diff --git a/lib/vmpooler.rb b/lib/vmpooler.rb
index c1fe206..aa65ff3 100644
--- a/lib/vmpooler.rb
+++ b/lib/vmpooler.rb
@@ -78,7 +78,7 @@ module Vmpooler
     parsed_config[:config]['vm_lifetime_auth'] = string_to_int(ENV['VM_LIFETIME_AUTH']) if ENV['VM_LIFETIME_AUTH']
     parsed_config[:config]['max_tries'] = string_to_int(ENV['MAX_TRIES']) if ENV['MAX_TRIES']
     parsed_config[:config]['retry_factor'] = string_to_int(ENV['RETRY_FACTOR']) if ENV['RETRY_FACTOR']
-    parsed_config[:config]['create_folders'] = ENV['CREATE_FOLDERS'] if ENV['CREATE_FOLDERS']
+    parsed_config[:config]['create_folders'] = true?(ENV['CREATE_FOLDERS']) if ENV['CREATE_FOLDERS']
     parsed_config[:config]['create_template_delta_disks'] = ENV['CREATE_TEMPLATE_DELTA_DISKS'] if ENV['CREATE_TEMPLATE_DELTA_DISKS']
     set_linked_clone(parsed_config)
     parsed_config[:config]['experimental_features'] = ENV['EXPERIMENTAL_FEATURES'] if ENV['EXPERIMENTAL_FEATURES']
diff --git a/lib/vmpooler/providers/vsphere.rb b/lib/vmpooler/providers/vsphere.rb
index 27ca3ac..386d07e 100644
--- a/lib/vmpooler/providers/vsphere.rb
+++ b/lib/vmpooler/providers/vsphere.rb
@@ -348,7 +348,7 @@ module Vmpooler
 
             begin
               vm_target_folder = find_vm_folder(pool_name, connection)
-              vm_target_folder = create_folder(connection, target_folder_path, target_datacenter_name) if vm_target_folder.nil? && @config[:config].key?('create_folders') && (@config[:config]['create_folders'] == true)
+              vm_target_folder ||= create_folder(connection, target_folder_path, target_datacenter_name) if @config[:config].key?('create_folders') && (@config[:config]['create_folders'] == true)
             rescue StandardError
               if @config[:config].key?('create_folders') && (@config[:config]['create_folders'] == true)
                 vm_target_folder = create_folder(connection, target_folder_path, target_datacenter_name)
@@ -356,6 +356,7 @@ module Vmpooler
                 raise
               end
             end
+            raise ArgumentError, "Can not find the configured folder for #{pool_name} #{target_folder_path}" unless vm_target_folder
 
             # Create the new VM
             new_vm_object = template_vm_object.CloneVM_Task(
diff --git a/spec/unit/providers/vsphere_spec.rb b/spec/unit/providers/vsphere_spec.rb
index 4cfaeeb..a613051 100644
--- a/spec/unit/providers/vsphere_spec.rb
+++ b/spec/unit/providers/vsphere_spec.rb
@@ -646,6 +646,18 @@ EOT
       end
     end
 
+    context 'when create_vm_folder returns nil' do
+      before(:each) do
+        template_vm = new_template_object
+        allow(subject).to receive(:find_template_vm).and_return(new_template_object)
+        expect(subject).to receive(:find_vm_folder).and_return(nil)
+      end
+
+      it 'should raise an error' do
+        expect{ subject.create_vm(poolname, vmname) }.to raise_error(ArgumentError)
+      end
+    end
+
     context 'Given a successful creation' do
       let(:folder_object) { mock_RbVmomi_VIM_Folder({ :name => 'pool1'}) }
       before(:each) do