We put our money where our mouths were a couple of years ago and invested in a gas-powered tankless hot-water heater (a Navien, if that means anything to you). But it has never worked quite right. It takes a long time to get warm water, and even then, the temperature varies uncomfortably and sometimes it has an "ignition error" and turns off completely. Sucks if you're just getting ready to have a shower, sucks even more mid-shower.
It produces a slight gas odour outside, and occasionally we get a faint whiff inside when there's been an ignition error. Unfortunately, it exhausts right by the only open play area is in our complex, so all the kids play in the driveways. The gas company has come and measured it, and it's putting out over 500 ppm of carbon monoxide (the safe upper limit is 200). Not a huge issue outside, but they said it should be fixed as soon as possible
Installer came by soon after, and said there was a piece of plastic film (like part of a CD shrink-wrapper) partially blocking the air intake, so he put an elbow on the intake so anything that sticks to it once will fall off, rather than stay there. But I'm sure he was spouting baloney; he also said the "danger" notice from the gas company was garbage and that all the tankless hot water heaters put out 5-600 ppm of CO.
The latest gas company guy who came by said that he thought maybe we weren't getting enough gas pressure to the water heater (they take much higher gas pressure than traditional water heaters and furnaces), and that it probably should never have been installed without upgrading the gas inputs (then baffled me with lingo and numbers). And changing the setup also affects the other 2 adjacent townhouses that are part of that input system. (Can you see the dollar signs piling up?)
We were also told last year, when the installing company first came out to investigate, that the location is less than ideal because it's right behind where the dryer is, and the venting goes right by it, and the lint gets into the air intake and may be affecting the little burner part (we had that part replaced under warrantee). Yet another reason why it probably shouldn't have been installed there.
Other friends have suggested that the new forced air furnace (located in the same utility closet, with louvered closet doors) could be "sucking up all the air", so that a negative pressure is created in the room, and the hot water heater isn't getting enough air.
Would love to talk to anyone here who either has such a hot water heater or knows something about gas (pressure, pipes, that stuff) - I need to know more about this!!! I'm starting to get Stupid finicky new-fangled things!