Avoiding Tankless Water Heater Problems For Installers, Home Inspectors and Homeowners

Wall installation of Takagi tankless hot water heater - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  IllAs someone who is both a home inspector and a developer, I've seen "the good,the bad, and  the ugly" when it comes to the installation of whole-house "tankless"(AKA "demand') water heaters.

When they are installed correctly I've been favorably impressed with the performance and  convenience of tankless units - I have one installed in my own home, and have installed  them in several of my rental properties.

Tankless heaters, though, have to be properly installed to produce satisfactory results, and experience has taught me that there are considerable differences between the installation requirements of tank and tankless water heaters. This is especially true when  a tankless water heater is being installed to replace an existing tank type unit.

This page is not intended as a comprehensive manual on tankless water heater installation or trouble shooting,  or as a substitute for careful reading of manufacturers' installation instructions and  a through understanding of the building codes.

Rather, it's a list of real-world problems and issues intended to assist installers, inspectors and homeowners to archive satisfactory results the first time out by avoiding  some of the problems I have encountered on my own projects and during inspections at homes, condominiums and rental properties.


Tankless Water Heater Installation and Problems Solving:

A word about efficiency

This page isn't about comparing the efficiency of tank type and tankless water heaters - there are many sources for such information.

But since I'm so often asked the question, I thought a brief comment and at least one suggested link was in order.

The payback period for tankless water heaters is considerable. In one test simulating normal household usage a gas fired tankless heater saved around $97 a year compared with a convention tank type heater. As the installed cost difference between and tank and  tankless unit often exceeds $500 and can be two to three times that, under some conditions the expected payback time of a tankless unit can exceed its expected operating life!

So why consider a tankless unit?

In the case of my own home we installed a large commercial tankless water heater because we have very wide demand swings:  most of the time my wife and I are only occupants, but when we have house  guests we can have two tubs (including a hydro-therapy tub) or showers running at the same time as the laundry, the dishwasher and the kitchen sink.

Our water heater was relatively expensive to install but it provides what we require:  essentially unlimited hot water in periods of high demand  without the cost or floor space required to keep 100+ gallons of water hot year-around. 

In the case of our rental rehab properties we could not make an "economic" case for tankless units on the basis of energy savings alone. However in out tight urban environment (Evanston IL) a tankless heater's smaller footprint recovers a few precious square feet of rentable floor space in each apartment and increases rental value of each by around $225 a year, greatly shortening the payback period.

So there are valid reasons other than "average energy-efficiency" to consider tankless heaters.

Tankless units really ARE different

The installation requirements and procedures for tankless hot water heaters differ in important respects  from tank type units.

In my experience many installers are not fully aware of the differences, but "don't know what they don't  know". When this happens they can make mistakes which result in poor performance, increased costs, create fire and safety hazards, and sometimes require expensive changes to correct such problems "after the fact".

It has also been my experience that some local building code officials are not familiar with the differing  installation requirements of tankless water heaters, and that these units can pass municipal inspections  when installed in incorrect and even dangerous ways. top

Planning the installation

Tankless units have requirements significantly different from those familiar to installers of conventional  tank type water heaters. These include differences in gas supply plumbing, venting, and other aspects of installation. As a result, it is easy for even experienced installers to make installation mistakes if they assumed that understanding  of tank type systems will be  sufficient to allow them to properly install a tankless unit. Based on my experience, I recommend the following guidelines to reduce the likelihood of this sort of problem.

Takagi wall vent terminator installed in vinyl siding - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill Attempts to mix different types of vent materials are a common installation mistake when installing tankless units. Tankless water heater manufactures may require materials such as vent pipes, fittings and terminators which are different from those used with common venting materials for tank-type water heaters.

This picture shows a correct wall ventilation terminator for a Takagi T-K3 configured for direct vent operation.
- Have the general contractor or whoever is going to have overall responsibility for the installation thoroughly review the manufacturer's installation instructions and completely plan the installation *before* ordering materials, or better yet before construction begins. Following links at these sites  will  provide installation instructions for American Bosch AquaStar, NoritzAO SmithRheem,  Rinnai, and Takagi  tankless heaters.

