The water heater on Encore was original to the boat. Even at 42 years old, it was working fine, but a separate issue with the fresh water pump caused it to run dry, damaging the heating element. Replacing the element could have possibly been done, but given its age, replacement with a new water heater seemed to be the best decision.
The water heater is mounted outboard of the port main engine. The only way to remove it is to move the salon furniture and remove the deck panels over the engine. Once the panels are removed, you can carefully lower yourself to the deck just forward of the water heater. When you get down, there is just enough space to access all of the electrical and plumbing connections.
Furniture moved 
Port decking removed
Draining
With the breaker turned off to the fresh water pump, I turned on the water at the galley sink to drain water/pressure from the lines. When all pressure was bled off and the galley faucet no longer running, I disconnected the supply and discharge lines connected to the water heater. I also removed the two straps securing it in place.
Draining the water heater was a little more difficult as it had to be stood up. 12 gallons of water plus 42 years of solids accumulation made it quite heavy. The tight space it was in also did not allow for good body positioning to get any kind of leverage on it. I was eventually able to slide it forward and get one end up onto a stringer. That allowed some of the water to drain out and shed just enough weight so that I was able to stand it up to drain completely.
Propped up on stringer 
Stood up and draining
Removal
The diameter of the water heater was larger than the space between the engine and the salon decking. To get it out, the raw water discharge pipe running off of the heat exchanger had to come off. With that pipe removed, we had just enough space to slide the water heater up on an angle past the heat exchanger and into the salon. I lifted and pushed from below, and my dad pulled from the top with a line that was choked around it.
Clean and Paint
While the water heater was out, we cleaned and painted the deck on and around where it sits and partially up the hull. The cleaner used was Bulldog Destroyer – Degreaser/Cleaner. It is very good at dissolving/breaking down grease and carbon based liquids. Interlux Bilgekote was the paint used, and it seems to adhere to everything, even with very little surface prep. Before and after pictures below:
Installation
The new water heater came from Lowes and is a 12 gallon, vertically mounted unit. Its diameter is slightly larger than the old one, but it weighs much less. Even with the larger diameter, we were still able to use the same path that the old one took coming out. Being substantially lighter, and with gravity on our side, the new water heater went into place far easier than the old one came out.
3/4″ spiral wrapped hoses with stainless steel hose clamps were used to tie into the original 1/2″ copper water supply and discharge (cold) lines. The other end of the spiral wrapped hose was connected to a 1/2″ brass hose barb on the cold side on the top of the water heater. For the hot discharge line, flexible copper piping was used with threaded connections on both ends.
The old threaded connections were cut off the cold supply and discharge lines 
Cold supply from tank on bottom, cold discharge to cockpit on top 
Hot line – flexible copper with threaded connections
1/2″ hose barbs used to connect to the cold lines, threaded connection on the hot line
Finished product above with all plumbing and electrical connections complete. Securing straps from the old water heater were cleaned and reused. They are connected to 2×4 blocks which were set in a bed of 5200. A 2×8 block was used at the top of the water heater and acts as a brace between it and the hull side.
Thank you for sharing the water heater exchange, I have a 1985 45c
I’m getting ready for the same, I’ve come to the conclusion that removing the line from the he is the route to take, or I’ll have to remove port engine exhaust, I think the he route is the way to go!