Dealt with the rental water heater situation last fall when ours started leaking. Posting the full financial breakdown of buyout vs. continue renting vs. buy new, for Ontario homeowners in the same boat.
Our Situation
Reliance rental tank, 9 years old, 40-gallon natural gas, lease started in 2016. Noticed rust around the base - clear sign the tank was failing.
Rental Buyout Quote from Reliance
Called Reliance for a buyout quote: $1,240 to buy out the existing leaking tank (that I would then have to replace). This makes no sense financially - they want you to keep renting.
Option Analysis
Option 1: Continue Renting (new Reliance rental)
- Monthly rental: $42/month ($504/year)
- 15-year cost: $7,560 for a basic tank
- No capital cost but perpetual expense
Option 2: Buy New Tank (own)
- New Rheem 40-gallon natural gas: $1,050
- Licensed plumber + gas fitter installation: $680
- ESA and gas inspection: $200
- Total: $1,930
- Annualized over 15 years: $129/year
Option 3: Tankless (Navien NPE-240A2)
- Unit + installation + gas line upgrade: $3,800
- Annualized over 20 years: $190/year
- But significantly lower operating cost (25% less gas)
What We Did
Went with Option 2 (owned conventional tank). Wanted simplicity and lowest upfront cost. Return on investment vs renting: payback in approximately 4 years.
Key Lesson
Call your rental company and ask for the buyout price before anything breaks - sometimes they offer better terms on a working unit. And know that you absolutely can refuse to keep renting and buy your own replacement - Reliance and other rental companies cannot prevent this.