This article is from the Model Rockets FAQ, by Wolfram von Kiparski with numerous contributions by others.
Well, that's kind of up to you....and your checkbook. With lots of
ingenuity and perseverance, many things can be done with simple tools.
For example, nose cones and transitions can be turned with just an
electric drill (small sized ones at any rate), but it's sure a lot
easier with a lathe (see Alway's book for details on turning with a
drill). An airbrush is almost a must to have, since even the cheapest
spray gun will (with practice) give a much better finish than a spray
can. Cans of propellant to operate an airbrush are available, but are
expensive in the long run; a portable air tank (found in many hardware
stores) could provide a refillable, cheap (free from service stations)
source of air for under $30. However, having a compressor is by far the
most convenient (if you live in a humid clime, you will also need a
moisture trap). Any precision scale work will require some measuring
tools, typically a steel ruler with 1/100 inch graduations and a
caliper are sufficient. Enco Mfg., a large machine tool supplier, offers
a line of low cost rulers and calipers. Their number is 1-800-873-3626.
Those who are really serious about scale modeling and have the $$$ to
spend may want to consider a small milling machine in addition to a
lathe (small lathes like the Sherline or Unimat offer an optional
milling column). With a lathe and mill, almost anything can be
fabricated, subject only to the skill of the operator and the size
of the machine.