When designing and planning a remodeling project, especially finishing a basement, a design that positions your water heater as close as possible to your kitchen and master bathroom will save money in the long run. Central or optimal positioning of this kind will reduce the distance the water must travel before it reaches most frequently used faucets. This accomplishes two things: (1) it reduces the amount of time you must run water through the faucet before the hot water travels to that faucet, and (2) it offers less opportunity for the water to cool as it travels from the water heater to the most-used faucets. This wastes far less water, and ensures that the hot water reaching the faucet is as hot as possible.

{google2493298872}

If you found this tip helpful, you might also want to read these:
Install a solar water heater
Install an instant water heater
Research rebates from utility companies for installation of energy-efficient lights and appliances