Despite their high energy efficiency and space-saving design, tankless water heaters present a few notable downsides. The most significant drawback is the substantially higher upfront equipment and professional installation cost compared to traditional storage tanks. Additionally, tankless units require strict annual maintenance, including flushing the heat exchanger with vinegar to prevent mineral scale buildup in hard water areas. They can also suffer from the "cold water sandwich" effect during intermittent use and may require expensive gas line or electrical service upgrades to handle high energy demands.
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