- Consider ordering the system as a "package".  If the installer is not thoroughly familiar with the entire system - heater, mounting brackets, back-draft protection requirements, plumbing, valves, safety devices, venting materials and the like - it is best to order the entire system as a package from a wholesaler or heating supply house familiar with these products.

- Someone needs to be responsible for coordinating the work of all trades involved in the install.

Installation of a tankless system will often require coordinated work by at least four different trades: carpentry, HVAC, plumbing and electrical.

It is important that all installers involved clearly understand how the requirements of the  tankless installation may differ from those that they are familiar with based on their experience with tank type water heaters. For example the wall framing required to accommodate the venting clearances requirements of tankless units may be different from that which framing carpenters  are used to, the gas supply piping required may be larger than the plumbers expect, the vent materials may be different from those the HVAC installers are familiar with, and local regulations my require a dedicated electrical circuit for the heater even if only a 120V circuit is required. top

Size the unit properly

Tankless water heaters do not store hot water, instead they heat water on demand. As a result tankless units are sensitive to the input temperature of the water they are heating. For a given make or model of tankless heater the installation manual and/or sales literature will list the capacity of the unit in gallons per minute flow for a given temperature rise - the colder the inlet water  the less hot water the heater can provide at a given output temperature.  So a  tankless unit must be sized with climate in mind.

For example here in Chicago I've encountered water inlet temperatures as low as 38 F, which is 30 degrees or more colder than in warmer parts of the US. This means that in comparison to those in a warmer area of the country I need a water heater with greater heating capacity to provide the same amount  of hot water.
Fortunately many modern tankless water heaters have "modulated" burners or variable output heating elements - they monitor water flow and inlet and outlet temperatures and increase heating as required to keep up with demand while using only as much gas or electricity as is needed to heat the required quantity of water.

This means that usually there is not a large efficiency loss for "oversizeing" the capacity of a tankless heater - a higher capacity tankless  unit will have a higher initial  cost, but not a substantially higher operating cost, than a smaller one.

For this reason my recommendation is that if you have a choice of a unit calculated to be  on the low
side of your peak demand and one calculated to be on the high side, that you opt for the higher capacity  unit. top

Use an experienced installer

Whenever possible use an installer familiar with the specific brand and model of product being installed,  preferably someone who has received some "factory training" in the installation  of such units. top

Take advantage of vendor technical support

If necessary, don't hesitate to avail yourself of the technical support available from vendors. On the first few installations of tankless heaters in my projects we obtained invaluable advice from factory field representatives -there is no substitute for having someone thoroughly familiar with the product and its installation on-site to evaluate how to best fit it in to a job, especially if it's a rehab where time, space and money area all tight. top

To help with tankless installation, planning and trouble shooting, I've listed below some of the
"gotchas" I've encountered in my own projects or during inspections for buyers or sellers:

Insufficient Combustion Air For Gas Fired Units

Tankless water heaters can require a *lot* of combustion air - a gas fired tankless water heater large  enough to serve the needs of a modern three bathroom house may require a quantity of combustion air considerably greater than is used by a gas furnace or boiler heating the same structure!

One result of these high combustion air requirements is that when  a tankless unit is installed to replace a tank-type water heater, the existing  method of providing combustion air may not be sufficient.

Takagi t-K3 direct vent tankless water heater - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill

Combustion air to this direct vent water heater is  supplied from the exterior. Note that though this is a direct vent installation this is not a CAT IV appliance and cannot be vented through PVC. Because of the high temperature of the exhaust vent and it's proximity to the intake, the intake also had to be in non-combustible material.

The brackets spacing the unit out from the wall must be ordered separately, missing spacers are another example of the sort of installation mistake made by installers not familiar with tankless units.

If sufficient combustion air is not available the efficiency of all the gas appliances may be reduced. More important, it is possible that one or more  appliances will "backdraft", which can cause toxic exhaust gases (carbon monoxide) to be spill back into the house.

The amount of combustion air required should be calculated  based on the input BTUs of all appliances requiring combustion air,  and a  determination made whether the available combustion air is sufficient.

It is important that the heating contractor or plumber perform these calculations, and not just "guesstimate" if sufficient combustion air is  available . A basic combustion air requirements calculator is available here, but you  should consult the manufacture's installation instructions and research local requirements when designing the vent system.

