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Use the tankless Bro! Takes up less room and you will have all the hot water you want. Be sure to check how many gallons per minute it will make per temperature rise. In the winter that could be an issue for you. The Navien 240 will even run on a 1/2" line 25'long and is convertable from...
VERY cool! This is the type of build I would LOVE to do, both as a challenge to build (physically because that is what I do) and for the result....the ultimate gearhead residence!