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Tankless Water Heaters: ROI, Tax Credits and Maintenance Contracts

  • Transcript

    LESLIE: Joe in Georgia, you’ve got The Money Pit. How can we help you today with tankless questioning? What’s going on?

    JOE: Based on the high capital cost and the fact that natural-gas prices seem to be at an all-time low, what is the return on investment or payback period and does the federal government still offer tax credits? Second part of that question, is the annual maintenance contract that the installers offer really needed?

    TOM: OK. Well, first of all, the tax credits are less and less today. I believe there are some still: some small tax credits.

    I do like tankless water heaters for a number of reasons, though. First of all, they last a lot longer than a standard tanked water heater. Secondly, they’re really energy-efficient and you never run out of hot water. Very important to me since I’ve got two teenagers in my house. If I’m the third one to get in the shower, forget it; it’s not going to happen. So I like the fact that they never run out of hot water.

    And I think if you compare the cost of tankless against not a standard, inefficient, tanked water heater but a high-efficiency tanked water heater, you will find that the difference is not that far apart.

    The contractor’s service contract? Look, you need to have this thing serviced like anything else. I don’t think it needs a big, expensive contract. What it’s typically going to need is a yearly service. And so I would have to probably judge that against what this contract covered. If the contract covered all of my gas appliances in the house and I felt like it was reasonable, I might do that only for the reason that we know that these gas appliances need service, because they burn dirty and they eventually have to be cleaned. But I will say that these newer, more efficient ones need a lot less maintenance than the older, inefficient ones ever did.

    JOE: OK. I guess what I’m hearing out there on the installers is these are stand-alone service (audio gap) and if you compare that to a traditional hot-water heater, you typically don’t see any service required. And I think the capital is maybe 10x difference. I mean it maybe $800 for a – maybe 900 for a hot-water heater and you’re looking, I think, upwards of $4,000, I should say.

    TOM: Yeah, that sounds a little crazy. I’m not seeing that. What I’m seeing is if you bought a high-efficiency tank water heater, it might be 1,500 bucks. And if you bought a tankless water heater, it might be 2 grand or something of that nature. I’m sure you’re going to run into contractors that are really driving the prices up and trying to charge you crazy money for service contracts and things like that. You just might not be talking to the right guys, Joe.

    JOE: You endorse any particular manufacturer?

    TOM: Yeah, there’s a bunch of good ones out there. Rinnai makes a good one. Rheem – R-h-e-e-m – makes a good one. I’d take a look at those. We’re talking about gas, right?

    JOE: Yeah, natural gas.

    TOM: Yeah, I would take a look at Rinnai and Rheem.

    JOE: OK. Excellent.

    TOM: Two good brands. OK, Joe?

    Good luck with that project. Thanks so much for calling us at 888-MONEY-PIT.

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