There is a rod inside the Water Heater called the Anode Rod.

The Anode Rod slowly deteriorates over time, creating a

horrible odor in the Hot Water. The Cold Water will be perfectly fine and the Hot

Water not so good.

It is highly recommended that the Anode Rod be removed from the Water Heater. The

original Anode Rod is made

of magnesium which flakes

off, leaving behind black particles. I highly recommend

replacing the existing rod with

a Aluminium Rod.