We've all done the little dance on a particularly cold morning waiting for the shower water to heat up. And, while you're waiting for the hot water, you're paying for all of that cold water escaping down the drain. You're also paying for your water heater to store, heat and reheat a supply of water in the tank. But imagine having instant hot water. You can with a tankless water heater. They heat only the water that is needed as it passes through an electric coil. This eliminates excess energy costs and wasted energy associated with a tank, often saving a reported 50 percent on your energy bill [source: Consumer Reports]. And as an added bonus, eliminating the hot water tank can free up valuable storage space. Sound too good to be true? Well, it might be for your home. Tankless water heaters are quite expensive and have limited hot-water flow rates, which means they may not perform to your liking, especially if you have a larger home that often has multiple showers running, or during the winter months when the water passing through the electric coil is particularly cold.