Thanks for asking, I’m hanging in there
It would be nice to know what type of a water heater you have (brand, model, BTU’s) because some of them (direct vent type) use exterior air for combustion (burning process) and you can build a closet around the water heater with just a door large enough for servicing / removal (you’d need to follow minimal clearance requirements).
Also, it would be helpful to know where in the garage is this water heater positioned; at least partially against the exterior wall or not, and garage’s interior dimensions (height, width, length). This is important because in case of a water heater that requires combustion air from the garage, you could install vents in that exterior wall and build a water heater closet with solid walls / install solid door to the closet
After clicking this link : water heater combustion air
scroll down and read the article starting from the paragraphs titled “Gas Water Heater’s Combustion Air
”. I wrote this article for condo inspections but the same combustion air principles apply to all water heater installations. It explains how big of an opening you’d need to provide sufficient air for the appliance (from interior).
Let me know if those articles helped to answer your question or provide answers to my questions from above (water heater brand / manufacturer, model #, BTU’s, positioning in the garage, garage dimensions), so I can better understand your situation.
Just click “comment” below my answer.