diff --git a/lib/hatchet/app.rb b/lib/hatchet/app.rb
index 0846936..7148e8d 100644
--- a/lib/hatchet/app.rb
+++ b/lib/hatchet/app.rb
@@ -160,6 +160,7 @@ def update_stack(stack_name)
     def setup!
       return self if @app_is_setup
       puts "Hatchet setup: #{name.inspect} for #{repo_name.inspect}"
+      create_git_repo! unless is_git_repo?
       create_app
       set_labs!
       buildpack_list = @buildpacks.map { |pack| { buildpack: pack } }
@@ -179,7 +180,6 @@ def before_deploy(&block)
       self
     end
 
-
     def commit!
       local_cmd_exec!('git add .; git commit -m next')
     end
@@ -327,12 +327,21 @@ def api_rate_limit
       true
     end
 
+    private def is_git_repo?
+      out = `git rev-parse --git-dir > /dev/null 2>&1`
+      $?.success?
+    end
+
     private def local_cmd_exec!(cmd)
       out = `#{cmd}`
       raise "Command: #{cmd} failed: #{out}" unless $?.success?
       out
     end
 
+    private def create_git_repo!
+      local_cmd_exec!('git init; git add .; git commit -m "init"')
+    end
+
     private def default_name
       "hatchet-t-#{SecureRandom.hex(10)}"
     end
diff --git a/test/different-folder-for-checked-in-repos/default_ruby/Gemfile b/test/different-folder-for-checked-in-repos/default_ruby/Gemfile
new file mode 100644
index 0000000..20b4d4a
--- /dev/null
+++ b/test/different-folder-for-checked-in-repos/default_ruby/Gemfile
@@ -0,0 +1 @@
+source 'https://rubygems.org'
diff --git a/test/different-folder-for-checked-in-repos/default_ruby/Gemfile.lock b/test/different-folder-for-checked-in-repos/default_ruby/Gemfile.lock
new file mode 100644
index 0000000..61268f8
--- /dev/null
+++ b/test/different-folder-for-checked-in-repos/default_ruby/Gemfile.lock
@@ -0,0 +1,11 @@
+GEM
+  remote: https://rubygems.org/
+  specs:
+
+PLATFORMS
+  ruby
+
+DEPENDENCIES
+
+BUNDLED WITH
+   1.16.2
diff --git a/test/hatchet/local_repo_test.rb b/test/hatchet/local_repo_test.rb
new file mode 100644
index 0000000..184c782
--- /dev/null
+++ b/test/hatchet/local_repo_test.rb
@@ -0,0 +1,14 @@
+require 'test_helper'
+
+class AppTest < Minitest::Test
+  def test_repos_checked_into_git
+    app = Hatchet::App.new("test/different-folder-for-checked-in-repos/default_ruby")
+    app.in_directory do
+      assert_equal false, Dir.exist?(".git")
+      app.setup!
+      assert_equal true, Dir.exist?(".git")
+    end
+  ensure
+    app.teardown! if app
+  end
+end