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We currently have a gas water heater in our laundry room (part of a converted garage, on slab). The hot water and gas are (obviously) running to it with no problem.

When I was getting a quote for a tankless gas water heater, the sales rep looked at the setup and decided we should put it outside by the gas meter instead, on the opposite end of the house.

This is slightly nice, since it will be closer to the bathrooms and they'll get hot water faster. However, I'm concerned about the level of work required to put it out there. They'll need to drill through the brick wall into the crawlspace to access the hot water lines, cap off the gas and water lines in the laundry room, and run the control unit wires through the crawlspace up into an interior closet -- instead of simply taking out the existing tank, putting the tankless unit in, and sticking the controls to the laundry room wall. I'm also surprised that having the heater outside makes sense from an efficiency and durability standpoint (we're in South Carolina, a mild climate, but even so).

Does it make sense to put the tankless hot water heater in a complete different place like that, or is this plan unnecessarily complicated?

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    Small note - the new tankless unit may not be able to use the same exhaust setup as your tank. High-efficiency water heaters may need intake and exhaust direct vented to the outside, and installing the unit outside likely simplifies this. Make sure you understand what the specific unit you're considering would need and factor that into your decision. – Shimon Rura Jun 30 '16 at 19:27
  • @ShimonRura That's an excellent point to bring up. It would be able to use the same exhaust point through the roof, but would require a different vent structure. – Erica Jun 30 '16 at 19:30
  • There's also a huge question of freezing. Yes, California and Florida freeze. While venting is a factor, it's also a win to be near the points of use. The less cubic volume of water you have to push through a pipe to get warm water, the more cost savings. – Harper Jul 1 '16 at 0:18
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Are you OK with "beautifying" your house by adding a post-industrial or modern "style" water heater on the outside of your house? Is there some other interior hidden space close to the bathroom that will be less conspicuous?

You could also run a dedicated ½" or ⅜" PEX hot water line to the bathroom, which will store much less water and therefore result in faster hot water there.

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"decided" -- a sales rep doesn't get to do that. You do, but only after finding out whether inside or outside violates local code; and whether you could make good use of the interior space freed up.

Other considerations: are the existing hot water lines (from heater to bathrooms) insulated? How long is that run?
Over a few years, you may well recoup the installation cost in energy saving with short feed lengths from the proposed exterior location.

As to efficiency & durability -- a tankless heater doesn't have a reservoir, so it's pulling the same 'cold' water that your current system is, and immediately sending the hot water indoors, so no efficiency loss. Presumably the system is designed for exterior installation, so durability is whatever's in the warranty.

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