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Indoor Vs Outdoor Tankless Water Heater: Which is Right for You?

Fact checked by Stephen Conklin

Indoor Vs Outdoor Tankless Water Heater

Picking the best on-demand water heater isn’t an easy task, as you need to choose from an indoor vs outdoor tankless water heater.

Many factors can affect your choice about where to place your tankless water heater. You’ll discover more information about how indoor and outdoor units work in this article.

Table of Contents

Indoor Water Heater


The installation requirements of indoor tankless water heaters vary by fuel source.

A gas-type unit requires a venting system outside. The gas supply lines and piping connections need a 120-volt circuit.

The vents are usually installed in the garage and vented through the exterior wall. Mounting areas can vary in location within your home. Generally, all indoor units need extra piping to get proper air flowing without obstructions.

An indoor electric tankless water heater requires 240-volt power, and it doesn’t need outdoor vents. The unit may be plugged into a 240-volt outlet or wired directly to a service panel.

Moreover, indoor units have built-in freeze protection just like outdoor units, making them winter-ready. The anti-freeze mechanism protects the water heater from winter temperatures ranging from – 5 Fahrenheit to – 22 Fahrenheit.

For instance, The Camplux CA318 indoor model has both liquid propane and natural gas versions. These versions have anti-freezing technology that could provide temporary protection against freezing climate conditions. The models also come with horizontal venting.

That said, indoor units could still be prone to cold weather problems even while having multiple safety features. Most manufacturers don’t have warranty coverage for damages caused by freezing. That’s why regular maintenance is imperative.

Indoor water heaters may be or may not be suitable for your home, depending on several conditions. You might encounter problems in the future if you overlook some factors that affect indoor water heater operation. Read more details below.

Things To Consider Before Buying Indoor Water Heaters

You need extra wall space for the installation. Ensure that the wall has enough leeway so that the indoor tankless water heater will be mounted properly.

Older homes might find it challenging to install indoor units. It is because tankless water heaters have special venting requirements, and this will affect their placement.

Newly constructed homes appear to be the best option for indoor tankless systems because we can do venting protocols during the design phase. Therefore, creating plumbing modifications becomes convenient as we can fully utilize spaces accordingly.

Find the ideal indoor location.

Confined areas require additional air inlets to avoid excess warm air. When choosing an indoor location, it is vital to find a place that is as close as possible to the ventilation as gas tankless water heaters vent more exhaust than traditional water heaters.

If you’re using an indoor electric unit, you don’t need to worry about the venting since this type doesn’t emit exhaust fumes. It relies on the power source instead.

In addition to that, indoor water heaters should be in a warm spot so the unit will operate effectively. If you have many water fixtures at home, it is convenient to install a heater near them.

If you live in a cold climate area, an indoor unit could survive if you seldom experience below freezing point temperatures. Otherwise, additional preventative measures are needed to avoid irreversible cold-weather damage to your indoor unit.

Although modern tankless water heaters offer an anti-freeze system, it isn’t a long-term solution. Therefore, winterizing your indoor water heater is a necessary precaution, especially if you’ll be away during the winter.

Know what venting system your indoor unit needs.

There are two venting options for tankless water heaters: power-vent and direct-vent.

Power vent systems use indoor air for combustion and release exhaust gases outdoors. Therefore, they require larger rooms so that they can have enough air for combustion.

When space is restricted, direct-vent systems are the better options because they use outdoor air. Direct-vent units can be flexible in small areas like the attic, storage space, mechanical rooms, etc.

The venting location usually depends on your tankless water heater unit; you can vent through the sidewall or from the roof. Tankless water heaters’ vents can settle at the side wall because they draw out their combustion air horizontally.

Indoor Water Heater Upside

  • Increase resale value of newly-constructed homes

Indoor Water Heater Downsides

  • Carbon Monoxide Poisoning (for gas units)
  • Noisy Machinery
  • High risks of condensation and leaks

Outdoor Water Heater


Can tankless water heaters be installed outside? The answer is yes under one condition: if they are designed to withstand harsh weather. Outdoor units’ enclosures are made of aluminum, which protects the heater and prevents rust stains.

In online discussions about outdoor vs indoor tankless water heaters, some homeowners prefer outdoor tankless water heaters because of space management and aesthetics. With outdoor units, there’s no need to worry about their effects on interior decoration.

People switch to outdoor units because of their convenience. Compared to indoor units, outdoor tankless water heater installation isn’t complicated. In addition, outdoor units don’t require ventilation systems.

Moreover, they can fit everywhere as long as they have easy access to plumbing lines and electrical connectivity. Gas and electric tankless models have outdoor designs, and they can withstand harsh elements with some weatherproofing procedures.

If you live in a warm climate region, outdoor units become more durable and dependable for home water emergencies. Otherwise, if you live in colder areas, an outdoor heater’s longevity isn’t guaranteed.

Even though outdoor tankless units offer appropriate protection from outdoor elements, they can be a nuisance in freezing weather conditions. Additionally, they might be exposed to the risk of damage if the system’s plumbing doesn’t have proper insulation.

Outdoor models also feature freeze protection and optimize the machinery’s capabilities, but we can’t consider this a permanent solution. We also need to exert extra effort to increase their lifespan. For example, we can place the units under a weatherproof shelter or a steel water enclosure.

Things To Consider Before Buying Outdoor Water Heaters

If you lack wall space inside your home, installing an outdoor unit is a preferable option for you. This water heater is also the best choice for space-saving enthusiasts who don’t want to make some interior changes.

You can choose outdoor tankless water heaters if you have a decent drainage point at home. A proper drainage system can help in preventing condensation buildup.

Most water heater manuals indicate that you should drain your water heater every 6-12 months to ensure that your water heater is still in its top condition.

A gas-powered tankless water heater best fits your home if your area has gas lines.

The freeze protection system. Uninsulated pipes that carry frozen water can damage the entire heater.

Freeze protection systems are electrically powered and may sometimes need a different power source to work (like during a power outage). Both the protective system and the water heater system should not use the same power lines.

Outdoor Water Heater Upside

  • A superb option for warm climates. On-demand water delivery becomes faster and more efficient
  • Easy to install outdoors because it can fit anywhere
  • Eliminates exhaust fumes, possible leakage, and noisy operation problems in your home

Outdoor Water Heater Downsides

  • Outdoor units may be susceptible to theft and vandalism incidents
  • Should be installed under building installation codes
  • Power outages are quite possible and could damage the unit


Indoor Vs Outdoor Tankless Water Heater is a subject of debate for homeowners because a water heater is a long-term investment. In general, indoor tankless systems are ideal for families whose ventilation is customizable; outdoor tankless systems are desirable for those who don’t want to install vents.

Therefore, it is necessary to choose a water heater that suits our domestic living situation.

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