Indoor vs Outdoor Tankless Water Heater


Tankless water heaters can help you save space in your house while also being energy efficient. You also have the option of installing them in a location that is convenient to you since you don’t need to worry about accommodating a storage tank.

How, then, do you figure out whether you should install the heater indoors or outdoors? There are several things that you should keep in mind when it comes to this, which we can look into in further detail below.

Things to Consider

The following factors can help determine the difference between indoor and outdoor tankless water heaters and which option you can opt for.


Installation requirements can be slightly trickier when it comes to indoor tankless water heaters as compared to outdoor ones. This is because you will need to install the appropriate kind of venting and piping to ensure the efficient functioning of the heater.

Moreover, drainage facilities also need to be in place indoors so that all the condensation from the exhaust can escape out instead of causing reflux into the heater.

This kind of reflux could damage the heater, lead to corrosion and reduce its lifespan. If you install it outdoors, you do not need to worry about condensation as it will escape into the air.


You must account for an adequate presence of oxygen around the heater so that combustion can take place sufficiently. This is necessary so that the oxygen in the air can combine with the gas (if it is a gas model) and allow it to fuel up the heater.

If you install your tankless water heater outdoors, it will have enough natural oxygen around it for the gas to combust easily.

If you install it indoors, however, you will need to ensure that the pipe and vent nearby can conveniently draw in the oxygen from the air outside.

Ensuring proper combustion can then prevent problems like the release of carbon monoxide into the house, insufficient combustion, inadequate heating and more.


How much space is available to you is also another important consideration. While tankless water heaters do not take up as much space as storage tank heaters, they still require enough space to be mounted on the wall along with space for venting.

If lack of space is an issue for you inside your house, then an outdoor tankless water heater could be a better option. This can also help you out with other factors such as combustion and venting.


The climate you live in can affect where you choose to install your tankless water heater significantly.

For instance, if you generally live in warmer climates, then an outdoor water heater will work out well due to the ample open space and light.

However, if you live in climates where it gets extremely cold in the winters, then outdoor heaters can end up bursting or cracking. Similarly, frequent rainstorms could also damage the efficiency of the heater.

In such a case, it would be a better idea to opt for an indoor water heater to maintain the lifespan of the heater.

Age of House

If your house is old, it could be difficult for you to appropriately install all the piping and venting as this would involve plenty of restructuring inside your house.

In such a case, an outdoor water heater can prevent the need to make major changes inside since an outdoor heater can simply make use of the natural air and outdoor piping.

In case you are constructing a new house, then you can ensure installing the pipes and vents correctly from the very beginning. This will help you out if you want to get an indoor heater.

This also tends to improve the value of your house in case you want to sell it.


Installing a tankless water heater can cost you hundreds or thousands of dollars on top of its purchasing cost.

However, if you opt for an outdoor location for your heater, you can significantly cut down on costs since you do not need to install separate venting pipes.

These costs will be present for an indoor tankless heater since you need to ensure safety and efficiency for the heater to work properly.

Additionally, you must also account for the operation costs of these heaters. While these would be much lesser due to their energy efficiency, they could still end up adding to the total cost.


Security, in this case, refers to the risk of your tankless water heater getting stolen or vandalized. In the case of outdoor water heaters, this risk can increase since it is essentially exposed to people.

For this reason, it would be better to install the heater indoors, especially if your area or town has a high crime rate.

If it is essential for you to install the heater due to several other reasons, then putting some security measures such as alarms, locks or cameras in place (especially at night) could help you prevent such breaches from occurring.


Leakage is another major concern that you should be wary of when it comes to installing your tankless water heater.

If your heater or pipes end up leaking for some reason, you should ensure that they can be easy to handle and manage. This would be a lot more convenient to do outdoors.

If such a leak takes place indoors, it could be potentially damaging for your health as well as for the structure of your house, in extreme situations.

Harmful gases leaking out could be damaging as well.

Final Remarks

That brings us to the end of this comparison guide. When it comes to making the final decision, you should keep all the above factors in mind as well as your own requirements and living conditions.

If possible, an outdoor unit might be more convenient based on what we have covered, but an indoor unit could work as well if you take the necessary precautions to maintain its surroundings.

If you want to find out more about plumbing solutions, you can refer to resources on PVC Workshop.

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