Where Should I Install my Tankless Water Heater?

Tips on where to install tankless water heater
Written by Steve Bates

How to Decide the Best Location for Your Water Heating Unit


Hello there! Are you considering hopping onto the energy-saving bandwagon with a tankless water heater? If so, you’ve made an excellent decision. Tankless water heaters are known for their compact size, long life span, and, above all, their ability to provide hot water on demand. This means you can say goodbye to the dread of a cold shower in the morning! But the all-important question remains: “Where to install it?”

Choosing the right location for your tankless water heater is crucial for many reasons. The right spot can make a significant difference in terms of your heater’s efficiency, durability, and ease of use. While you might think this decision is a straightforward one, there are several factors to consider that may surprise you.

In this article, we’ll guide you through each aspect, helping you make an informed choice that will allow you to get the most out of your tankless water heater.

Whether you’re renovating your home or just looking to make a switch from the traditional bulky water heaters, this guide will be your trusty companion. Let’s dive right in

What’s the best place to install a tankless water heater?

This is a question many homeowners purchasing a new tankless water heating unit face. And it’s not an easy question to answer, due to all the variables involved, but we’ve got you covered.

Firstly, every manufacturer has their own recommendations for the physical location of a tankless water heating unit.

Since every tankless water heating unit is different (unless you’ve got the same models, of course) every instruction manual will say different things. It’s essential that you adhere to what the manufacturers recommendations are, as following them will ensure you receive the maximal functioning of the system.

That includes all sorts of benefits, such as absolute maximum efficiency, lowest noise, hottest water and highest safety from pressure related accidents.

Their instructions are important, and should never simply be disregarded. Always follow the guidelines set by the manufacturer. They know their product better than any Youtuber or online amateur DIY enthusiast. In fact, it’s their legal obligation to protect you and your property from damage to a reasonable extent.

Seriously, read and follow the manufacturer’s installation advice.

Having said that, here are some generic tips of where you should install your tankless water heater, to save you the trouble of having to decide for yourself.

Every option has both positives and negatives, which makes it difficult to actually reach a decision. But by prioritizing what’s important for you, it should help making a decision easier.

You’ll find that there is a direct correlation between the functioning of the tankless unit and its location.

You don’t want it buried underground or positioned outside where it will freeze up in the winter. There again, you also don’t want it dangerously hot and exposed to direct sunlight in summer months, especially if it’s powered by propane.

Your positioning of your tankless water heating unit will also affect how efficient it is, and how much water and energy gets wasted.

For example, positioning your heater nearest to where demand is ensures that it does not need to travel miles to reach the outlet, and therefore it won’t cool in the piping.

Factors to Consider When Choosing the Location

Picking the perfect spot for your tankless water heater might seem like a simple task, but there are several factors you need to keep in mind to ensure optimal performance, safety, and longevity. We want you to get the most out of your investment, so here’s what you need to consider:

Accessibility and Convenience

You want to install your unit somewhere easily accessible for regular maintenance, which is essential for the longevity of your tankless water heater. Remember, out of sight should not mean out of mind!

Distance to Point of Use

Tankless water heaters work instantaneously, but the time it takes for the hot water to reach your faucet, shower, or appliance depends on the distance between the unit and the point of use. To avoid wasting water while waiting for it to warm up, consider installing the unit close to where it will be most frequently used.

Climate and Weather Protection

Depending on your climate, you might need to protect the unit from freezing temperatures if installed outdoors. Alternatively, in hotter climates, direct exposure to the sun can cause overheating.

Ventilation Requirements

Combustion gases need to be vented outdoors. The type of venting required will depend on the model and manufacturer of your tankless water heater.

Local Building Codes and Regulations

Always familiarize yourself with local codes and regulations regarding the installation of tankless water heaters. Some areas may have specific rules about placement, especially in multi-unit buildings or properties close to the property line.

As you can see, there’s a bit more to it than just finding a spot where the unit fits! However, understanding these considerations will ensure a smooth installation process and optimal efficiency of your new tankless water heater.

