Check out the selection of tankless water heaters at Hirsch Plumbing Supply on Oxnard (near Sepulveda Blvd.).
As my favorite oracle, Steve O, has already stated, you will definitely need a permit to move the water heater to another location within your home or garage. This is due, in large part, to the exhaust that must be moved in your roof, the natural gas line that must be added to the new location, the water lines that must be changed from the current location to the new location. For what seems like such a simple thing, you'd be surprised how much work and how many vendors will be required to complete the job.
In my case, for example, in moving the water heater from the left side of my garage to the right side, I ended up having to cut a new hole in the roof for the new exhaust and then patching the side where the exhaust used to be, moving the gas line, and rerouting all of the hot water lines. PG&E or your local utility may also need to inspect your work along with the City inspectors to determine that your new installation will not pose any health or fire hazards to your home and occupants. In the end, at a minimum, you'll need a plumber and roofer or contractor, the city inspector and the utiltiy inspector to do this job correctly--and I would strongly suggest that this work be done by professionals so that it does not become an issue later when you try to sell the home.
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
Personally, I would use licensed contractors. You can check to see if someone is licensed by going here:
I would ask for contractor referrals from people you know and trust. An online service that has customer feedback rating is http://www.angieslist.com , which I personally use.