Because of multiple rising, the process may need to be repeated. Separate pre-mixing of the dry and wet ingredients may give a better texture. It takes a few extra seconds and one large bowl to mix all ingredients before adding to the machine. Some machines will show no difference in bread quality, so try it both ways. If your hot water heater is set at 105 - 120 degrees, tap water should be warm enough.
Some bread machines requires the water to be at room temperature.
This is because the bread machine's motor will warm up the ingredients during the first mixing stage. People have a tendency to make the water much too hot for the bread machine. This activates the yeast too quickly, causing a poor textured loaf which may often collapse. Too hot water may rupture the yeast cells and render them ineffective. Do not warm ingredients in the microwave.