Route one — replace like-for-like today. Hot water tonight. What happens: a new tank of the same type and size goes in, frequently the same day, provided nothing about the installation needs changing. What it costs you: the tankless question is deferred for the life of the new tank — typically somewhere in the region of eight to twelve years. When it's right: you can't be without hot water, the household is fine with a tank, or the tankless case was never strong for your usage pattern. Be honest with yourself about one thing: if you were already running out of hot water before it failed, a like-for-like replacement guarantees you keep that problem for another decade.