Best Outdoor Tankless Water Heaters

The vent pipe run, the roof or wall penetration for the flue terminal, and the interior clearance and combustion air planning around it. On an indoor unit, especially a retrofit into a home with no existing suitable flue chase, running new vent pipe through finished walls, an attic or a roof is frequently the single most labor-intensive and disruptive part of the entire tankless conversion. An outdoor unit skips all of it: combustion air and exhaust both happen a few inches from the unit's own housing.

That is a real, structural saving, not a marketing claim, because it removes an entire scope of work rather than making the same work cheaper. It does not eliminate the gas line sizing question or the water piping, which remain identical to an indoor install of the same capacity.

An outdoor tankless unit and the water lines connecting to it are exposed to ambient outdoor temperature, unlike an indoor unit protected by the building envelope. Manufacturers build in freeze protection, typically small electric heating elements at vulnerable points that activate automatically below a threshold temperature, but that protection requires the unit to have continuous power. A power outage during a hard freeze removes that protection at exactly the moment it is needed most.

This is the honest counterweight to the install saving: an outdoor unit in a genuinely cold climate carries a real risk a well-protected indoor unit does not, particularly around power reliability during winter storms. Buyers in mild or moderate climates get the install saving with comparatively little downside; buyers in the coldest climates should weigh that risk seriously against the saving, and consider a backup power plan for the freeze protection circuit specifically.

These picks were compiled from manufacturer published specifications, installation manuals and the consensus of verified owner reviews. We did not install, test or run any of these units ourselves, and freeze-protection claims cited here are the manufacturer's own stated design feature, not a cold-weather test we performed.

• In a cold climate, confirm the unit's published freeze-protection threshold and whether it needs a dedicated circuit that stays powered during an outage.
• Outdoor mounting still needs a properly sized gas line; nothing about outdoor placement changes that requirement.
• Consider a wind-resistant or recessed mounting location; manufacturers publish clearance requirements from doors, windows and grade.
• If cold-climate performance is your main concern rather than install simplicity, also read the cold climate tankless picks, which weigh temperature rise capacity specifically.

Both natural gas and propane outdoor units appear here since the outdoor mounting question is the same regardless of fuel; see the propane-specific page if fuel type is your primary concern.