A guy I work with started and ran one in SOMA for a year. I asked whether he would like to help on this, but he is sick of that kind of stuff.
They basically took over an empty building (legally), and renovated it into sort of a cross between a hostel and a community home for entrepreneurs (and wantrepreneurs) from out of town.
They charged around $1000 a month for a dorm like situation where you would share a room. That's definitely a pretty high price, and may make people want to start yelling about rent-seeking capitalists, but the reality is that they barely turned a profit on that after a year, after legal and construction expenses.
They basically spent the whole time fighting the SF zoning bureaucracy, and were really just delaying their inevitable expulsion from the building by the city.
You could probably reduce expenses considerably by-
1) using volunteer construction labor under some cooperative scheme (you'll still need to pay a bunch for skilled trades, like electricians and plumbers).
2) either choosing a building zoned appropriately, or not informing the city of your plans to have people live there.