If additional combustion air is required it can be provided by increasing the size of the interior space from which combustion air is drawn or by arranging for additional combustion air to be brought to the appliances from outside the structure. Building codes and utility company requirements  in your area provide a set of rules as to how this can be done, and it is important that these rules be followed.
If it is not possible to provide the required combustion air by these methods, or if it is not considered desirable to do so (perhaps because you do not want to introduce cold outside air within the conditioned space of the building) an alternative is to utilize a "direct vent" tankless water heater which brings in outside combustion air through a pipe without mixing it with air within the house.

Such direct vent units will initially be more expensive, but will be more efficient as they are not sending heated air  from within the house "up the chimney". top

Incorrect Exhaust Venting

Most gas fired tankless water heaters require special provisions for their venting. If the vent system is not
properly designed and installed  there is a real possibility that the high temperatures involved may damage vent components, produce conditions that allow  exhaust gases to enter the structure, or create a fire hazard.

It is important to note that in many cases you cannot just attach a tankless unit to the vent pipes previously used by the conventional hot water heater it is replacing. Each tankless heater's manufacturer provides detailed installation instructions specifying the units vent requirements. Often these requirements include the use of special stainless steel vent pipes  designed to resist high temperatures and corrosive exhausts, specified means of attaching them and spacing them away from other building components, and often the use of specifically designed  portions of the venting system such as vent terminators (the portion of the exhaust vent located outside of the house at the end of the exhaust system).
Label for CAT III vent pipe showing clearances - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill Always check clearance requirements when planning installation. This venting material for a CAT III unit can require as much as 8" of horizontal or 12" of vertical clearance from combustible material when enclosed in a soffit or chase.
Bosch tankless water heater with optional power assist - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill Tankless heaters are often installed using materials and methods unfamiliar to some plumbers, HVAC contractors and homeowners. Installation errors are a likely result, in this example single wall vent pipe has been placed too close to electrical wiring and wood structural members - so close floor joists above the vent were showing visible evidence of overheating.

In addition some tankless water heaters can be vented in "unconventional" ways. Even an experienced contractor or inspector encountering this auxiliary power vent might assume that "This can't be right..." - but this method of horizontal power venting via an auxiliary external fan is a factory option for this Bosch water heater. Photo (c)  Scott A. Figert, Figert Building Inspections Ltd. Cecil, OH   used by permission.
These differences between tank and tankless venting requirements can be large, and can cause significant problems if planning for the installation has not anticipated the increased clearance requirements. One problem I have encountered is that most plumbers and HVAC contractors are used to running such vents in "B-Vent" material which typically has a clearance of 1 inch from combustibles.

Some types of vent pipes specified by manufacturers of tankless hot water heaters require clearances as great as eight to twelve inches from combustible materials to the top and sides. If this requirement was not been taken into account when planning the installation, it can prove difficult and expensive to provide the required clearances "after the fact".

Another potential problem is that manufacturers of tankless heaters, or the manufacturer of the vent pipe they specify, may prohibit mixing vent components from different manufacturers or may specify the exact circumstances in which components from various manufacturers can be mixed.

This can add considerable complexity, cost, and time to projects, especially if additional material and fittings cannot be obtained "off-the-shelf" from a local supplier. top


Insufficient Gas Supply

The symptoms of an undersized gas supply include water heaters which are not supplying the expected quantity of hot water and burners which intermittently turn off when they should be providing heat, or both. According to my local Takagi representative 80% of the service call on newly installed units are the result of undersized gas supplies; and because of the high energy requirements of tankless water heaters it is likely that the gas supply to tankless units replacing conventional tank type water heaters will have to be upgrade and problem may be encountered in new construction as well.

It is important that gas supply sizes be accurately calculated based on the manufacturer's installation instructions, the NFPA. or local requirements rather than based on "guesstimates" - at one of my rental rehab projects the plumbers ended up tearing out and replacing the entire gas distribution system because they had failed to perform these calculations - an expensive mistake as the walls and ceilings had been finished in the meantime. As a guideline only, here are typical gas supply pipe sizing tables for gas and propane appliances.

