How can I hide my water heater?
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You could build a 3 or even 2 sided box like,that you can move to enclose it, and pull out when you need to service it. It looks like the upper shelf and something else is behind the water heater. You want to be sure that you can get to it when it needs to be replaced.
Hi, you can build a cabinet around it with a door to access it, or use a bi-fold closet door to hide it as in the picture, this leaves the top open so the tank can still breathe
Remove the bottom , inside shelves and back of a tall cabinet and slide it into place to hide the water heater.
The other answers are good suggestions. The other problem I see is the dryer vent running across the floor where you can step on it or trip over. I would suggest finding a new routing for that and replace the cheap plastic hose with a more rigid hose without all of lint catching folds. Maybe you can go route it under the floor and then outside or overhead if possible.
I would either buy a folding screen to hide it or install a ceiling track for curtains (like they have in the hospital rooms for privacy). You can order these curtains and track on-line in a variety of colors and patterns.
Use bi-fold doors. this way if you have any problems with the water heater, it can easily be reached.
2 hollow core flat panel doors so you can get something tall enough. . Use hinges to connect the two doors side by side. Fold in a 'L' configuration. Paint same color of room to blend.
These would work well:
https://www.amazon.com/Room-Dividers-25-50-Accent-Furniture/s?ie=UTF8&page=1&rh=n%3A3734261%2Cp_36%3A1253524011