If thinking about an instant heater, make sure you get one powerful enough for your system. If the taps (fawcets) are too far aware from the heater, then the water will be cooling as it travels.

I don't know where you are mousethief, but a cold climate might rule out siting the heater in a garage as the pipe from the garage to the house may freeze in winter.

Incidently, British Gas (who also operate in North America) have an electricy combi boiler on the market at present capable of running a cetral heating system and giving instant hot water. It's supposedly very efficient. Their web site is www.gas.co.uk.