Watts Galvanized Steel Water Heater Enclosure: Reviews are horrible for this thing, with reports that the "galvanized steel" is like a soda can. But what can we expect for $100? It comes in different sizes as well so if you do go the cheap route, make sure it fits at least.
HOLDRITE 24" Water Heater Enclosure: The HOLDRITE enclosure looks almost exactly like the Watts variant at Home Depot, and we wonder if it's not the same thing, simply rebadged.
AquaHut: Also made of galvanized steel, the AquaHut's construction seems more robust and actually includes 1" of fiberglass insulation. The AquaHut is several times as expensive, but looks like it will do a much better job of keeping your water heater protected from the elements and wasting less energy.
All three models include a space for you to route your ventilation as well. If you're venting straight up make sure to keep out the rain, objects, animals, etc. Check with a professional for installation if you're not comfortable. You can also wrap your hot water heater in insulation as well as your pipes for good measure.
Alternatively, you can also keep your hot water heater in a shed as long as it's properly ventilated and meets the minimum clearance requirements for distance to combustible material. And If you've got the dough, we'd definitely suggest looking into springing for a tankless system. It may save you money in the long run, and takes up a fraction of the space of a traditional hot water heater.
MORE WATER HEATERS ON APARTMENT THERAPY:
• How to Ruin an $800 Water Heater
• Simple Green: Wrap Water Heater In Insulation Blanket
• How To: Quiet a Noisy Water Heater