A couple weeks back we noticed my water heater was leaking. A new water heater can be pretty expensive so I did quite a bit of research to figure out how to replace it while spending the least amount of money. So you can figure out how save a little dough when you find yourself in the same position here is an explanation of all the decisions I made.
Step 1: Repair or Replace?
The first decision I made was whether I was going to fix or replace the water heater. With home repairs I will often try to watch a few youtube videos on how to repair a given appliance, but I wasn’t about to try that with a water heater because the fellas from Mythbusters have taught me this could happen if somebody who doesn’t know what they are doing (like me) goes around messing with water heaters:
So I was going to have to have a professional repair it. Before I called a plumber though I looked over the water heater real well and found a sticker telling me the water heater was almost 30 years old. That is well past the expected life of a water heater, so I decided instead of paying someone to fix it I would be better off just replacing it.
Step 2: Where to buy the water heater from?
I called all the reputable plumbers in my area to get quotes on what a new water heater would cost me. The lowest qoute I got was $900 to install a tank they provided or $350 to install one that I bought myself. I knew I could get a water heater for less than $550, so I told them I would buy my own.
Step 3: Tankless or regular water heater?
My father in law suggested I consider going with a tankless water heater because they are more efficient. A regular water heater collects water in a large tank, then heats the water in the tank. Then it sits in the tank until it is needed. The problem with this system is that while the water is sitting in the tank waiting to be used the water cools down and needs to be reheated every so often.
A tankless water heater on the other hand doesn’t let hot water set around waiting to be used. It heats the water as it is needed with water rushing into the heater, being heated, and being piped to your shower or faucet in one constant motion. Because water is only heated when needed this system uses less power to heat the water, but there are a couple of downsides.
The first problem with a tankless water heater is that they cost more and the second problem is that they cost more to have installed. More energy is needed at the time water is being heated in a tankless system so a bigger gas pipe to the heater must be installed. So does the higher cost of the system and installation make up for the lower cost of gas in the long run?
I checked out my local hardware stores, and these are the best deals I found on both a regular and tankless water heater:
As you can see by these pictures, a regular water heater costs $300 less up front, but $78 more per year to operate. At that rate, the tankless water heater would pay for itself in a little under 4 years, which isn’t a bad deal at all.
Then there is the installation. The plumber refused to give me a qoute on how much installing a tankless water heater would cost because he said it was a fairly complicated procedure and it was impossible to know how long it would take until they actually did it. I pressed him a little further and he told me that it would take 2 guys to do and very well might take twice as much time as a regular water heater installation.
So I estimated it might cost me $700 since it was twice as much work as a regular installation. That means a tankless water heater would cost me a total of $1,400 installed vs $750 for the regular water heater. At a savings of $78 per year, that would mean I would make up for the additional $650 in up front costs in a little over 8 years.
That isn’t a horrible deal, but I normally like a payback period a little shorter than that, so I decided to go with the regular water heater.
Step 4: The gift card trick
I was buying my water heater from a big national chain hardware store which meant I could use the giftcard trick. I found a giftcard with a 10% discount so my $300 water heater only ended up costing $270. Not bad for 5 minutes work.
So I ended up buying the plain old boring water heater because it only cost me $620 and the tankless version would have cost me twice that. What do you think? Did I make the right decision?
Photo at top of article by Jesus Rodriguez