Ive always liked seeing the ways other people do things and maybe get some ideas so post pics of your lathe you use for modding here.
Here’s mine-
Nice little wood lathe you have there.
Here is one like mine.
Mine actually has the right stand with it though.
I’ll get actual pictures of it soon.
How did I know that you would own this thread?
I have the exact same lathe. They’re fun, you can do a lot with them.
and for $180 you cant go wrong
Spent a little more on mine for some extras. ;D Been turning some new yo-yos all day in prep for Indy states, looking forward to a break. 8)
How does it work for yoyos? Because I wanted to get a lathe, but I don’t want to spend too much money or buy something that doesn’t work well.
Buy a taig lathe instead.
They are nice. 
I would say yes if you want to make money doing mods and do ALOT of them but for my lathe and a decent chuck it still only costs maybe $300 and as evidenced by my work you can get great results on recesses. Now I already had the lathe back when I was really into wood turning so I wouldve gotten a Taig if I didnt have this already. But honestly with practice and a good set up you can get great results with a drill.
Any tips on how to get the drill to be steady?
Here is a picture of my setup when I use a drill
Now obviously the yoyo would be flipped around to do a recess but i didnt feel like taking the caps off.
The drill is clamped to the table and the block of wood is the same height as the center of the yoyo and is also clamped to the table.
I would recommend a corded drill that spins both ways and has a trigger lock so you dont have to hold the trigger down
Also get a bag or two of extra nuts and bolts for duncan yoyos at the hardware store (just bring your fhz along, see what nut fits and get them plus the same type of bolt) it will only cost a couple dollars but you can clamp down on an extra axle without worrying about the threads rather than using the axle the yoyo came with.
I am so glad that there are people like Tyler that will take the time to set this up and take a pic just to help someone else get into modding.
I just want to add one thing. WEAR SAFETY GLASSES!!!
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Just wrote up a more detailed post about doing recesses on a drill