On a fresh install there is no test-writable.txt file in the admin/includes folder. I created one and tried adding the default template that shows up but same issue. However, I figured it out anyway. Inside the writable.php file (the ones that is doing this), I found this line of code:
$filename = ALM_PATH .'core/repeater/default.php';
So I changed that files permissions to 777 and now it seems to be working.