Plumbing, Water Heaters

Can Water Heaters Be Installed Outside: What You Should Know

Tankless Water Heater

Hot water is essential for every household. Tank water heaters take up a lot of space inside a house. They are big and bulky and can cause damage if a leak occurs. Homeowners are always looking for the best way to hide a water heater, even if that means installing it outside.

You can install water heaters outside in certain instances. Electric and gas tank-style water heaters are not designed to be installed outside without shelter. On the other hand, gas tankless water heaters have exterior models installed outside. You can also install electric tankless water heaters outside with some sheltering recommended to protect the unit from the weather.

To expand on this, installing a water heater outside depends on two main factors:

  • your climate
  • type of water heater

We will look at both gas and electric tankless and tank-style water heaters

Where to Install a Tankless Gas Water Heater

Tankless Wall Lg

Tankless water heaters are popular because they are compact, energy-efficient, and produce a seemingly endless hot water supply. Water on demand is the main driving force.

You can buy a tankless gas water heater in exterior and interior models. The units are specific to each installation, so you need to know which installation method you use before purchasing. In other words, you can’t install interior tankless outside and vice versa.

You can tell the difference between the two based on venting. The tankless outdoor units have built-in venting located in the front of the unit. The indoor tankless water heaters need a vent flue attachment at the top.

Outdoor tankless water heater models work for outdoor installations like on the exterior wall of your house. They have a built-in vent on the front of outdoor heaters.

Indoor tankless water heater models require indoor installation. They can’t withstand severe weather conditions, like outdoor models. They are usually installed inside a garage with venting to the exterior, usually through the exterior wall. 

Indoor installations of tankless water heaters are usually along the interior side of an exterior wall. While uncommon, installation inside a basement, interior room, or attic is an option. A garage is a popular installation location. The most important consideration is proper ventilation of exhaust gases to the outside.

These methods typically include the tankless water heater installed with a recirculation system and water heater storage tank. Both outdoor and indoor gas models produce the same gallons per minute (GPM flow rate) of hot water output because the incoming cold water temperature determines hot water production more so than its location.

Insider’s Tip: Keep code requirements in mind when installing an outdoor unit, it should not be installed within four feet below or to the side, and one foot above, any door or operable window that can be opened. This is to prevent carbon monoxide from entering into the living space.

Where to Install a Tankless Electric Water Heater

The popularity of tankless electric water heaters is growing rapidly, particularly in small spaces like tiny houses, apartments, condos, and RVs. Other uses include outdoor spaces such as pool houses and outdoor showers where you don’t need a large output of hot water.

Electric units have whole-house installation options. However, you need to read the specifications carefully because these units have limitations and can cost a lot of money to operate if a significant demand for hot water occurs.

However, these units have proved ideal for small spaces, for example, where only one bathroom and a kitchen are present. I would not recommend them for a family of more than two as a whole-house option.

You can install an electric unit outside. We recommend shelter to protect it from rain and cold weather. Ideal applications include outdoor kitchens, pool houses, and outdoor showers.

Both gas and electric models have superior energy efficiency compared to tank models.

Are you shopping for a tankless water heater? Check out our Buyers Guide: What Tankless Water Heater Do I Need?

Can You Install a Tank Water Heater Outside

Water Heater Enclosure Lg

Electric and gas tank water heaters should not be in outdoor locations without shelter. We recommend installations inside the garage, storage area, attic, or indoors. Some exceptions do apply. 

If you live in a warm climate that doesn’t have harsh winters, you can install them in an outdoor water heater enclosure or weatherproof shelter. Outdoor locations are not best in cold weather. Unlike tankless models, tank models make water heating harder and less energy efficient.

However, an outdoor water heater enclosure is not for all tank water heaters. The diameter of the water heater cannot exceed 30 inches, which will eliminate some models. Typically these enclosures will fit up to an 80-gallon water heater.

I don’t usually recommend galvanized steel enclosures because they are not constructed with a back and are generally not sealed or insulated. The steel enclosure doesn’t have a back because it sits up against the house. These enclosures are also prone to leaks from rainfall which can cause the tank’s exterior to rust. 

