on demand electrics do exist, but for whole house supply, they can involve ALOT of rewiring, and generally cost more to run than an electric tank. Garage water heaters are commonplace, and newer ones have FVIR systems that prevent fume ignition.
As for the 2 options, tankless systems have better placement options than a tank, and you don't have to worry about the tank bursting when you aren't there. If you size it right, you also don't have to worry so much about when those ten friends are going to be taking their showers.
On the other hand, at the rate propane is going up, the electric tank may be cheaper to run.