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There are a number of factors that determine where the Plumbing contractor decides to install it.

If it is a gas heater, it needs to be located where it can be vented to the outside.

Typically the heater should be as centrally located as possible to facilitate hot water getting to all of the fixtures it is attached to.

They will attempt to minimize the length of the piping runs. Takes less piping and less work to install.

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