The tankless water heater heats water as it flows through the tubing in the heat exchanger inside the heater. Because a tankless water heater heats the water as it flows, you can have a never ending supply of hot water. This can be especially beneficial for families or businesses that require a constant demand for hot water. In the past few years, improvements have been made making them less primative and much more reliable. However, routine maintenance is required at least once a year to prevent sediment build up for optimal performance.