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The symptoms are easy to detect. A hot shower never gets really hot, but lukewarm instead. Or in some cases, the dishes aren’t clean when you remove them from the automatic dishwater. That’s usually the first sign of trouble of a water heater problem.
But before you replace the unit, first determine where the problem lies. You may not really have a hot water heater problem with a typical tank-type water heater, and even less so with a tankless gas or electric water heater. There are items to check before you spend a lot of money.
Energy Source. In all cases of electric water heater, the unit is on a separate electric circuit. A typical tank-type unit requires about 7000 watts of energy while a tankless electric water heater requires about 38,000 for an average household. If the breaker has been trip for whatever reason, resetting the breaker would be the very first item to check.

Tankless electric water heater
In the case of a gas heater, the most common problem is not that it runs out of gas, although in the case of propane that could easily be the culprit, but the pilot light mechanism could be inoperable. Either the pilot light could be out or the electric ignition may need to be cleaned or reset, or in the worst case replaced.
Elements. Tank-type water heaters have heating elements that burn out from constantly being turned on and turned off. Replacing the elements in an electric water heater is a simple step. They are designed for easy repair. Of course, don’t try to change it if you are in the dark as to where it is located on the tank itself. And by all means turn off the electricity to the unit before you start.
Tankless electric hot water heaters have sealed elements that last 3 to 4 times the standard elements, so there is less of a problem.
Leaks. These can occur in a variety of different locations on the tank-type units. The outtake, drain faucet, around heating elements and any other connectors to the tank itself are just a sampling of the areas a leak can occur. When they do occur, it’s generally time to replace the tank.
With an electric or gas tankless unit these types of water heater problems rarely exist.
So before you decide to replace your water heater, check the alternatives to the water heater problems and save yourself some money.