To see a water heater in your dream implies that you are keeping your anger inside, instead of expressing it. So far, you have been able to keep your feelings under control. If the water heater malfunctions or explodes, then it implies that your anger is on the verge of erupting into violent expression.
To see a rusty water heater in your dream means that you are avoiding or neglecting your anger.
Dreaming of a tankless water heater is telling you not to keep your feelings bottled up inside or to harbor any negative feelings.