Picking the right unit is the key to any hot water heater installation. You want to make the most of available options to run your system as efficiently and cost-effectively as possible. Three issues come into play when picking the right hot water heater for a home.

Form Factor

There are two form factors. You can install a model that has a storage tank or one that heats the water on demand.

The main strength of a tanked model is that it provides a large supply of water. If you have a big household that's regularly taking showers and doing laundry, for example, a tanked model offers the necessary capacity. Conversely, a tanked model may cost more to run because it'll reheat water that cools down when not in use. This can become particularly expensive if you live in a cool part of the country or have a poorly-insulated area for the water heater.

Tankless models tend to be more efficient because they only heat water on demand. However, the available water pressure and lines will naturally limit your total capacity. If you have a small household or aren't home a lot, you might want to go tankless.

Heat Source

A water heater installation will require an energy source. Electricity, natural gas, and propane are popular options. Natural gas isn't readily available in some parts of the country. However, electricity isn't always the cheapest option. Propane deliveries also can be expensive.

Some people use solar systems to mitigate some of the costs. By installing a solar panel that connects to the water tank, you can lower your costs while using one of the other sources as a backup.

Space

Not all homes have great locations or lots of space for hot water heaters. Especially if you're installing a tank system, you need to be aware of the space where you want to put it. Have a contractor take some measurements before you commit to a particular setup.

Also, don't assume that just because a water heater will fit somewhere that it'll be in a good spot. Ask the hot water heater installation contractor what they think of the spot in terms of long-term maintenance. If they'd have a hard time accessing gas or electric lines, for example, the system could be problematic. Likewise, someone will have to remove and replace the system someday. They will need room to remove the old one and bring the new unit in.