Increased Upfront Expenses
A tankless heater costs more than a conventional water heater. In 2010 a complete installation may cost up to $1,000 more in a new home, and if retrofitted, perhaps up to $2,300. If a homeowner is on a budget, he or she may have to pass up the tankless heater.
Finding a plumber who will install or maintain a tankless heater is more difficult. As on-demand water heaters become more common, this will be less of a problem, but it is a concern in 2010.
May Require Extensive Remodeling
The ventilation needs of a tankless heater are much greater than for a conventional heater, and often older homes cannot meet the building code requirements.
Limited Amount of Hot Water
If too much hot water demand is put on at the same time for multiple uses, the heating capacity may not be able to handle it all at once.
No Well or Hard Water
Tankless heaters are susceptible to blocked pipes from well or hard water, and some manufacturers don't honor the warranty if the heater is installed under these circumstances.