The only requirement for the first nightmare is that rhot likes a certain amount. It's either 21 or 41, it should be in one of the update notes.
edit: I was wrong on both of those it's only 40.
i guess the sequence is, resting would make Rhot approach you, thus sleeping with you, then there shall be a nightmare. then a game-week later you sleep back home to wake up with Korg holding your neck, cracking it, destroying your throat, unable to speak. blood burst out of your eye balls, unable to scream.
hahaahah jk, sorry, i should write my own terror game