My hot water is provided by a ground source system, and works well. However, I'm adding an apartment over the garage, which is at least 80' away and the hot takes a full minute to arrive. And when pulling the permit, the person doing the Title 24 (California's energy conservation code) could not get the current system to calc out and I was told I must make the domestic for the apartment with gas (propane as I'm rural).

Now that I've stopped whining and am cutting open drywall to run a 3/4" gas line, I don't know whether to go tank or tankless. The forum has lots of grumbling over tankless and I've had mixed success in the past myself. However the best location for the heater is an attic over the stairwell and is only 4' high. Although the vent can exit straight up through the roof there, the inspector told me he didn't think any gas tank heater would legally fit in that short a space. If true, a demand heater it is.

In conjunction with this, should I use the geothermally heated water as the supply for whatever heater I end up installing or use the cold for the supply?