A woman has been so moved by the sight of Melbourne's homeless people that she has started buying houses for them.

Jessica Pearce was staying at a hotel in Flinders Street with her partner over the Christmas period when they came face to face with city's homeless problem.

"I guess we felt shocked and I suppose a bit guilty — we didn't realise how bad the housing situation in Melbourne was," she told ABC Radio Melbourne's Rafael Epstein.

"The streets were lined with people sleeping on mattresses or on the ground.

"I guess it just touched me and I thought that maybe there was something that we could do."

'I wanted him to have stable accommodation'

The couple spent two nights wandering the streets handing out $20 and $50 notes to those sleeping rough and talking with them about their circumstances.

One of those people was a man who was sleeping on the steps of St Paul's Cathedral.

"He had a two- and a three-year-old who were staying with his ex-partner and he wasn't going to have access to them because he didn't have somewhere to live," Ms Pearce said.

Ms Pearce and her partner invited him back to their hotel for two nights, before putting him up at a motel for a month.

"I wanted him to have stable accommodation for the children."

Four for the price of one

Ms Pearce had recently finished paying off her own mortgage and was looking to buy an investment property in inner Melbourne.

But after her experience she decided to buy houses in cheaper areas, and two weeks ago purchased four houses "all about three or four days apart from each other" .

The properties Lara : Short-term accommodation for people with children who are on a waitlist for housing

: Short-term accommodation for people with children who are on a waitlist for housing Corio : Accommodation for homeless young people studying or in an apprenticeship

: Accommodation for homeless young people studying or in an apprenticeship Morwell : Short-term crisis accommodation for up to three months

: Short-term crisis accommodation for up to three months Moe: Apartment providing permanent accommodation for up to three young people

"The price that I would have paid for one house in town was the same as buying four in cheaper areas," she said.

The properties in Corio, Lara, Morwell and Moe will provide either short-term crisis accommodation or a stable, long-term residence.

The house in Lara, for example, will be provided for up to three months to people with children who are on a waiting list for long-term accommodation.

"It's quite a lovely house, it's very much like you would imagine a grandmother's house to be," Ms Pearce said.

She said she had spoken to youth housing providers and government organisations about how to best administer the properties, which are still awaiting settlement.

"It's very much a work in progress."

Homeless as a teenager

Jessica Pearce was shocked by the sight of people sleeping rough in Flinders Street. ( ABC News: James Hancock )

Just why Ms Pearce has taken such a generous step might be explained by her own history.

Three days before she turned 16 her mother and stepfather asked her to leave home.

"I'd already been working at Hungry Jack's so I just took on some extra hours.

"It's funny, at the time I didn't think much of it, I kind of took it in my stride."

She confided in her maths teacher, with whom she had a good relationship, and he set her up in stable accommodation.

"He was connected with a house in Elwood that provided accommodation for young people who wanted to stay in school, which is probably a lot of the reason that I had the idea of providing a house like that myself now."

Ms Pearce now has a successful business and her four children "have not really wanted for anything".

"I've probably got it better than most people," she said.