How can you hide an ugly hot water heater in laundry room?
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If the heater is fueled by gas, be sure you don't cover the lower area where the gas/temperature is controlled. Almost any type of material can be used to wrap around the body of the heater to cover it's 'ugly'. Probably should not use paint on it even if it's run by electricity. Check with the heater manufacturer.
My thoughts are a 'privacy screen' or a suspended curtain . A closet could also be built around it.
Maybe a small fabric folding screen.
Louvered doors hinged together:
https://www.pinterest.com/pin/2674081003058212/
Thanks to all of you
Have you considered a lovely room divider. They come in all sizes, prices, and colors. I purchased one for about $30.00 to hide all of my crafting materials in a corner of my office. I am very happy with the result. I hope you will be too. Good luck.
Buy inexpensive louvered doors. Screw together at right angles & attach to walls with magnets. Easy to move to service heater & lovers pass air.