Probably not the best practice, but the former owner of my boat kept the tank in the starboard side cockpit locker with the hose coming through a broken vent.
I don't know if all the vents are original, but in my case it's well ventilated and I have never smelled any vapors building up.
I haven't changed this setup yet, although when I had to do a 30 knot passage I pulled it out partly to make it easier when filling.
Next year when I am tackling the topside, I may try a more permanent solution and install a used tank where my water tank once was in the lazarette.
They appear on the local Craigslist from time to time, and the odd one even looks similar to the old water tank.