need a new hot water heater for the home.  If we were purchasing a new water heater for a rental unit, the choice would nearly be a no-brainer.  We’d go out and find the cheapest and smallest tank-style hot water heater we could find at the local Home Depot or Menards.

($278 at Home Depot)

Most of our units are one bedrooms or very small two bedroom apartments, and each apartment has its own water heater so the tenants pay their own water-heating expenses.

But for our home, the advantages of a tankless system seemed quite attractive:

  • We would gain an entire closet
  • The new water heater would last three times as long
  • Less expensive to operate
  • Instant on hot water
  • Limitless supply if all bathrooms and appliances were in use at the same time

Plus, this video from This Old House made it sound like hot-water Nirvana.

So we started asking around for referrals to companies that provide, and install, these new water heaters.  What we heard back from colleagues was not as encouraging.

From one co-worker:

Although tankless are very popular there are several drawbacks and I never recommend them especially if clients plan on drawing hot water for multiple sources to be used at the same time. Much of the energy efficiency achieved by a tankless can also be achieved by a high efficiency water heater or a solar powered water heater. And if you are replacing an exisiting water heater there is minimal added expense to connect to existing piping and no rerouting of venting, so long as the water heater is placed in the same location.

From a second:

From my experience going tankless also causes some new piping to be put in as well, whereas a water heater is a much simpler replacement. In my experience multiple use at the same time is not great for a tankless as it does not know how to evenly distribute the hot water that is being demanded so you end up with an uneven distribution. And with rebates available from as well as

You would most likely save more cash going for regular size water heater that is highly efficient. But you don’t get that storage space!
Tankless water heaters at this point in their technological development are sorta “green bling” in my humble opinion.

And a third:

There is no rage to a tankless hot water heater…trust me I should know because I researched them for my previous house and plumbers really do not prefer them over the standard natural gas fired model. In fact they do not produce enough hot water as efficiently as a standard model unless multiple units are installed which really increases your cost, so depending on the size of the home, it is not uncommon to have several units stacked to insure hot water.

I ended up with 2- power vent 40 gallon “STATE” top line gas fired water heaters with carbon monoxide sensors built on the units. The cost is around 900.00 per heater unit but you can get much less expensive models for 350.00 and up at Home Depot or Menards. I purchased for a deal at a plumbing supply store and my power venting system is usually more money. (Depends on how you have to vent the unit)

There are thresholds to where you are really going green especially when you’re using more energy than you need in specific instances. In Europe they have been using tankless for years but they live in much smaller spaces and use less water. They do not have car washes in shower stalls like you see in some ridiculous bathrooms with multiple body shower heads accompanying a rain head. These will tap through your hot water in minutes.

In our house, it seems we would need one unit to power the whole house with a purchase price of around $1,200 plus installation of another $1,000 for a total of $2,200.

Or we could get a nicer tank-style unit for $800, and pay another $200 for installation for a total of $1,000.

We also learned that the savings on our gas bill will only be around $70 to $100 per year, making the investment a 10 to 20 year payoff.

So unfortunately I am not going to get the amazing new hot water heater.  Rather in our installation, it seems the best course is to go with the more traditional installation.

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