The house we just bought has an electric water heater which is closer to the end of its life cycle but was leased for $17 per month by the previous owners. If anything goes wrong the leasing company comes out and fixes it.
Does it make sense to keep the current operational water heater and pay the lease, or to buy a new one, or is there a different way to go?
Good Morning Gloucester 
I’ve never even heard of a lease, so thanks for educating me on the latest take on unnecessary warranties, which is what I would call this “lease” situation.. I’d vote against a lease, if the agreement is just for the heater itself and not electric service too. (If by chance it includes electric service which would require a separate meter, hey $17 per month might be a bargain anywhere.) Since you leased it, by the way, do they come out and remove it if you want a new unit, especially if you don’t lease a new one from them? Do they ding you for dents, as a lessor would do for a leased BMW? Bet not, but correct me if I’m wrong. I’ve owned four heaters (all conventional ones) and always get at least 10 years of use, and have never required “service” until they died. My last electric heater was old when I got it, and it did not fail in the six years I owned it. My current gas heater has been in place since 1/2003…almost 14 years…and is still working, though I don’t expect it to last much longer. I’m sure I paid $300 at most for it, installed. (But factor in inflation, make that $500 today.) Why pay this exorbitant $204 PER YEAR, especially since a new heater will have a warranty that will last at least one year, if not longer? If it is electric, the only thing they can replace is the anode, at which point you have an old, prone to leaking, mineralized up old tank. There ain’t a heck of a lot you can do for one of these, except fix bad soldering joints that the installer might have messed up and should replace for free anyway.
Best wishes!
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Don’t know if you have Propane access but the Renai “on demand hot water heater” is fantastic. You always have as much hot water as you want any time of the day or night! No tank to worry about – my unit is a small flat box attached to the outside of my house!
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Try HomeWorksEnergy (partners w Mass Save)
There are some rebate incentives I believe.
Buying would be the best option if you could get a rebate.
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I highly recommend going with a heat pump water heater. It is an electric heater that has a heat pump attached to the top. It takes the heat from the air and puts it into the water. Another advantage is in the summer it also dehumidifies the air around it, so if it is in the basement, your basement stays cool and dry. Massachusetts has a $750 rebate for them, and the feds have a $300, because they are so incredibly energy efficient. There may be more rebates from GE as well. There are a few brands, we installed the GE, love it. http://www.geappliances.com/ge/heat-pump-hot-water-heater.htm . Or you can look at a more efficient one, but more expensive, https://www.altestore.com/store/solar-water-heating/heat-pump-water-heaters-c1247/
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Most water heaters have a ten year warranty. I know since one of mine went 9 years and 11 months and the plumber who came to look at it read the sticker on the side. He got me the free one and installed it.
So ten years times 17 per month is $2,040. You can get a water heater for less than that. They are also getting a lot better so that my 9 year 11 month calamity is a rarer event than it used to be.
So math says, buy one.
Fun Fact: That water heater broke the night Sue’s water broke with our first child. That was 27 years ago and the new one still has not broken water. 🙂
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The water heaters used to be rented from by the electric co. But have been spun off to a different entity due to regulatory changes I believe .
When it does finally fail they will not replace or remove it for you and will only stop billing you upon receiving a paid invoice for the new one ( so that people don’t just say it Is not working and stop paying the rental fee ) . They will not try and get any extra fees like an auto lease .
As to weather to remove it or pay the 17$ a month a new heater cost around 800 $ installed by a licensed plumber, or at least 400 for a small heater purchased and installed by you .
As to an instant gas heater expect to pay 1500 or more installed , these are great heaters if you need a LOT of hot water and they cannot be installed outside in a freezing climate for obvious reasons
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Go with buying the heat pump water heater. It’s a no brainer. It’s almost free with the rebates and costs less than half to run verses the old fashioned resistance hot water heater. Even if your present water heater is in good shape, it makes sense to switch to the heat pump model. I did this 3 years age and love it.
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Electric is lousy in general. A nice propane on demand hot water heater will cost you between 1000 and 1500, and you’ll have endless hot water with 98% efficiency. And there are rebates available for a few hundred bucks too. I just got one and it’s the best thing I’ve ever bought.
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