Put it close to the point that you will be using the hot water. If the points of use are scattered rather than the ideally centralized, then choose a central location. Or consider multiple units. You can also use a small tanked heater as a buffer, but that increases your energy costs to the point that having a tankless is moot and you might as well just have a giant tank.

You need a recirc pump. Some of the newer tankless systems are available with them built in. We have one, it cost us a few hundred to have it added and installed. Hot water available in 4 seconds flat ~50' from the water heater with the recirc pump. Without the pump, it takes longer than 2mins to get hot water in the shower during the winter & even longer at the sinks. Most front load washing machines won't trigger the tankless hot water heater for warm or hot washes. Even if they do, the drum fills with mostly cold water before the hot ever makes it to the machine. Definitely a plumbing upgrade that makes a difference.

Hope this helps!

When we were building, there was really no good option on what mydreamhome was describing. Maybe something has come up and it is worth checking into.

Otherwise, just get a tank - it isn't the end of the world. There are tanked units available with the same efficiency as tankless. The standby losses from a tank are pretty minimal especially when compared to recirc loop.

A tank might be $30 a year, an uninsulated loop might be $300 a year, an insulated loop $100 a year. Obviously loop length matters as does ambient temp, recirc temp etc.

We have a super high efficiency tank - think they are called condensing water heaters - and a recirculating pump. Love them. Low cost, instant hot water. Plus they reheat so quickly we don't ever run out.

We used 2 tankless hot water heaters. One serves just the master bath on the west side of the house. The other serves the PR, laundry and kit and guest bath all located on the east side of the house.

The recirc systems bristled against my desire to go green.

Whether tanked or tankless, without a recirc loop, it will still take time for the hot water to get to the tap based on the distance the source is from the tap.

I use one big gas powered tankless for the main shower and smaller electrical point of use tankless units (they are tiny) per secondary showers/faucet/vanity (a few inches away) where the throughput is not so high.

We were planning a large gas powered tank, however I didn't realize that our Energy Efficiency plan (Title 24 required by California) had included two tankless water heaters. If we switch it out to a large gas tank we go from being 45% over code, to only 29% over code. This means that we would lose about $6000 in rebates.

David_Carey - you will find this twist of logic with Title 24 amusing, going with a solar water heater doesn't help either, they don't consider it in the calculations as they want you to be efficient before solar! ha. This is changing in 2014 though, a bit late for me.

mydreamhouse - that sounds like the kind of thing we were hoping for! Is that a recirculating loop, or is the extra water dumped out?

We are considering two tankless systems, but even that leaves a lot of distance between some of the places water is needed.

Laura12--it's a recirculating loop with a pump. As far as cost, we did a test to see how much it was running us. We started with the recirc pump going 24/7, then we set the timer on it to have the recirc pump on only during peak water usage times (630-730 AM & 630-730 PM), then completely off all the time. We did not find there to be a significant cost difference/gas usage between the different settings.

The recirc loop & pump are also much less expensive than buying a 2nd tankless water heater. Provided your tankless is sized properly to the average number of taps open in your house at one time you should be able to get away with just 1 unit.

Hope this helps!

This post was edited by mydreamhome on Thu, Feb 7, 13 at 22:18

I don't understand how a recirculating loop works on a tankless system. Doesn't that mean it is constantly heating water and removes the gained efficiency with a tankless system?

After ours was installed I stumbled across a company that makes an all in one unit called Eternal Hybrid (link below). You may want to contact them and see about getting the energy efficiency specs to go that route. I think Navien also makes an all in one system now too. I would think either company would be able to give you more accurate energy specs and better answer your question.

The other thing to keep in mind is that without the loop (& pump), you are in effect wasting gallons of water waiting for the hot to kick in--think showers, sinks, etc. How much does the water wastage cost in terms of both water & sewer bills + the unnecessary waste of a resource?

In addition to washing machines not pulling enough water through at a time to trigger the heater and then remain on long enough to actually get the water down the line to the machine, some dishwashers are having problems too.

Here is a link that might be useful: Eternal Hybrid Hot Water Heater Site

Heating the water is usually the bigger expense than the few cents of "water down the drain" to wait on hot water. Even in a water conserving climate like most of the West, the energy costs usually are more than the water costs. Recirculating pumps are just not very green. If putting all of that cold water down the drain is bothersome, there is always the solution of keeping the 5 gallon bucket there to harvest it to water plants with. It's what a lot of people do anyway to use their graywater.

mydreamhome is correct. a continuous recirculating loop with negate the efficiency of the tankless, and probably shorten the warranty on it too. fortunately, there is an alternative solution. check this link.

Here is a link that might be useful: instant hot water solution

I have been using an on-demand hot water pump for years. It's similar to the Metlund mentioned above but for a fraction of the cost. I have been very pleased with the operation and highly recommend it. It's very easy to install; the only downside is that you need an electrical outlet under your sink or at the installation point.

(Disclaimer: I do not work for the company and am not affiliated in any way.)

Here is a link that might be useful: chili pepper hot water pump

we are doing a recirculating pump with a dedicated return line with our tankless setup. we are using the metlund d-mand system. it was the only brand that would not void warranty with our tankless.
you can either connect a button that you press before you want to use hot water to activate the pump, or there are motion sensors to activate the pump for a few seconds. we chose the motion sensors because we didn't want to think about having to press a button first.

Here is a link that might be useful: metlund system

Thanks for all the advice!

What jrldh describes is becoming the "gold standard". There is so much distribution loss with hot water, that point of use is really the way to go.

It looks like I may have a burnt out element on my water heater after 3.5 years ... from the recirc pump. Well - it is one theory at least. But the fact that it happens just shows why warrantys are effected by recirc pumps.

I may switch to condensing NG as solar backup like Athensmom has - 90% efficient, shouldn't burn up with the pump.