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Hot Water Heater: Rent or Own?

Hot Water Heater: Rent or Own?

Nothing diminishes anxiety faster than action.

~Walter Anderson, The Confidence Course, 1997

When we had our home built 7 years ago, we went with a rental for our hot water heater. I realize now that this is not the norm everywhere, although it seems to be the route most people here in Ontario choose. It seemed, at the time, like a good call.

Renting a hot water tank means that your up-front costs are zero, and you just pay a monthly rental fee of $15 – $30. Service is covered for as long as you rent the tank, so you don’t have to worry about unexpected expenses. A couple of years ago, a sensor went on our hot water heater. A technician showed up the same day, fixed the problem, and we had hot water again pretty quickly. Can’t you just hear a giant “but” coming?

The Water Heater Vendetta Is Born…

When we moved into our new home at the end of June, 2003, our hot water heater rental was a little less than $19/month. Over the years, however, the rental company regularly raised our rates. Each time I sat down to draft our new annual budget, I had to bump up that water heater rental amount a little more. I grumbled like a grumpy old man, but did nothing about it.

I’m not sure what the reason for consistently raising our rates might have been, but the reality is that we now had a 7-year-old water heater that was costing us almost 40% more than it did when it was brand new. In March of this year, our rate went from $23.45/month to $24.27/month. This month, they raised the rate again to $26.11.

That was the last straw. The simmering anxiety/annoyance we had been feeling for a few years now boiled over and Mr. Cents and I decided that enough was enough. Mr. Cents did a bunch of research that same weekend on what it would cost us to buy a new hot water heater and get out of that money trap once and for all.

Hot Water Heater Math

I always say that doing the math is one of the keys to good personal finance habits. A few minutes with a pencil, paper and calculator have been instrumental in some of our best financial decisions. Many times, just getting started is a lot harder than actually doing the work.

Mr. Cents spoke to a very helpful associate at Home Depot. They chose a 189L tank with a 6-year warranty on parts and a life expectancy of 6-9 years. It’s a little smaller than our current tank, but it’s supposed to be suitable for a 2500 square foot home. (Ours is about 2200 square feet.) It’s also supposed to be more efficient.

Here’s what the math looked like:

Water Heater: $953.72
Accessories: $105.88
Installation: $0
Return Fee: $40
TOTAL COST: $1099.60

It would have cost about $150 to have the water heater installed, but Mr. Cents decided to do it himself, so that saved us some money. He tells me it’s not that hard to do, but I would say you have to be pretty handy to pull it off. I’m not sure what the opposite of handy is, but that’s me. So I would have been happily paying the $150 if not for my husband. (The “accessories” included pipe elbows, couplings, a valve that broke, and a couple of patio stones on which to set the new tank.)

I should mention that renters do have the option of calling the company and buying out the rental. That would have cost us $770 – for a 7-year-old tank. Really?

The bottom line is that the up-front cost of the new hot water tank represents about 42 months of rent if you include the $40 they are charging us to take back their old tank. That’s about 3 and a half years and it suits us fine. We used some money from our savings to cover the cost, but we still have a very nice emergency cushion.

Michael James and Canadian Capitalist have written some good articles on this topic as well. If you’re looking for more information, there’s a decent overview at Natural Resources Canada.

One Last Poke in the Eye

So what happens to the old hot water tank? Well, of course, the rental company does not make it easy. This is another one of those “You’re kidding, right?” situations.

When Mr. Cents called to find out how to do it, they tried to convince us to stay with them, but eventually outlined the following bureaucratic nightmare scenario: We need to bring the tank to a Reliance Home Comfort location during a very limited set of hours. They will give us a receipt for the return. It takes 4-6 weeks for customer service to get the paperwork. In the meantime, we will still be charged rent.

At the end of the 4-6 weeks, they will issue a final bill, which includes the $40 return fee, and a credit for the interim rent they charged. This should net out to a credit for us. In order to get that money, we need to call them and have them issue a cheque. I’m not sure how long it will take to get that cheque, but I would guess it might be the old 4-6 week thing again.

Mr. Cents installed the new hot water tank on Friday night. It took about 4 hours in total, and we were without water for about 2 hours. A round of showers on Saturday morning confirmed that the new tank is working fine. Just before I sat down to write this, I cathartically removed the water heater rental line from our budget. We won’t miss it.

Do you rent or own your hot water heater?


  1. Dd

    I don’t rent a hot water tank, and thanks to you, I never will–THANK YOU!

    You also saved money on electricity as well since the tank is likely more efficient! Good job you guys, and I think I need to brush up on my handyman skills.

