"Real estate -- I know a couple of part-time landlords, and this is not passive work. They have to deal with tenants, maintenance, etc. Sure, you can hire a property manager, but that cuts into your returns."
I posted somewhere down the thread that this has been my observation from watching my grandparents and father manage their investment properties (which were their retirement fund as retirement money in Uruguay is only good for basic survival).
"f something is profitable (easy money), then other people will enter the market and the profitability will decline"
Yep, but as you said, there are psychological barriers of entry which make the "short-term" profitability good enough for an individual, yet bad for foreign investors.
For example, you can make a 12% profit off real estate rentals here in Uruguay now, it's shifting downwards due to the market pressure, but for us locals it looks like a low-risk, high-reward investment opportunity, but for people in the developed world, the perceived risk of investing in a South American country is too great (and I'd agree, they need a local partner to avoid getting fleeced by the government, or investing in the wrong places, etc... local knowledge basically).
As it usually happens, I'm currently in debt and cannot take advantage of the investment opportunities (fortunately my parents and grandparents can :) ).