If you choose a water heater with a tank, you should probably buy the largest one available. That sounds like strange advice, but it makes sense. Because larger tanks hold more water, the greater mass of the tank's contents will help maintain the temperature. More importantly, larger tanks often have thicker insulation and longer warranties.
For a tankless model, consider how much hot water you need each day, how much you need at any one time, and whether the water heater is for part of the house or all of it. According to manufacturers, tankless water heaters are about 30 percent more efficient than water heaters with tanks in households that use no more than 40 gallons of hot water each day. Households that use twice as much water will get about half as much improvement.
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