water simply because the TlessHWH isn’t activated until the water flow starts and the water and manifold then have to heat up to the outflow temp. With the conventional the water coming out of the heater is already at temp. #2) place the tankless inside and vent through a roof if you live somewhere it gets cold a lot. Short vent horizontally to the outside risks having your manifold freeze and crack. Expensive to repair or replace.(ask me how I know). Caveat… mine was put in years ago when they were babies. Hopefully technology has improved to mitigate this problem.