Discolored hot water is seldom caused by tank failure, but may be caused by several non-toxic, iron-reducing bacteria; Crenothrix, Leptothix, and Gallionella. Bacterial action can lead to early failure of anode rods. Well water, water softeners, and dormant water heaters are conditions that encourage bacterial proliferation.
Treatment is possible. Recommend a qualified water treatment specialist. FURNACE EFFCIENCY RATINGS