Hybrids (if we're talking about the same thing) have a condensate drain.

What's under the floor? Some houses have crawl spaces and the drain can go that way.

No crawl space, just 6+ inches of concrete under the floor (slab-on-grade foundation). Thanks for the input though! I may be a little overly paranoid on this issue as the newish (3 years old) water heater at the last place I rented had a pretty spectacular failure that caused a lot of water damage. Water heater at this place just turned 10 years old, so I am looking into replacing it now so I don't end up in a bad spot in a few months.

I understand. People who have had this problem - esp when the heater is on the main floor (rather than the basement) -- are often very paranoid about a recurrence.

I've installed Rheem tankless units in my last couple of homes and have been very happy with the brand.

You should understand that a gas tankless heater will be expensive to retrofit. They may have to run larger gas line and will have to install a new flue (as well as an electrical outlet.)

Again, keep in mind the Rheem Marathon fiberglass tank water heaters. They only come in standard electric - but could be an alternative to a gas tankless.

To answer your question about the drain - a condensing gas tankless requires a drain. It is my understanding of code that a water heater T&P valve must be able to discharge without causing significant damage - and thus a drain is always required, regardless of the type of heater. I assume you are grandfathered or have some way around this provision - so I won't argue that point.

Thank you for all of the input. I feel a bit more prepared for my appointment with the plumber tomorrow. I don't see any way to install a drain without relocating the water heater to the garage or other location and I don't want to think about how much that would run me. **Sigh**

The garage might not be terrible for a number of reasons. It would presumably solve the drain issue and would get the heater out of the main living space in case of a rupture. You could use a hybrid tank heater and it would be cheaper to install and run than a tankless unit in your closet. It would also cool the garage some.

You are in TX, so PEX through the attic wouldn't be unreasonable and I assume power is in the garage. There would be a down side that hot water would take a bit longer to get where it was going.

Let us know how it turned out.

Yup, there's power in the garage. The garage is usually where they usually locate water heaters in this neck of the woods. At least it has been in the garage in every single story house I've lived in here. I'm assuming they didn't put it in the garage in this house because the garage is on the smaller side for a 2 car (appx 18'W x 20'D). Otherwise I don't get it b/c the garage is actually not that far away from the bathrooms or kitchen.

Also, I didn't even consider that a hybrid/heat pump water heater would also slightly cool the garage (big bonus, at least in the summer). After doing a little more research it looks like they recommend hybrid water heaters be located where ambient temps are between 40-90 degrees. I've never measured the temperature in the garage in the winter. We obv don't get a true northern winter in DFW, but it does freeze here. January nighttime lows usually hover around 32 degrees (I know this sounds downright balmy for anyone up north) and we usually get 2-5 days of a hard freeze with lows below 25 (record low I've every experienced here was 16 degrees). I'm guessing that my attached garage is about 10 degrees warmer than outside in winter and 10 degrees cooler than outside in the summer. I'm assuming if the temp in my garage ever does drop significantly below 40 degrees for a couple of days the water heater would just switch to all electric mode...

A hybrid heater typically does switch over to standard electric if the ambient temps are too low or there is a big demand. There is at least one (Stiebel is the brand) that doesn't have much of a standard electric element - so you should check that to confirm on any unit you consider. Again, I like the Rheem units.

Having a garage that gets below freezing is a potential deal killer though for putting any plumbing in there (unless it's heated to keep it above freezing - which you could do and set to 35 degrees, for example).