For hot water I would get a wall mounted on demand propane unit, they're small and only come on when you use hot water, whereas a tank unit heats the water when the temp drops and waste power.
+1 for the Hot Water on Demand (HWOD) water heaters...the only thing you need to be aware of is the mineral content in your water supply. My second home is located in a "hard water area" and in the span of 3 years (and there was VERY little usage for two of those years....only about 10 days per year) I "burned out" three units. Apparently the calcium and other minerals in the water get "fused" to the heater elements, which are housed in small canisters (mine uses two 60amp/240V elements). That caused the heater elements to burn out twice and caused the "mother board" to burn out the last time...apparently trying to figure out how to send enough power to the heater elements to get the water up to temperature.
You can fix the issue with a water softener...but, since the home in which my unit is located only gets very limited use each year, I did not want to invest that much $$. I found a "Descaler", which looks like a standard under-counter water filter, like you would place under a kitchen sink for a water spigot, except that the water housing and filter are 24" long. The company from which I purchased both the HWOD and the "Descaler" assured me that the "burn out" issue would be resolved.
Don't think you need the larger unit like I bought...I had planned on operating the home as a "Bed & Breakfast" so I bought enough heating power to satisfy high-demand. A single "burner" unit operating on a 30amp-50amp circuit is totally adequate for a location where there would be no more than one point source of use at a time. When you add a second point of use (such as a shower and a kitchen sink) you run into trouble getting enough hot water...and you get scalded when someone is using water at a second point and turns it off if you're taking a shower.
I absolutely LOVE mine...be aware, though, that they have limitations. If you do not use enough flow, the unit will not turn on...I think you have to use about 0.5gal/minute to activate the unit. When you're showering and you turn the water flow down low enough that you're below the baseline needed to initiate the unit, you'll get a "Cold water sandwich"...the water will be hot when you turn the flow down, when the unit shuts down the water will get cold, then when you turn it back up to reactivate the heater elements you'll get warm water again. You get use to it, but it's a shock the first time.
Of great importance will be the winter temperature of the water supply at your house...check the temperature gain that the unit is capable of and add that to the temperature of the water supply and you'll get the final temperature. It'll naturally be colder in winter than in summer, particularly if you're in the northern states.
The positives....endless hot water....no need to pay to keep a tank of water warm while you're at work, etc....I went all electric because I was peesed off at the natural gas company, but if I had the chance I'd opt for natural gas/propane operation (although you DO have to vent those units and don't need to for electric units)...it'll be cheaper to run.
Between the large-scale HWOD unit I bought (said to be adequate to supply a small "lodge") and the descaler my most recent purchase was over $700.
I think they are a great option for a garage/workshop...when I build mine it will have a full bathroom with a shower/tub/sink and I have no expectations that there will be any problems.
My next HWOD project will be to install under-floor radiant hot water heating for the house, with the hot water provided by a smaller HWOD unit in a closed-loop configuration. For that the fluid needs to be ethylene-glycol (automotive antifreeze). Easy to heat separate zones with a single-"burner" HWOD unit for each zone and a recirculating pump for each zone.
Can solar assist be far behind? Keep in mind that these units can only supply a finite amount of temperature gain, so a passive solar water heating system could increase the temperature of the water going into the HWOD unit, thereby increasing the output temperature...except for electronically controlled units (which mine is), where the output temperature is controlled by the internal processing unit. In that case, the warmer water entering the HWOD would reduce the energy needed to get the water to the temperature set for the output.
Cheers!!
Doug