This is Dave again. I thought I would post about our water heater since it's so dear to us. Sorry if it's too technical.
We had a Rinnai unit installed at our last house in Alabama for two reasons: (1) There literally was no place in the house to put a water heater, and (2) the 28-gallon "countertop" water heater in the kitchen had to go. Going from our 8-10 minutes of hot water in February that we both had to use for our morning showers to endless hot water was amazing.
While our current home's water heater did provide longer showers, it was older, the galvanized pipes connecting to it were rusting, and we had saved enough money to replace it. So that's what we did!
We learned a few things from our first time installing a tankless water heater. First, avoid electric tankless water heaters. They offer little efficiency benefits over tank-style water heaters and they are no match for natural gas or LP units. The second is to check out Ebay to buy your water heater. Seriously, there are Ebay "stores" that specialize in HVAC/Plumbing equipment and I've spoken with their customer service people. They've been excellent in answering detailed questions about the tankless water heaters. The third thing we learned is that it's difficult to find someone to install a tankless water heater. Most units affect four major disciplines: plumbing, electrical, natural gas, and roofing. You could get separate contractors out and have them each do their piece, but we were looking for someone to do it all. Because it is so difficult to find someone to install the unit, the cost of installation is a lot. I think it cost over $800 to have ours installed. We grit our teeth (especially after it took the installer only 4 hours to do the job), but we decided it was best given our inexperience at the time and to ensure we didn't void the warranty by installing it improperly.
This house, however, I decided I wanted to do the installation. Driven partly by the desire to avoid forking over another $800, and partly by the challenge. Since this would involve having no hot water for an indetermine period of time, depending on how smoothly things went, I went ahead and did what little work I could that did not disrupt the tank water heater. Below you can see how I ran a new electrical outlet (spliced it into a run of outlets running through the garage ceiling).
We did pay $90 to have a roofer install the new boot/vent on the roof, but that seemed a small price to pay to avoid work on a roof above our concrete driveway. One of the big selling points of tankless water heaters is their high efficiency. One part of this involves the inlet/exhaust duct. The stuff is expensive (about $1/inch of pipe), but it consists of two concentric pipes. The inner pipe is metal and allows the exhaust gases to vent. The inlet gas comes in between the inner and outer pipes and is preheated as it enters the unit, which ultimately leads to a hotter combustion temperature. The roof vent looks atypical because it supports the inlet and exhaust together.
Below I had just gotten the Rinnai unit mounted on the wall and the vent pipe attached. I began installing everything after work around 4:00pm. I wanted to leave the old tank there just in case we had a hiccup up to this point. (You can see the electrical outlet on the ceiling just to the left of the unit)
The old tank was then removed and the process of hooking up the water and gas lines began. The gas was surprisingly simple. Working with natural gas is dangerous, but with the proper process including the natural gas teflon tape and the soap bubble test after the fact, it went well.
The last hurdle was hooking up the water supply. I replumbed our last house and thought this was going to be pretty straightforward. The one trick was going to be working with copper piping. The last house was replumbed with CPVC and I got comfortable working with this relatively easy medium. I bought sweat connection water fittings (they're special all-in-one shutoff/drain/flush/overflow fittings). Those fittings are nice, but do come with different connection methods (threaded, CPVC, etc) so investigate those so you don't repeat the same mistake of having to learn a new skill in order to get hot water back. I got it all hooked up and working, but the next day my parents were in town and we noticed a pinhole leak at one of the joints so my dad and I had to re-do that one.
In the end everything turned out fine and we have wonderful, endless hot water again!
A few notes on cost: It never hurts to get a quote for the entire thing (we called but ballpark they said they start around $3,000). Our Rinnai was around $850-$950 just for the unit. Vent piping was another $300 or so. The valve kit (not absolutely necessary, but convenient) was about $75 too. We obviously saved on installation costs, but that could run you another $800. All of this is just to note that there are other significant costs to consider than just the unit itself.
When thinking about doing interior vs exterior here are a few thoughts: Our last house had an exterior unit simply for necessity. You save money because you don't have to spend $300-$400 on vent piping, but you'll have to spend $150-$200 on a weather-protective box. Additionally, although they make kits (another $200) to drain the unit in the event of a power loss, I was still worried about the unit or the water lines going to it freezing. We now obviously have an interior version in our garage. I like this better because although you have the vent piping to deal with, you'll never destroy the unit because of frozen water.