Most super-budget guesthouses are located along Nathan Road between Tsim Sha Tsui and Mong Kok. Expect a tiny, undecorated room and little else. Some bathrooms are shared and noise could be a problem for light sleepers. Single rooms with private bathrooms run for about $150-$250 a night.
Two popular guesthouse clusters are inside Chungking Mansions (nicknamed Chungking Jungles by some local people) and Mirador Mansions in Tsim Sha Tsui. Located in the city centre and regarded as a slum by local people, it is home to tight budget travellers from Europe, America, India and Africa. Your friends in Hong Kong will probably be shocked when hearing that you choose to stay there and it is true that there are considerable negative reviews on those guesthouses, but it is the place packed with most of the cheapest (and the worst) accommodation. Brush aside the gloomy environment, the annoying fake watch sellers and disturbing pimps, the well-patrolled place in the heart of Hong Kong is safe. Just bear in mind that $100 for a dorm bed and $300 for room is still low in Hong Kong. Keep your expectations as realistically low as possible.