diff --git a/README.md b/README.md
index 562dc2e5c3..30f3d19348 100644
--- a/README.md
+++ b/README.md
@@ -119,6 +119,8 @@ discussion in the main [Zulip installation docs][install-normal]):
 - `SETTING_EXTERNAL_HOST`: The hostname your users will use to
   connect to your Zulip server. If you're testing on your laptop,
   the default of `localhost.localdomain` is great.
+  Note that it needs to contain a top level domain to work, e.g.
+ `mycomputer.lan`.
 - `SETTING_ZULIP_ADMINISTRATOR`: The email address to receive error
   and support emails generated by the Zulip server and its users.