5 Best Water Heaters For a Rental Property in 2023

Last Updated: November 2023

Water heaters in rental properties don’t get much appreciation until the hot water stops. Choosing the right water heater for a rental property can be overwhelming with so many choices. Most rental property water heaters are either powered by natural-gas or electric, and either tank (storage tank for hot water) or tankless (on-demand hot water as needed).

Best Rental Property Water Heaters

Best Electric – TankBest Natural Gas – TankBest Electric – TanklessBest Natural Gas – TanklessBest Commercial – Gas
A.O. Smith - Signature 100 40 Gallon Tall 4500-Watt Double Element Electric Water HeaterA.O. Smith – Signature 100 40 Gallon 4500-Watt Electric Tank Rheem - Performance 40 Gallon 38,000 BTU Ultra Low NOx (ULN) Natural Gas Tank Water HeaterRheem – Performance 40 Gallon 38,000 BTU Nat. Gas Tank EcoSmart – ECO 18 Electric 4.6 GPM Tankless Water HeaterRinnai - Outdoor Whole House Natural Gas Tankless Water Heater 5.3 GPMRinnai – Outdoor Whole House Natural Gas 5.3 GPM Tankless Rheem - Commercial Universal Heavy Duty 100 Gal. 199,900 BTU Ultra Low NOx (ULN) Natural Gas Tank Water HeaterRheem – Commercial 100 Gallon 199,900 BTU Nat. Gas Tank

Below we explore the top 5 water heaters for rental properties based on 5 different factors that landlords should consider when determining which type of water heater is best for their rental property investment.

Best Electric – Tank

A.O. Smith - Signature 100 40 Gallon Tall 4500-Watt Double Element Electric Water Heater

Buying Options

A.O. Smith – Signature 100 40 Gallon Tall 4500-Watt Double Element Electric Water Heater


Electric Powered, Tank

  • Energy efficient (0.92 Uniform Energy Factor), offering significant energy efficiency and cost savings.
  • Provides ample hot water for 2-3 people and includes features like a self-cleaning dip tube to extend unit life.
  • High cost could deter some budget-conscious consumers.
  • Tall, slim profile, while suitable for narrow spaces, might not fit in some installations.
Why We Like This Overall Water Heater

A.O. Smith is a reputable brand and for under $500, this electric powered tank water heater is a great blend of affordability, performance and availability to quickly pick up at a nearby Lowe’s home improvement store.

Best Natural Gas – Tank

Rheem - Performance 40 Gallon 38,000 BTU Ultra Low NOx (ULN) Natural Gas Tank Water Heater

Buying Options

Rheem – Performance 40 Gallon 38,000 BTU Ultra Low NOx (ULN) Natural Gas Tank Water Heater


Natural Gas Powered, Tank

  • Ultra-Low NOX emissions suitable for strict air quality regions.
  • Reliable hot water for households of 2-4 people with 71 gallons in the first hour.
  • High cost might be a concern for some consumers.
  • Limited warranty of 6 years for tank and parts may not appeal to everyone.
Why We Like This Natural Gas Water Heater

Gas powered tank water heaters are still very common and if you need a quality replacement then this unit is a great choice. They are readily available at local home depot stores for a quick repair.

Best Electric – Tankless

Buying Options

EcoSmart – ECO 18 Electric Tankless Water Heater 4.6 Average GPM


Electric Powered, Tankless

  • Provides endless hot water, reducing energy and water waste.
  • Compact design saves space and is versatile for various applications.
  • Limited to 1.8 to 4.3 gallons-per-minute, may not suit larger households.
  • May incur higher installation costs if electrical connections need to be updated.
Why We Like This Electric Tankless Water Heater

For residential use, this electric and tankless water heater delivers an impressive 4.6 GPM for under $500. This same brand (EcoSmart) also has other options of electric tankless units with more or less power.

Best Natural Gas – Tankless

Rinnai - Outdoor Whole House Natural Gas Tankless Water Heater 5.3 GPM

Buying Options

Rinnai – Outdoor Whole House Natural Gas Tankless Water Heater 5.3 GPM


Natural Gas Powered, Tankless

  • Energy-efficient, potentially saving up to 40% in energy costs with consistent hot water.
  • Compact design suitable for outdoor installation, saving indoor space.
  • High cost might be a deterrent for potential buyers.
  • Does not include a temperature controller, potentially adding to setup expenses.
Why We Like This Natural GasTankless Water Heater

This Rinnai tankless natural gas water heater is a great mix of reliability, performance and reasonable price. This unit is perfect for serving a small single family rental home.

