I've actually been toying with the idea of a tankless water heater for our 3rd floor (4th, if you count basement) bathroom. The prior owners installed a 40 or 50 gallon traditional electric water heater in the unheated attic space adjacent to that bathroom, and it works fine, but will eventually leak. It's also a very old house (that wing was added 1775), with vintage plaster we'd like to not ruin, and it's a massive amount of weight sitting up there.
But delivering power to it, and freeze protection, are both concerns.