When considering this option, you must weigh the cost of the transformation. To install a tankless, or on demand, water heater, you must first run a new stainless, or pvc flu to the outside (see manufacturers specs). The aluminum flu on top of the water heater will not handle the heat that the on demand units put out. A dedicated power outlet must be installed to run the unit. The gas line must be increased to ¾ instead of ¼ in most cases. Most manufacturers recommend that the unit be tied in with a water softener for the house. And the basic unit for a standard size house is usually over $1,000.00. After everything is in place, it can cost several thousand dollars to have your house fitted with one of these new units. The silver lining to this is that they are much more efficient than a standard water heater and you never run out of hot water. If you have jetted tubs that you are always filling, many showers, laundry and other hot water needs on a constant basis, then it may be the way to go. The manufacturers warranty on these is much longer than a standard water heater.