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Outdoor Vs Indoor Tankless Water Heater Installation

Tankless water heaters offer endless hot water without the bulky storage tank. But where should you install yours? This guide dives into the benefits and drawbacks of indoor and outdoor tankless water heater placement, considering factors like ventilation, climate, and available space.

Tankless water heaters heat water on demand, unlike traditional storage tank models that keep a reserve of hot water heated constantly. This translates to several advantages for tankless systems: endless hot water, reduced energy bills (as they only heat water when needed), and more space in your home due to their compact size.

However, a dilemma arises when choosing a tankless system—should it be installed indoors or outdoors? Both options have merits and drawbacks. The ideal choice depends on factors like available space and climate. For instance, an outdoor installation might be ideal if you have limited indoor space. However, colder climates might necessitate indoor placement to prevent freezing pipes.

Indoor Tankless Water Heater Installation

Tankless Water Heater Indoor Installation


  • Easier access for maintenance and repairs: Since the unit is located inside your home, servicing and repairs are more convenient.
  • Potentially shorter pipe runs: Less distance for hot water to travel means less heat loss through the pipes.
  • Suitable for limited outdoor space: Tankless water heaters are ideal for homes with minimal exterior space for bulky units.


  • Requires dedicated space: Indoor tankless water heaters need a designated spot inside your house, typically in a laundry room, garage, or basement.
  • Proper ventilation is crucial: Especially for gas-powered models, venting flue gases is essential. This may necessitate additional installation costs.
  • Noise generation: These units can generate noise during operation, potentially causing disruption in certain locations.

Outdoor Tankless Water Heater Installation

Outdoor Tankless Water Hearer


  • Frees up valuable space: Installing outdoors is ideal for smaller homes, as it frees up space inside the house.
  • No venting needed for gas models: Fumes are released outdoors, eliminating the need for special ventilation with gas-powered units.
  • Quieter operation: Generally quieter compared to indoor tankless water heaters.


  • Vulnerable to weather extremes: More susceptible to cold temperatures and extreme heat. It may require winterisation in colder climates.
  • Heat loss in longer pipes: Longer pipe runs for hot water delivery can result in some heat loss.
  • Increased risk of theft or vandalism: The exposed location increases the risk of theft or vandalism.
  • Additional installation costs: Weatherproofing and protecting the unit from the elements may require additional installation costs.

Decision-Making Framework

When deciding between an indoor and outdoor tankless water heater, several key factors should be considered to ensure the best fit for your home and lifestyle.

Available space is a crucial consideration. If your home has limited indoor space, an outdoor unit may be the preferable choice. Outdoor installations free up valuable interior space that can be used for other purposes, such as storage or living areas. However, an indoor unit may be a suitable option if you have ample indoor space, such as a large garage or utility room.

Noise tolerance is another factor to consider, particularly for indoor installations. Tankless water heaters can generate noise during operation, which may be disruptive if the unit is located near living areas or bedrooms. If noise is a concern, consider placing the unit in a location that minimises sound transmission, such as a garage or utility room. Alternatively, an outdoor installation can mitigate noise concerns, as the sound is less likely to penetrate the home’s interior.

Budget is critical when choosing between an indoor and outdoor tankless water heater. While both options offer long-term energy savings, the initial installation costs can vary. Outdoor units may require additional expenses for weatherproofing and protection against the elements. Indoor gas models may necessitate the installation of proper venting systems, which can add to the overall cost. When making your decision, factor in these potential additional costs and weigh them against your available budget.

The local climate should also be taken into account when deciding between an indoor and outdoor installation. In regions with mild climates, an outdoor unit may be a viable option, as it can operate efficiently without the need for additional protection. However, in areas with extreme heat or humidity, an indoor installation may be more suitable to ensure optimal performance and longevity of the unit.

By carefully evaluating your available space, noise tolerance, budget, and local climate, you can decide whether an indoor or outdoor tankless water heater is the best choice for your home. Consult with a professional plumber or tankless water heater specialist to discuss your specific needs and receive personalised recommendations based on your unique situation.

Choose the Perfect Tankless Water Heater Installation

Choosing between an indoor and outdoor tankless water heater depends on your living situation and priorities. Outdoor units offer simpler installation, eliminate venting concerns, and run quieter inside. However, they require weatherproofing and may need winterisation in colder climates. Indoor models offer easier access for maintenance but take up valuable space and require proper ventilation.

For expert advice on which tankless system is ideal for your home, contact Service First Plumbing today. Our licensed technicians can answer all your questions and ensure a smooth installation for endless hot water.

Frequently Asked Questions (FAQs) Tankless Water Heaters

How long do tankless water heaters typically last?

Tankless water heaters generally have a longer lifespan compared to traditional tank-style water heaters. With proper maintenance, a tankless water heater can last up to 20 years or more, while tank-style heaters typically last around 10-15 years. The longer lifespan of tankless heaters can be attributed to their efficient design and the absence of a water storage tank, which can corrode over time.

Are tankless water heaters more energy-efficient than traditional tank-style heaters?

Yes, tankless water heaters are generally more energy-efficient than traditional tank-style heaters. Tankless heaters only heat water on demand, meaning they don’t waste energy constantly maintaining a large tank of hot water. This can result in significant energy savings, especially in households with low to moderate hot water usage.

However, the actual energy savings will depend on factors such as the size of the unit, the household’s water usage patterns, and the efficiency rating of the specific model.

Can I install a tankless water heater myself, or do I need a professional?

While a skilled DIYer can install a tankless water heater, hiring a professional plumber or tankless water heater specialist is generally recommended. The installation process involves working with gas lines (for gas-powered models), electrical connections, and plumbing, which can be complex and potentially dangerous if not handled correctly. A professional installer will ensure that your tankless water heater is properly sized, vented, and installed according to local building codes and manufacturer specifications.

How do I determine the right size tankless water heater for my home?

Determining the appropriate size for your tankless water heater depends on several factors, including the number of bathrooms, the number of simultaneous hot water demands, and the flow rate of your fixtures. A professional plumber or tankless water heater specialist can help you assess your household’s hot water needs and recommend a properly sized unit.

Factors to consider include the maximum flow rate and the temperature rise (the difference between the incoming cold water temperature and the desired hot water temperature). Undersizing a tankless water heater can result in insufficient hot water during peak usage while oversizing can lead to higher installation and operational costs.

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