In most cases they can. However, a tankless water heater CAN NOT use the existing metal vent that your current gas tank style water heater uses. This means we need to be fairly close to an exterior wall of the home. Although we can vent them through the roof of single story homes, the preferred method is through the sidewall. In some cases, we prefer to completely relocate the tankless water heater to an area of the home that will facilitate getting hot water to your faucets quicker. There are also EXTERIOR mount tankless water heaters. These are popular for people with space limitations. The exterior mount system is being used less and less as we move forward. 5 years ago, 3 out of 10 tankless installs were exterior or “outdoor” models. Now we do about 1 in 10. This is due to the evolution of tankless water heaters being marketed here in the USA now. Newer models are more forgiving in how they can be vented.