Replace Old Tank Water Heater with a Tankless Unit

Our home still has the original 40-gallon tank-style water heater that came with the house over twelve years ago, and it is clearly on its last legs. It takes longer to recover between showers, the pilot light has needed relighting twice this year, and there is a faint rust ring forming around the base that makes us nervous about a sudden leak. Rather than replace it with another tank, we would like to switch to a tankless (on-demand) system so we stop paying to keep forty gallons hot around the clock and free up the closet space the old tank currently occupies.

What we need is a contractor who can walk through the house, tell us honestly whether gas or electric tankless makes more sense for our setup, and put together a clear plan and cost breakdown before any work starts. We are especially interested in understanding what has to change beyond just swapping the unit itself, since we have read that tankless heaters sometimes require larger gas lines, upgraded venting, or an added electrical circuit, and we would rather know all of that up front than get surprised mid-project. We are open to your recommendation on brand and size once you have seen our fixture count and typical hot water demand.

Please include in your proposal: removal and disposal of the existing tank unit; sizing calculation based on our bathrooms and simultaneous fixture use; any gas line, venting, or electrical upgrades required; a written itemized cost estimate covering parts, labor, and permits; the manufacturer warranty terms for the unit you recommend; and an estimated timeline from start to a fully tested, working system. Photos of the current setup can be provided on request, and we are flexible on scheduling within the next few weeks.