When replacing an existing tank-type unit keep in mind that most exiting residential tank type units employ a 1/2" supply pipe for at least a portion of their gas supply run, but many higher capacity tankless units specify a minimum 3/4" gas supply line running continuously all the way to the heater, including valves and any flexible connectors. If you are installing a unit for which the manufacturer specifies a 3/4" gas or propane supply, consider installing a high capacity flexible gas connector
and a valve rated for the required flow rate.
Note that in addition to the branch line from the main gas line within the house to the water heater, the high combined demand of the gas tankless water heater and a gas forced air furnace or boiler may require resizing some or all of the other gas lines running within the house.
The gas supply components outside a building can also cause problems for tankless heaters.

Gas meter label - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill To translate meter cubic/ft/hour into BTUs multiply by 1020. If the result is less than 105-110% of your maximum demand and you are on a low pressure gas distribution system my experience is that you may experience intermittent problems which can be corrected by increasing the capacity of the meter.
If the current gas meter is "on the edge" of being able to supply the quantity of gas calculated to be your maximum demand (the input BTU ratings of the gas appliances - water heater, furnace or boiler, clothes dryer, oven and cook tops - you expect to operate at the same time) it may be necessary to replace the  meter with a higher capacity unit. In some cases, it may also be necessary to upgrade the underground gas line from the gas main at the street to the house. Such problems are most likely to occur if the building is on a "low pressure" gas system at the street (the utility company will be able to tell you if this is the case). Gas supply problems caused by meter capacity can be frustrating to solve as they often  only be diagnosed by "trial-and-error"  and the utility company may be skeptical that a bottleneck at the meter is causing the problem.  In two cases I've had to pay the gas company to replace the a meter with a larger size; in both cases this  solved the problem, but in neither was the gas company willing to refund the cost of the upgrade even though they had originally specified the meter size. top

Freeze damage

In areas where freezing conditions are not expected, tankless heaters can be installed (local codes permitting) on the exterior of the structure, reducing the complexity and length of vent runs, and thus reducing the cost of the installation. In areas where freezing temperatures are possible tankless units must be mounted in a conditioned (heated) space, and the manufacturer may specify a back draft preventer (to control the movement of cold air back into the unit through the vent), a unit with a thermostatically controlled electric heating element, or both.

It important that the manufacturer's installation instructions be carefully reviewed and followed with regard to freeze prevention requirements. Failure to do so can cause severe damage to the water heater and will meanwhile have voided the manufacturer's warranty. top

Plumbing Issues

Tankless water heaters follow the same general plumbing code provisions for their installation as conventional tank type heaters, however a few points bear mentioning. Some tankless water heaters use a pressure release valve different from the temperature-pressure release valves commonly installed on tank type water heaters. (The type of safety device required can also depend on local code). The manufacturer's installation instructions should be consulted to determine the proper type of relief valve. top Many tankless heaters have a debris tap screen on the cold water inlet, which needs to cleaned after initial startup and periodically thereafter. Maintenance of these can be simplified by the installation of unions and valves specifically designed for use with such heaters, such as the Webstone  Webstone and Dormont water heater isolation valves. top


Takagi tankless heater controller - Paragon Home Inspections Chicago Buffalo Grove Des Plaines Evanston Glenview Highland Park Morton Grove Mount Prospect Niles Northbrook Park Ridge Skokie Wheeling Wilmette Winnetka  Ill Takagi auxiliary control unit
Some tankless water heaters (for example Takagis) require a separately purchased controller if you want to set the output temperature above or below the factory preset.

Some of these controllers also provide additional information such as diagnostic codes or input water temperature.

Note that as a safety feature some controllers do not automatically reset to ON after electrical power has been interrupted and restored, in this case the heater will be inoperative after a power outage until the controller has been manually reset.

Also note that in new construction if you want to install the controller remotely from the heater you will need to prewire the connection between them. top

Additional Resources

Since I wrote the first version of this FAQ, I've run across some additional resources
you may find useful:

This page from Puget Sound Energy puts some numbers on the issues addressed above.

This page at Houseneeds.com has direct links to installation manuals for many brands of tankless


This page was written for Paragon Property Services Inc., Evanston, Illinois by Michael Thomas. I am always interested in readers comments on all aspects of property inspection. If you have questions or comments about this article please feel free to contact me by e-mail or at 847-475-5668.

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