I need to drill a4" vent hole for a water heater in side of my house to connect the venting. What is the best drill to use and any avice on problems imight run into?

What is your house construction? Wood, brick, masonry?

The first thing you need to do is check if you need a spool to go through a wall. I don't think you just cut a hole and run a vent pipe through it, not even type ''B''. Check the directions that should have come with the heater. Otherwise use a hole saw. Also measure the pipe, and make sure it measures 4'' before buying one. A good 4'' one with a mandrel will run $20, maybe more depending how good. For a use once, maybe something cheap from someplace like Harbor Freight. Pipes and wires are common problems if you run into them with a hole saw. Study things first inside and out. Then start inside stopping as soon as you are through the drywall. Hole saws don't work well on fiberglass insulation. First check for hidden wires an pipes. Then cut the insulation away with a box cutter or scissors. Then go through the outside sheathing and siding.