In the next sections, we will dive deeper into the pros and cons of indoor versus outdoor installations, so stick with us! We promise it’s worth your while.

The best locations for tankless water heater installation include the attic, garage or under the stairs.

Indoor Installation vs. Outdoor Installation

Now that we’ve covered the key factors to consider when choosing a location, let’s delve deeper into the two main options for your tankless water heater: indoor and outdoor installations.

Each option has its benefits and challenges, so let’s shed some light on these.

Indoor Installation

Indoor installations are a popular choice, especially in regions with harsh weather conditions. Here are some pros and cons to consider:


1. Protection from Weather: Indoor units are safe from extreme weather conditions that can affect the efficiency and lifespan of your unit.

2. Safety: Installing the unit inside can reduce the risk of vandalism or accidental damage.


1. Space Considerations: While tankless units are more compact than their traditional counterparts, they still require a dedicated space, which may be challenging in smaller homes or apartments.

2. Ventilation and Flue Requirements: Indoor units require venting systems to safely expel the combustion gases, which can add to the installation complexity and cost.

3. Noise Considerations: Although quieter than traditional tank heaters, tankless water heaters can still make some noise, which might be disruptive if the unit is installed near living or sleeping areas.

Outdoor Installation

Outdoor installations, on the other hand, can be a great option if indoor space is limited or if you want to keep the unit entirely out of sight. Let’s look at the pros and cons:


1. Space Saving: Outdoor installation can free up indoor space and be an excellent option for smaller homes or apartments.

2. No Venting System Required: As the unit is installed outside, it doesn’t require an indoor venting system, simplifying the installation process and potentially reducing costs.


1. Climate and Weather Protection Requirements: Outdoor units are exposed to weather elements, requiring additional protection, especially in areas with extreme weather conditions.

2. Local Building Codes and Regulations Considerations: Outdoor installation may be subject to stricter regulations, and you’ll need to ensure that the unit is not installed too close to windows or ventilation intakes.

In the end, the choice between an indoor and outdoor installation depends on your specific circumstances and preferences. Think about your climate, your available space, and the locations of your main water outlets. And remember, a professional plumber can provide invaluable advice based on your unique situation.

Stay tuned as we’re about to dive into some handy tips for both indoor and outdoor installations next!

Tips for Indoor Installation

If you’ve chosen to go down the indoor installation route, you’ve come to the right place! Here are some helpful tips to ensure a smooth and effective setup for your tankless water heater:

1. Ideal Locations Within the House: Look for a place that’s near your main points of water use, such as the kitchen or bathrooms. This will minimize the lag time before hot water arrives at your tap. Potential spots could include utility rooms, basements, garages, or even large closets.

2. Minimize Noise and Maximize Efficiency: While tankless water heaters aren’t overly loud, they do make some noise. Try to choose a location where this won’t be disruptive, like a basement or utility room. To maximize efficiency, avoid unheated areas if you live in a cold climate, as the heater will have to work harder to heat colder incoming water.

3. Ventilation Considerations and Solutions: Always refer to the manufacturer’s instructions regarding the necessary ventilation. Most indoor units will need a way to vent exhaust gases outdoors. This could mean installing the unit on an exterior wall or implementing a flue.

4. Compliance with Local Codes and Regulations: Before starting the installation, check with local authorities or a professional plumber to ensure that you’re meeting all safety codes and regulations. This can include clearance from combustibles, proper venting, and access to the unit for future maintenance.

An indoor installation can be a great choice for many homeowners. By carefully considering these tips, you can ensure that your tankless water heater is installed in a way that maximizes efficiency, ensures safety, and minimizes any potential drawbacks.

In our next section, we’ll give you some equally helpful tips for outdoor installations, just in case you’re still weighing your options or considering installing additional units.

Tips for Outdoor Installation

Choosing to install your tankless water heater outdoors can save you some valuable indoor space and simplify your venting requirements. If you’re considering this option, here are some practical tips to ensure a successful setup:

1. Ideal Locations Outside the House: Similar to indoor installation, try to position the unit close to your main points of water use to reduce the delay in hot water delivery. Opt for a sheltered spot if possible, to protect the unit from extreme weather conditions.

