Last year, my hot water tank failed and had I replaced it with another tank, it would've been the 3rd time in 20 years in a new construction house. Plumbers were telling me the shelf life on the tanks these days is about 7 yrs, which was consistent with my experience. That's what got me looking into a tankless. The tradeoff in upfront costs was worth not having to keep replacing the tank every 7 yrs, deal with flooding, surprise ice cold showers when it failed, etc. I found Noritz had started promoting a 25 warranty a year or so prior and that really spoke to me. (Note: There is some fine print language to read carefully if that's something you want to look into. That being said, no other company appeared to come close to that and even if it doesn't last 25 years, the fact they are putting out a warranty like that suggests to me that it legitimately will last significantly longer than a hot water tank.)
It cost me $3k including installation. I was really pleased with how much unanticipated space it freed up since I don't have a basement for storage (to your point about space). I've had no issues with it at all and qualified for a rebate from my energy company. A couple other thoughts:
- I didn't think about what would happen if I lost electricity until after it was installed. Fortunately my subdivision rarely loses electricity even when everyone else seems to be losing electricity from storms or whatever. I haven't had to deal with that yet but I do have a generator in the garage that if I'm desperate enough I can run an extension cord to.
- I'm not sure why one of the posters said to get the biggest size you can. The beauty of the tankless water heaters is that you have a virtual endless supply of hot water so the guidance I had gotten when I purchased it was to get a small one unless there were multiple showers running concurrently (not my situation). That is when you would need increased capacity. For resale, I still went with a little bit larger size than what I needed. (Model 111)
- if you do go this route, check with the manufacturer for their rebates as well as Energy savings rebates offered by your gas and/or electric company.
- my one complaint is that it does take a little bit longer to get the hot water hot than having a hot water tank where it's instantly hot. For example, my shower is right above where the water heater is. When I take the first shower in the morning, I have to run it for about a minute for it to get hot. Previously it would have been hot in about 5 seconds (but of course there is an energy price to pay to ensure that water is hot all the time.)
- I'm a little skeptical about those who are skeptical about the savings not being there going with a tankless unit. I've never really paid attention to the cost because that wasn't what was driving me to make this change but given that the electric and gas companies are so big on giving rebates for these I would have to imagine that they've done the math and there is a quantifiable savings by switching.
- I'm a little hesitant to say 40 gallons would be enough for you because I had a 50 gallon tank and I was looking to increase the size before I went tankless. It does depend on how long your avg showers are but women tend to take longer showers and also like to occasionally indulge in a hot bath. Whenever I would take a hot bath, I ran out of hot water before it filled all the way. Also, teens are notorious for the long showers too. While you didn't mention kids, if you're thinking about resale, that is something to consider as well. However, if you plan on living in the house for 7 more years or more, you'll most likely have to replace the tank anyway!
Ultimately this decision really comes down to your individual needs and plans for the future but hopefully the combined feedback will better help inform your decision.
Note by 57 - Poster is in the US.