Water pooling under the tank itself, rusty hot water, an age past ten to twelve years, or a second repair within a year. Any one of those usually means you're spending money on a unit that will fail soon regardless.
Both work well. They suit different households:
An undersized heater is the most common complaint after a replacement. A rough guide for tanks: 40 gallons for one or two people, 50 for three or four, 65–80 for five or more. Tankless is sized by flow rate and by how cold the incoming water is in winter, not by gallons. A contractor should ask how many bathrooms you have and whether anyone showers at the same time.
Quotes vary more than people expect, and these are the reasons: the unit itself, whether you're switching between tank and tankless, whether gas or electrical work is needed, where the unit sits and how hard it is to get to, hauling away the old one, and bringing anything up to current code. An attic install costs more than a garage one for straightforward access reasons.
A like-for-like tank swap is often a few hours. Switching to tankless, or any job needing gas or electrical changes, can take a full day or more.
Water heater replacement typically requires a permit in Texas municipalities. A licensed contractor handles that as part of the job — it's one of the practical reasons to use one.
It depends on how long you'll stay in the house. The payback comes from efficiency and lifespan over many years. If you're moving in two years, a tank is usually the better financial call.
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