    • 2 Cents

      I’m hoping to save a little more on electricity, especially since rates are rising so much in Ontario. Thanks for your comment!

    • Mike

      I believe most people have gas water heaters so it would be the gas bill. Its pretty hard to get installation for $150 if you don’t know anyone. People were quoting me $300 to $700. I believe I got someone to install it for $200 or 300, can’t remember?

      I returned mine by myself for free but transporting it in a hatchback was quite a challenge.

  2. Michael James

    I encountered a similar level of bureaucracy when I stopped renting my hot water tank. It took a while, but I’m happy to have extricated myself from tank rental.

    • 2 Cents

      Your post was really instrumental in getting me to think seriously about making a change. It took 6 months for us to get moving on this, but better late than never! 😉

  3. Canadian Capitalist

    Thanks for the mention. Years ago, I decided to stop renting the water heater. Everything I’ve seen since then (including one breakdown) convinces me that it’s the right thing financially. It’s far cheaper to own over the long-term.

    • 2 Cents

      That’s good to hear. We feel great about our choice. I’ve heard from a few others that renting a water heater isn’t even an option in many other areas. Thanks!

  4. csharp

    Did you ever consider a tankless water heater? They’re supposed to be more energy efficient (therefore costing you even less in the long run).

    • 2 Cents

      My husband looked into the tankless water heaters a few times over the past couple of years but decided that the costs outweighed the benefits. Thanks for the suggestion, though.

  5. Millie

    I am so pleased to have read this. I am at the point where I have to replace my hot water tank and had been considering whether to rent or buy. This helps very well in that decision.

  6. Mike B

    We bought our home 4 years ago, and nowhere in the agreement of purchase and sale did it specify that the sellers were renting a water heater (a serious oversight on both agents parts!). A year after moving in, I decided to open one of the letters I kept getting from a company called Reliance, addressed not to the previous owner, but another person. When I saw it was a water heater rental bill, the penny dropped. I was seriously pissed at that point, and went through the same monetary calculations. We were tight on cash at the time, and so decided to be fiscally lazy, pay the back rent, and continue renting. Two weeks ago we got a rate increase notice in the mail. That straw broke the camel’s back. She’s a – coming out ! Hopefully I won’t have as much trouble with those bozos from Reliance.

    On another note, most people don’t realise that regular maintenance will stop your tank from rusting out. There is a part called an anode rod that should be replaced every 2-3 years, or yearly if you have a water softener. It usually appears as a hex headed bolt on the top of the tank. This rod is made from magnesium, and it’s purpose is to be sacrificial, meaning it corrodes instead of your tank. Your water heater could last 25 years, instead of the typical 8-10 years of most tanks!

  7. Amanda

    I can see how owning a water heater is more financially sound but if you live on a tight budget the idea of renting seems like a good idea. Otherwise you have to rent money to pay for the water heater.

  8. Jamie

    Our water heater was new in 2010. Purchased with installation around $1700.00. Six years later and out of warranty, the computer and igniter went. Cost $800.00. The unit was still young so considering life expectancy is about 12 -15 years we fixed it. Well two years later and the computer module is gone again and probably the igniter.

    We were quoted $2100 installed to purchase a new one outright, installed with the old one taken out. That would mean in eight years the water heater would have cost us $4600.00!!!

    That my friends covers many many years of worry free renting, which is exactly what we decided to do.

    Owning is great as long as you don’t end up with a lemon.

    • Timmy

      I’ve just bought a new home here in Ottawa and received a Rheem tankless gas water heater, value CDN$ 4,375.63 if I were to buy it on Amazon. I knew I was being given a rental and the builder wouldn’t provided any other option for the lot that I wanted.

      I didn’t receive any welcome package from Enercare or my builder and took the initiative to call them. They asked for $50 to send me a welcome package by mail as no electronic version is available; no thanks! I’m waiting on my first bill but likely will stay with them due to the costs involved…

  9. Aaron

    Thanks for the review. An old finance professor at business school did an entire 3-hr class for us once on how financially stupid it is to rent a water heater. I shrugged it off and continued to rent for another 15 years — until today. Last straw for me was a call to the provider, asking to update my 9 yo tank to a newer (same capacity) power vent unit. The quote went from $18 per month to $32 per month. A little haggling got it down to $27. Still $3k over 10 years! No thanks.

  10. Cheryl

    I’m in the market and “renting” is so easy. Purchasing means getting a plumber and an electrician (moving from gas to electric). But I know in the end buying makes better financial sense.

  11. Geoff

    Why switch from gas to electric?

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