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Indoor vs Outdoor Tankless Water Heater: Detailed Comparison

Writen by Ronald Brown

Fact checked by Natalie Bridges

Indoor vs Outdoor Tankless Water Heater

Are you one of the many potential buyers who cannot decide about an indoor vs outdoor tankless water heater? Tankless water heaters are famous for their high energy-efficiency and exceptional operation cost-effectiveness.

Besides choosing between an electric and gas tankless water heater, it would be wise to determine whether you will want to install it inside or outside your home.

Each water heater type has its advantages and disadvantages. Learning them should make you more confident in choosing and buying the right tankless water heater for your home.

Table of Contents

Why an Indoor Tankless Water Heater is Good for Your Family

Some families prefer an indoor tankless water heater because of the following advantages.

  • Ideal for Families Living in Windy and Cold Regions

Low temperatures can make your water heater work harder and longer. It increases the time needed to heat water to a comfortable temperature, spending more energy in the process.

Putting your water heater inside your house should help shield it from cold weather and the elements. While it will still work harder than water heaters in homes found in warmer areas, it heats more effectively than having it installed outside.

An indoor tankless water heater is also ideal for people living near the coast, protecting it against ocean spray or strong salty winds.

  • Increases Home Resale Value

Homebuyers today want a prospective property to have almost everything they need to lead comfortable lives. Installing an indoor tankless water heater improves your home’s resale value by offering two things.

First, it offers readily available water heating to your buyer’s family. And second, it will never detract from your house’s curb appeal.

Downsides to Having a Tankless Water Heater Inside Your Home


Like all products, there are also disadvantages to an indoor tankless water heater.

  • Risk of Carbon Monoxide Poisoning

You will never have this issue if you will install an electric tankless water heater. However, gas water heaters require proper venting to channel carbon monoxide away from your home’s interior.

The Centers for Disease Control and Prevention says that carbon monoxide poisoning can produce vomiting, confusion, chest pain, upset stomach, dizziness, weakness, and headache.

Meanwhile, the Minnesota Health Department identified water heaters as a common source of carbon monoxide.

If your house does not have adequate venting, you may have to create one. It can be pretty expensive to install a venting system for your water heater.

Gas tankless water heater installation can cost you about $900 to $1,700. Add to this the installation of a vent, and you can spend a few hundred dollars more.

  • More Frequent Maintenance

Due to carbon monoxide toxicity issues in your home, you will have to hire a licensed HVAC professional to check your water heater’s integrity every year. That ensures your unit does not have cracks or leaks that carbon monoxide gas can leach through.

  • Some Tankless Water Heaters Create Condensation

Another issue with gas tankless water heaters is that they tend to form condensation during water-heating. You may have to install a condensate drain to channel the water into a floor drain or a utility sink. That can mean additional costs.

  • Quite Noisy

Gas water heaters tend to be noisier than electric versions. However, you will still hear the noise and can impact your sleep. Studies show that environmental noise is one of the main causes of sleep disturbances. Your cognitive performance suffers, too.

Why an Outdoor Tankless Water Heater is Better


Tankless water heaters installed outdoors offer the following advantages.

  • Ideal for Families Living in Warmer Climates

If you live in warm areas, heating your water with an outdoor tankless water heater is quick and efficient. You do not want to install this unit inside your house because the heat it generates can only make your life uncomfortable.

  • Easier, Cheaper, and Faster to Install

Installing an outdoor tankless water heater requires no modifications to your home. You never have to worry about installing a vent, a floor drain, or a condensate drain. You can also install an outdoor water heater almost anywhere, as long as it has access to electricity and plumbing.

  • More Durable

Manufacturers design outdoor tankless water heaters with exceptional weatherproofing. They can stand up to snow, harsh wind, rain, extreme heat, and other forces of Mother Nature. Most products also have aluminum enclosures, making them virtually rustproof.

Disadvantages of Having a Tankless Water Heater Outside the House

Not everything is rosy about outdoor tankless water heaters. They also have drawbacks, including the following.

  • Risk of Theft and Vandalism

Tankless water heaters are a magnet for thieves, especially if you do not have any form of home security. These products can net several tens of dollars in the streets. However, it is the copper they contain that has crooks on the lookout.

Copper theft is a $1-billion-a-year underground enterprise. Thieves do not care about the water heater; it is the copper that is gold to them.

  • May Require Compliance with Building Codes

Some cities and municipalities may have strict building codes when installing a fixture outside your home. It may be wise to check these guidelines before you attempt to install an outdoor tankless water heater.

  • Water Heater May Break in a Power Outage

Brownouts and power failures render some of your tankless water heater’s protective mechanisms useless. In colder climates, a power outage can disable the unit’s freeze protection. You can end up with a dead unit if the power outage lasts too long.


Choosing an indoor vs outdoor tankless water heater takes an understanding of their unique advantages and disadvantages.

In general, an indoor tankless water heater is perfect for families living in colder climates and wanting to improve their property’s resale value. But it is trickier to install and requires more meticulous maintenance.

On the other hand, an outdoor tankless water heater is ideal for families living in warmer regions and valuing ease of installation above all else. Unfortunately, these products are quite prone to theft and vandalism.

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