A Thug Hut is basically a really small crappy house. More often then not, the siding is peeling or rotting, the windows are boarded shut, there's grass sprouting in the middle of the cement walkway...you get the idea.
There's a fun game to play while on a long car or bus ride where everyone points out ugly houses, whoever can shout "THUG HUT!" fastest wins. It really makes time fly.
*driving by a dumpy house*
Girl #1: "THUG HUT!"
Girl #2: "Aw man, you beat me to it!"