What is Better: Buying or Renting a Water Heater? Comparing Pros and Cons

The question “buying or renting a water heater” is not equally present in North America or Canada. Renting as an option is so poorly represented in the market that many consumers don’t even know that it exists. So, they never called the utility company to ask about the rental program or have been approached by the sales rep.

Meanwhile, when you move into a new house in Ontario, it is not quite unusual to sign a water heater renting agreement or take it over from the previous owner. It looks like homeowners prefer renting, without further analysis.

Over the last few years, however, things are changing. If you compare costs for renting vs. buying a new heating appliance, you may find that the second one is more economical. Water heater renting is starting to be called “fad,” let’s cite the mildest word.

At the same time, renting companies in Canada and United States are arguing that their offer is superior.

How to make a smart decision or, what are the advantages and disadvantages of buying vs. renting, let’s compare the options.

Buying or Renting a Water Heater: Which Option Wins?

Things to Consider

When it comes to deciding between buying or renting a water heater, there are a few factors to consider:

• Upfront cost: Buying a water heater outright can be more expensive upfront than renting one, as you will need to pay for the unit and the installation costs.
• Long-term costs: Renting may be more expensive in the long run, as you will be paying a monthly rental fee over the life of the unit. On the other hand, if you buy a water heater, you will not have any ongoing rental fees to pay. I pay approximately one hundred dollars every three months for the Rheem 50-gal power-vent gas model from Reliance.
• Maintenance: With a rental, the rental company is responsible for any necessary maintenance and repairs. However, with a purchased device, you will need to cover the cost of any repairs yourself.
• Ownership: When you buy a water heater, you own it outright and can do with it as you please. However, with a rental, you are essentially borrowing the unit from the rental company and will need to return it when you are no longer using it.
• Long-term investment: When you buy a device, you are making a long-term investment in your home. A high-quality unit can last for many years and can add value to your home if you decide to sell it in the future. This is especially true for tankless and hybrid types.
• Flexibility: If you choose to rent a water heater, you may have more flexibility to switch to a newer or larger unit if your needs change. However, if you own a heater, you will need to pay for a new unit if you want to upgrade.

Advantages of Buying a Water Heater

Long-Term Cost Savings

One of the most compelling arguments for buying a water heater lies in the long-term cost savings. While the initial investment of purchasing a device can be higher compared to the start-up costs of renting, owning the appliance outright often leads to significant financial savings over time.

This is primarily because you eliminate ongoing rental fees, making the one-time purchase a cost-effective decision in the long run. An analysis comparing the initial investment versus the long-term ownership cost reveals that, despite the upfront expenditure, the absence of perpetual rental charges can lead to considerable household savings.

Ownership and Control

Owning a water heater grants homeowners complete control over their choice of appliance. This freedom allows for the selection of a model that perfectly matches the household’s needs in terms of capacity, efficiency, and type-be it tankless, storage, gas, or electric.

Additionally, homeowners have the liberty to upgrade or make modifications to their system as technology advances or as their water usage needs evolve.

This level of autonomy and flexibility is seldom available when renting, where choices are often limited to the options provided by the rental company.

Potential for Increased Home Value

Investing in a high-efficiency water heater not only caters to your current hot water needs but can also enhance your home’s market value. Modern, energy-efficient models, such as Rinnai, Navien, and Takagi, are an attractive feature to prospective buyers, potentially increasing the property’s appeal and sale price.

The impact of such an upgrade on home valuation cannot be understated, with many real estate professionals acknowledging the positive correlation between energy-efficient appliances and property value.

Tax Incentives and Rebates

Another advantage of buying a water heater is the potential to benefit from government or manufacturer rebates and tax incentives. These financial incentives are designed to encourage the purchase of energy-efficient appliances, helping to offset the initial cost.

Homeowners who invest in qualifying water heaters may receive substantial rebates or tax credits, further enhancing the financial viability of their purchase.

Advantages of Renting a Water Heater

Low Initial Costs

Renting a water heater offers an attractive financial advantage due to its low initial cost, eliminating the need for a substantial upfront investment required when buying. This option is especially beneficial for those valuing financial flexibility.

Additionally, the rental agreement typically includes professional installation and setup, reducing the initial burden and ensuring a hassle-free process. This makes renting a water heater a convenient and cost-effective choice for many households.

Maintenance and Repairs

A significant perk of renting a unit is that maintenance and repair services are typically included in the rental agreement, offering renters peace of mind and financial predictability without extra charges.

This arrangement ensures any water heater issues are swiftly handled by the rental company, relieving renters from the inconvenience of managing maintenance or unexpected breakdowns.

The hassle-free benefit of not overseeing repairs makes renting an appealing option for those seeking a hands-off solution to appliance management.

Flexibility

Renting a water heater provides the flexibility to easily adapt to changing household needs or living situations without the commitment tied to ownership. This option allows renters to upgrade or replace their unit to match evolving hot water demands or household sizes seamlessly.

It’s particularly beneficial for those in temporary housing or planning to move soon, as it circumvents the complexities and long-term commitments of relocating a purchased water heater. Renting thus offers a practical and adaptable solution for managing hot water needs.

This Is Why I Rent a Water Heater

If you rent a water heater from local or national companies such as Direct Energy, Reliance or any other, you will have a free installation, lifetime service, maintenance, repair, and replacement.

The monthly rental rate is the only payment. For example, for a 40-gal Rheem power vent model, I was paying approximately 25 CDN per month in 2019 (Ontario, Canada).

You can expect a quick response to any problem and customer service with a 24/7/365 emergency phone number.

This Is Why You Need to Be Cautious When Renting a Water Heater

The rental provider’s agreement is detailed and requires careful consideration. There are circumstances where services and repairs may incur additional charges. Inquire about what is included in the standard installation.

Pay close attention to sections of the agreement titled “Policies,” “Cancellation Terms,” “Limitations of Liability,” etc., and ensure you understand them thoroughly.

Be prepared for your monthly payment to increase. The standard rental term is 15 years, with an annual increase typically ranging between 3.5% and 3.8%.

If you decide to buy out your water heater from the rental company, be aware that it may not be a favorable deal. The buyout price is usually high.

Here is an article about an Ontario family that paid over $4,000 by renting a water heater for 28 years. Their story offers valuable insights into long-term rental costs.

So What Is Better, Buying or Renting a Water Heater?

As we can see there are many pros and cons of buying and renting a water heater, so you need to decide taking into account your needs, plans, wishes, budget…

Some calculations show that after 8-9 years of usage, buying becomes more profitable than renting. We add – most of the time. A water heater needs to be maintained regularly to reach its full lifetime. Repairs and maintenance may be more or less expensive, regardless of the factors under our control.