I use a 4 gallon electric water heater. I'm quite happy about it.
The above is the synopsis - feel free to skip to the picture at the bottom - otherwise get a fresh cup of coffee and read on -

It got a little windy, but maybe something you could noodle over in this mess ...
When I was trying to figure out what to use I really didn't want to use propane - mostly because Ididn't want to cut any more holes in it than I had to (I like my bus

)- so I didn't really consider any RV appliances at all, since they all seem to need some sort of vent.
I was planning for off grid - so my questions were -
1) How often will some external AC be available - doing the battery -> inverter -> water heater thing (which seems to be what most think of right off the bat) was definitely out - as Albert Einstein noted about nuclear energy -
"It's a hell of a way to boil water".
Just a personal prediliction, I think building a DC system that will take a 125 AMP hit for 20 minutes is way outta proportion for a little hot water, or for anything else for that matter - but that's just me - to each their own, that's why we're building busses, huh?
2) how long does the water stay 'useably hot' in the tank, with normal use.
3) recovery time - obviouly, not too big a deal unless, for example the heater holds enough for 2 showers and you have 3 people show up at 'shower time'.
4) Is the tank big enough to supply the water you need at the temperature you want for as long as you want it - considering #1.
'Instant hot' heaters were out because of a) the propane thing and b) electric ones require an immediately available power source (yeah, yeah, yeah I know battery->inverter->water heater - I'm not spending a grand on a system plus the water heater so I can have hot rather than warm water to wash my hands twice a day - just me

)
#2, #3 and #4 of course depend on #1. I already worked out that while I was working out the electrical system. Best
bang for the buck (for me) was providing AC to charge the batteries, etc. daily for about 1 1/2 hours.
The 'power plan' was for off grid with external AC supplied by a generator, so worked out #1 by checking power useage (excluding power used to work on the bus) and worked out my particular 'cost/benefit' - it was 2 batteries and recharging every day.
You could add batteries to say, two days worth, and run the generator every other day, but you'd just run it twice as long (no benefit) and requires more batteries (additional expense). Running daily gives me a daily 'AC window', as well as saving a buck or two on extra batteries. During that window I do all the 'big' AC stuff, vacuuming, water heater etc. ANyhow - this seems to be getting off in the weeds here

, but actually gives you #1.
As to #2 I had no way of knowing and no way of testing, so we'd just have to see how this worked out in the end.
As to #3 Didn't much matter to me, as it's only me or me and one other person.
As to #4 - Pretty much just a refined WAG.
After slappling that whole slumgullion together -
For size I'd never really heard many complaints about RV water heaters in this regard, so just looked at then for size. They're usally something like 6 gallons and a recovery time of something like about 30 minutes. I so I just found an electric that hit that and used 120 volts, would fit on a 15 amp circuit comfortably, wound up with the 4 gallon/1200 watt job (on sale at Lowe's -
even better!) . We hit #1 pretty well, for the other three we just tried to get what was commonly available to jive with our guesses.
Put it in and of course was curious - since I had absolutely no idea about how much a shower took, etc. So I took a shower the 'normal' way - just showered until the water got cold - about a 20 minute shower with no hot water left in the tank.
Took one then with an eye towards making it last - get wet, water off, soap up, rinse off. Took showers like that about 5 minutes apart (without the water heater 'powered') until the water ran cold. Got 3 that way.
Anyhow - to the chase - I can heat the water during the my 'AC cycle', then take one shower and have enough 'useably hot' water top last 'til the next 'AC cycle'. 'Useably hot' to me is warm to the touch - not really hot. I ususally take a shower while I run the generator in the evening, so there's time AC time to heat another full tank afterward. There's enough hot, I guess I should say 'comfortably warm' water to clean up and shave with in the morning, wash dishes couple of times and wash my hands a few times.
I put my water heater in the bathroom under the sink - bottom half of the cabinet on the left -

so the plumbing's simple. A tee on the outlet, one side to the shower - about 4' of pluming and a 24" regular faucet supply to the sink. Filled the space in the cabinet around the heater with plain old fiberglass.
If you skipped to here, you probably didn't miss much

, if you read your way here - congrats on you patience, but wanted to but a little background in - others make different choices, but they may be based on other considerations.
Oh, just a final note - all this applies only during the winter for me - out here in the desert in the summer, when the temp is 110 degrees, ALL your water's hot water ...
Tom