Best Commercial – Gas

Rheem - Commercial Universal Heavy Duty 100 Gal. 199,900 BTU Ultra Low NOx (ULN) Natural Gas Tank Water Heater

Buying Options

Rheem – Commercial Universal Heavy Duty 100 Gallon 199,900 BTU Ultra Low NOx (ULN) Natural Gas Tank Water Heater


Natural Gas Powered, Tank

  • Compact design with multiple water connections allows for versatile installations in tight spaces.
  • Patented multi-flue design and stainless steel burners enhance durability and reliability.
  • High cost might deter some potential buyers.
  • Requires a separate 120-Volt power source, potentially complicating installation.
Why We Like This Commercial Gas Water Heater

Rheem is a very reputable brand when it comes to water heaters, especially when it comes to commercial water heaters that businesses or many tenants depend on.

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Rental Property Water Heater FAQ

4 Different Types of Water Heaters for Rental Properties

When choosing the best water heater for a rental property, it’s best to start with understanding the different types of water heaters available to purchase. Most common ones available at local home improvement stores can usually be broken down into several categories including power supply and water storage. Power supply is usually supplied by one of the following: Electricity or Natural Gas. Water storage is also usually one of the following: Storage Tank or Tankless. Below is an explanation of each type.

Power Source

Electric Water Heaters
Electric Water Heaters

These heaters use electric resistance coils to heat the water. They are usually cheaper to install than other types but can be more expensive to operate depending on electricity prices in your area. Electric water heaters are also very efficient, with almost 100% of the energy consumed going directly into heating the water.

Natural Gas Water Heaters
Natural Gas Water Heaters

These are a popular choice for many homeowners. They use a gas burner to heat the water and are typically more cost-effective to operate than electric models, depending on local utility rates.

Water Storage

Rental Property Water Heaters
Storage Tank Water Heaters

These are the most common types of water heaters. They consist of an insulated tank in which water is heated and stored until needed. They are available in both gas and electric models. The capacity typically ranges from 20 to 80 gallons.

Tankless Water Heaters
Tankless Water Heaters

Also known as demand-type or instantaneous water heaters, they provide hot water only as it is needed. They don’t produce the standby energy losses associated with storage water heaters, which can save you money. They are more energy-efficient than traditional storage tank heaters. They are also available in gas and electric models.

Water Heater Repair and Installation

How to Hire a Rental Property Plumber

How to Hire a Plumber for a Rental Property

Repairing or installing a new water heater is a job that is often handled by plumbers. Before calling a plumber for the job, it is a good idea to first understand the best practices of how to hire a plumber to install or repair a rental property water heater.

Where to Find Rental Property Water Heater Repair Pros

How to Find Rental Property Contractors and Service Professionals

Finding qualified water heater repair pros can easily be done with online service directories. These platforms directly connect you to top local service providers who can work on whole home repairs ranging from air washer and dryers to kitchen faucets.

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How to Determine the Right Size of a Water Heater for a Rental Property?

Determining the right size for a water heater in a rental property is crucial for ensuring tenant satisfaction, maximizing energy efficiency, and optimizing the lifespan of the appliance. The appropriate size depends primarily on the maximum expected hot water demand during peak usage times. Undersizing can lead to tenants running out of hot water, while oversizing can result in unnecessary energy consumption and costs. To ascertain the right size, it’s beneficial to calculate the total gallons of hot water needed during the busiest hour of the day (peak hour demand). To assist landlords in choosing the correct water heater size, below is a table that breaks down typical water usage for various tenant activities and appliances:

Activity/ApplianceAvg. Gal. of Hot Water Used Per Use
Shower10-15 gallons
Bath15-20 gallons
Hand/Face Washing1 gallon
Shaving1-2 gallons
Dishwasher (standard cycle)6-10 gallons
Food Preparation4 gallons
Clothes Washer (standard cycle)20-25 gallons
Automatic Dishwasher6-16 gallons

What are a Landlord’s Responsibilities for Maintaining and Repairing a Water?

Landlords are generally responsible for ensuring that the water heater in a rental property is in good working condition and complies with all applicable safety standards and building codes. This responsibility includes performing regular maintenance tasks, such as inspecting for leaks, flushing out sediment, and checking the pressure relief valve, to extend the heater’s lifespan and efficiency. If the water heater malfunctions or stops working properly, the landlord is obliged to repair or replace it within a reasonable timeframe, typically dictated by local housing laws. The costs of these repairs and maintenance are usually the landlord’s responsibility, unless the damage is caused by the tenant’s negligence or misuse. It is best practice for landlords to educate tenants on the proper use of the water heater and provide instructions for reporting any issues or concerns.

About the Author

I’m an investor, real estate developer, and property manager with hands-on experience in all types of real estate from single family homes up to hundreds of thousands of square feet of commercial real estate. RentalRealEstate is my mission to create the ultimate real estate investor platform for expert resources, reviews and tools. Learn more about my story.

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