diff --git a/INSTALL.md b/INSTALL.md
index a211e99..08e6dc8 100644
--- a/INSTALL.md
+++ b/INSTALL.md
@@ -110,6 +110,12 @@ settings.
     $ cp config/settings-default.yaml config/settings.yml
     $ vim config/settings.yml
 
+Create a directory that will keep all the VCS repositories hosted by Vervis.
+Its name should match the `repo-dir` setting in `config/settings.yml`. For
+example, if you're keeping the default name:
+
+    $ mkdir repos
+
 # (8) Development and deployment
 
 To update your local clone of Vervis, run: