Sarah,

Electric tankless water heaters do not require exhausting or venting to the outside since there is no combustion. Gas or propane water heaters do require outside venting to exhaust the combustion gasses.

Remember to size your tankless heater to deliver enough water for your needs. Your plumber should be able to help with this. Include all the plumbing fixtures and appliances you anticipate using at the same time in your load calculation.

If there is any doubt about the sizing capacity I recommend going one bigger if feasible to allow for the unanticipated. Demand heaters only heat what’s needed so you won’t waste energy. Say you anticipate using a shower and washing machine simultaneously and a guest showers at the same time, that might make the water tepid for all.

Before you go out and buy your new unit have an electrician verify your house has the electrical capacity to handle the additional load. Small electric tankless hot water heaters can draw 40 amperes and whole house units upwards of 150 amps, which can be more than you homes main electrical service. Good luck!