Newer Tank Water Heaters: Anyone Noticing Them Going Bad Quickly?

[Jeff S.]

Hello fellow rental property owners,

I'm curious if other landlords can share their experience with tank water heaters in their apartment units. Mainly, how long are they lasting before they fail and begin leaking?

In the past five years, I've replaced electric tank water heaters in all of my rental units (18 units). In the past few months, I've had three of the 18 water heaters fail. One of the failing water heaters is about five years old and the other two are only 2-3 years old. I have three other units that are already showing signs of corrosion on the bottom seam, so that's 33% of my water heaters that don't even seem like they'll make it 5 years!

 These water heaters are all Rheem brand units, so they are a "name" brand. When I started replacing the water heaters 5 years ago, the old water heaters (also mostly Rheem) were mostly 15 years old or more. Some were even over 20 years old! The water in the city where my apartments are located is said by area plumbers to be "good water", not full of iron or other minerals that might cause water heaters to go bad quickly, and that seems to be true since the old water heaters lasted so long.

I've had an area plumber tell me that all tank water heaters in the US are manufactured by the same three companies (Rheem, A.O. Smith, and Bradford White), and they are all trash. According to the plumber, the companies have all depleted every aspect of the water heater from the steel tank quality and thickness, the glass lining thickness inside the tanks, the welds, and they've even gone cheap on storing and transporting the heaters. The companies also all managed to nearly double the price of their water heaters in the past 5 years as well.

Hearing this news from the plumber was rather alarming as it drastically changes the cash flow that I can expect on these properties if I can't buy a water heater in this country that lasts much more than 5 years. If what the plumber said is true, I can't be the only one experiencing these fast failing tank water heaters, and I figured this would be a pretty big topic of conversation amongst landlords here on BiggerPockets. I'm not seeing those conversations though. Interested to see what everyone's thoughts and experience are on this topic.

Thanks,

Jeff

[Jeff S.]

Thanks for the responses guys!

Richard:

We put a pan beneath our water heaters as well. We don't have an easy place to drain it if it leaks, but we do install a flood stop safety valve on each unit. When the sensor gets wet, the valve closes, and I get a call from the tenant saying they don't have hot water.

Bill:

We have not checked the anode rods in the failed units yet, but I kept two of the failed units to autopsy them. I'll check that. Thanks for the suggestion! Our water heater arrangement within the unit is not ideal - They are 30 gallon electric units beneath the kitchen counter. It's a real pain in the butt with high labor costs to replace because they have to remove and reattach cabinets from one part of the kitchen to do the work. That said, it would be difficult for us to replace the anode rod without major work to access it. I agree with you that having a backup water heater is a must because you can't complete the warranty on the old heater without bringing the drained heater into the store. calling a plumber out twice and inconveniencing the tenant for a few days doesn't work.

Our water heater problem (layout and performance) has been the most annoying/expensive thing we've dealt with in an otherwise amazing couple properties. We thought we were set for at least a decade when we replaced that last water heater, but reality is setting in that it's going to continue to be an ongoing issue. We are considering making a major change to a tankless solution where we could put 3 gas powered Navien tankless water heaters with a poly tank reservoir and recirculating pump in a ground floor common area and pipe this through all the units. This is a rather expensive solution (likely $30k per 9 unit building), but I'm comparing that cost to the $15k or so that it would cost to replace all the tank water heaters every X years. If the tankless solution gets at least twice the life of our existing setup, it makes sense. Especially considering it would protect us from potential flood damage by taking the water heaters out of the units and putting them on the ground floor in an area that will be easy for a contractor to service.

Anybody have thoughts/experience with Navien tankless water heaters set up in series? Thanks for the responses, and looking forward to the continued conversation.