If you intend to install a water heater outside inside a galvanized steel enclosure, we recommend that you not install the water heater directly on the ground. You can use a raised platform or purchase a steel raised water heater stand so that water does not collect in the bottom of the enclosure and rust out the tank. Also, if using a gas water heater, you don’t want water collecting in the burner chamber.

Also, if you install a water heater in an outside storage building, you should consider using a water heater blanket.

Moving a tank water heater outside can save floor space but you’ll lose some energy-saving benefits. Installing tank-style models outside can experience higher energy costs as energy consumption increases.

Can a Heat Pump Water Heater be Installed Outside

You can’t install heat pump water heaters outside. These units are also not recommended in unheated spaces, such as garages, because they would rely more on the electric mode due to the wide variances in temperature of the air surrounding the water heater.

Ideally, heat pump models require more space than tank models because they are taller. They also need more space to operate correctly; manufacturers recommend 100sf to ensure enough airflow around the unit. So, the ideal space would be a laundry room or mechanical room.

Suppose you would like to learn more about heat pump water heaters. In that case, our article Hybrid Heat Pump Water Heaters: Benefits, Cost, & Savings is a complete guide to the benefits, costs, and savings associated with these units.

Common Areas Water Heater can be Installed

Tank-Style Water Heater

You can install a tank-style water heater just about anywhere in your home. The most common areas are:

  • Garages – attached unheated spaces
  • Basements – unfinished and finished spaces which commonly house mechanical systems
  • Attics – unfinished spaces above the living space.

However, you can also install tank heaters inside your home: 

  • Kitchens – common in older homes where metal box cabinets would house a small water heater. It can also be found under sinks and inside cabinets underneath countertops.
  • Bathrooms – also common in older homes where the hot water heater would be located inside a closet. Hot water would flow to the fixtures quicker.
  • Laundry rooms – often near the clothes washer.
  • Interior closets – such as under staircases or in hall closets.

Insider’s Tip: Keep in mind that interior units need to have a drain pan with a discharge pipe directed to the house’s exterior. Gas water heaters also need an 18-inch stand to elevate the water heater to protect the burner chamber from flammable vapors, and a stop post is necessary (inside a garage).

Tankless Water Heaters

45Hi Lifestyle 1 Lg

As I mentioned earlier, the tankless water heater comes in two models. Outdoor models need installing on the exterior of your home, and indoor models on an interior surface and vented outside.

Exterior Tankless Water Heaters

Let’s look at the outdoor models first. Outdoor tankless water heater installation is best on a sunny sidewall that is not easily visible for warmth and aesthetic purposes. 

Tankless water heaters installed on the exterior must stay as warm as possible, particularly during winter. It is also essential to have the water supply lines insulated to prevent freezing. 

Many people are installing fencing or some other decorative covers to hide the view of the tankless water heater and maximize curb appeal. 

Interior Tankless Water Heaters

An indoor unit installation can be in garages or basements. While uncommon, some installations are inside attics while others are on interior rooms along the interior side of an exterior wall. As we mentioned before, the indoor tankless water heater needs to be located on an exterior wall to vent it to the exterior.

Attics are the exception because venting through the roof is an option like a gas furnace. Indoor tankless units can be mounted to wood framing in the attic, just like other interior areas.


Whether shopping for a new house or just shopping for a new water heater to install in your current home, consider your existing water heater location, professional installation is best when you need alterations to the plumbing to achieve your desired goals.

Professional installation of a water heater will provide years of reliable service (with routine maintenance). Indoor installation is best for tank heaters. Either way, a water heater can last many years, even one that is outside.


Hubert Miles | Licensed Home Inspector, CMI, CPI

Hubert Miles is a licensed home inspector (RBI# 2556) with more than two decades of experience in inspection and construction. Since 2008, he has been serving South Carolina through his company, Patriot Home Inspections LLC. As a Certified Master Inspector, Hubert is dedicated to providing his expertise in home inspections, repairs, maintenance, and DIY projects.