a gas WH iis goign to cost less to operate inthe long run. LP does heat better than NG in my experience. i have just started researching tankless, so no recs on a particular brand.

what tanks are you talking about mounting outside? the propane tank has to be outside, your local codes will dictate how far fromthe house they must be. sometimes they can be right against it, others they have to be 50+feet away.

if you put a tank in the attic, be prepared to reenforce under it for weight, and to put a pan and drain in case it leaks. you ever see a water spot on a ceiling, a cup of water can make a large spot. now think about 20-50 gallons of water, if it leaked your ceiling would fall.

We have a Rinnai tankless, propane fired installed and running. We also have a hot water assist from our radiant heat system, so the Rinnai starts with roughly 80 degree water instead of 40 degree well water. Home is in NW Wash. state, propane or electric were our only energy options. Sounds similar to what you are thinking of doing - starting with warmed water. Have been in the house a couple of months and so far no problems! The Rinnai is installed inside the house in a closet. So far doesn't seem to be a big drain on the propane tank at all. You will need to take into consideration that since it is propane fired that it will need a fire-rated stove pipe for venting (not the right wording, but you get the idea). So.... my two cents is that it is a wonderful and economical option (works for us!).

Like honeysmomcooks, we have a Rinnai tankless running on propane, however, we installed ours on an outside wall where an insulated vent pipe is not required. Don't have a problem installing it inside, we just didn't have a convenient location.

We are not complete with the house but have been staying in it for 8 months. We are a family of 4. We filled the 250 gal tank in April (actually it is only filled to 80% or 200 gal) and after running the propane home heating system for a couple of weeks entered a period where the only appliances using propane in the house was the tankless heater and the stovetop. That tank of gas lasted us from mid-April to early November. About 6 1/2 months. When we filled it again we were down to 20% full or 50 gal. So during the 6 1/2 months we used 150 gal of propane primarily using only the stovetop and the water heater. Propane costs us about $2.10/gal to that comes to a total of $315 or about $48.50 per month. We use a lot of water in the tub, however, the girls are still taking a bath together, so our usage is closer to a family of 3.

Thanks so much for the info. I think I will go ahead and put the heaters on the exterior walls. Can't seen any advantage to putting them indoors and the disadvantages seem to include using up interior space, the added expense of special venting, and my worry about having propane indoors anyway!

davidandkasie, I didn't realize I had used the word "tank" when asking about where to mount the TANKLESS water heater. Duh. Have had regular water heaters all my life and I guess I just tend to talk about water heaters as "tanks". I do know that propane tanks have to go outdoors... as if anyone would have a spot in their house for those monsters anyway (LOL.) Sorry about the confusion.

I'm also not real keen about having a water storage tank (for preheating purposes) in the attic but, around here, builders put water heaters in the attic all the time anyway. (Slab foundations are de rigeur so nobody has a basement where they can go.) Since our attics get so darn hot most of the year, I guess having the water heater in the attic probably saves on heating bills but you're right about the danger of having a leak. Plus, getting a regular water heater OUT of the attic is such a chore that most people don't bother to take the old ones down when they get a replacement. Eventually their attic winds up being a "water heater graveyard!"

We will have "walk in" access to our attic space though so getting to/from shouldn't be a problem. To avoid water leak problems, I'm thinking I will get a big black poly (rubbermaid) "stock tank" to set the preheating storage tank down inside of. Will also add an alarm to warn me if there is a leak. Hopefully that will do the trick. (Oh, and I guess I'd better make sure my insurance covers water damage from leaking pipes and water heaters.)