2. Protecting the Unit from the Elements: While outdoor tankless water heaters are designed to withstand the elements, it’s crucial to add additional protection in extreme weather conditions. This could include a weatherproof cover, insulation for pipes to prevent freezing in colder climates, and sunshades in hotter climates to avoid overheating.

3. Compliance with Local Codes and Regulations: As with indoor installations, always check local building codes and regulations. These can dictate how far the unit needs to be from windows, doors, or ventilation intakes. You should also ensure the unit isn’t too close to the property line.

4. Security Measures: To prevent accidental damage or potential theft, consider installing a protective enclosure around your unit. This can also help hide the unit and improve the aesthetic appeal of your home exterior.

5. Easy Access for Maintenance: Even though the unit is outside, it should still be easily accessible for regular maintenance and servicing. Don’t install it in an area that’s hard to reach or requires special equipment to access.

Outdoor installations have their own unique benefits, and with these tips, you can make sure you’re setting your system up for success. But remember, whether you’re installing your unit indoors or outdoors, professional assistance is invaluable to ensure a safe and efficient setup.

In the next section, we will give you a brief overview of the installation procedure.

Tankless water heater installation on external wall

Installation Procedure

Whether you’ve decided to install your tankless water heater indoors or outdoors, understanding the basic steps involved in the installation process can help you better coordinate with your professional plumber and understand what to expect.

This article has taken us a long way. From understanding the basics of tankless water heaters to navigating through the complexities of choosing the perfect installation spot.

Here’s a broad overview:

1. Choose the Right Unit: Depending on your hot water needs, the size and type of your tankless water heater can vary. Consult with a professional to choose a unit that’s right for your household’s demands.

2. Prepare the Installation Site: Once you’ve chosen the perfect spot for your heater, the area must be prepped. This includes ensuring proper ventilation for indoor units, access to electricity and gas supply, and the presence of a nearby water source.

3. Install the Unit: Professional installation is key when it comes to tankless water heaters. Your installer will mount the unit, connect the water supply, set up the gas or electric connection, and make sure all elements are properly secured and sealed. For indoor units, they’ll also install venting to allow exhaust gases to escape.

4. Test the System: The installer will then turn the unit on, test the system, and adjust the settings to ensure it’s heating the water to your desired temperature. They’ll also check for any leaks or issues.

5. Explain Maintenance Procedures: Lastly, your installer should walk you through basic maintenance and troubleshooting procedures. Regular maintenance is crucial for the longevity and efficiency of your tankless water heater.

While this overview makes the process seem quite straightforward, remember that each step requires technical knowledge and skill. Always hire a licensed professional to install your tankless water heater to ensure it’s safe, up to code, and functioning at its best.

Stay tuned for our final considerations as we wrap up this comprehensive guide to installing your tankless water heater!

Let’s sum up . . .

Whether you opt for an indoor or outdoor installation, it’s clear that the decision depends on your specific circumstances, such as your home’s layout, your climate, and your household’s hot water needs.

Remember, while this guide provides a helpful overview, every home and every heater is unique.

The advice of a professional plumber can be invaluable in making the final decision. They can help you navigate local building codes, understand the manufacturer’s instructions, and ensure a safe and efficient installation process.

By investing in a tankless water heater and thoughtfully choosing its location, you’re making a significant step towards energy efficiency and endless hot water supply. It’s a decision that will serve your home and the environment well for many years to come.

Thank you for joining me on this installation journey. Here’s to warm, energy-efficient days ahead!

About the author

Steve Bates

Hi, I'm Steve and I currently reside in Chicago, Illinois. Although for most of the last 20 years I was a partner in a HVAC company down in Austin, Texas.

I understand the frustration involved with dealing with water heater repairs and replacing or upgrading to a new, more efficient model.

My aim is offer some basic advice on fixing home hot water systems. And if a repair isn't possible, then to make the process of selecting a new water heater – be it gas or electric - as simple as possible.

So that you can save money and have a safe and reliable hot water system in your home for many years to come.