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I was actually thinking about putting it in my furnace room as my main tank is plumbed through the wall into ther, where I have my sump and my 60 gallon. I would imagine it could be tapped into the cold water feed line to the bathroom sink from there.
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Thats what I did and it works really well. There should be a drain close to your hot water tank (provided you HWT is close to where you want the install done) that you can use for your waste water dump.