Custom Avatar Workflow

VRoid

For those who don’t want to deal with MMD parts and much of the nitty-gritty involved with that workflow of avatar creation, and instead would like a more cohesive, traditionally artistic approach to 3D avatar creation there is an option called VRoid.

What you do is create a model using VRoid Studio[vroid.com] and upload it via the VRM Converter for VRChat[booth.pm], a Unity tool.
(If there is demand for it I may expand this section. I do not have much experience with VRoid because I dislike the style.)

Frankensteining an avatar

Combining various different parts, such as body bases, faces, hair, clothes, etc. into a single model with a single cohesive rig.
Typically these parts are taken from MMD models.

Originally posted by Tupper:
What's an MMD model, and where do I get one?
“What is "MMD"?
MMDs are model files used by the program MikuMikuDance. This program is typically used to create music videos, animations, and etc. If you search for "MMD dance" on YouTube, you'll find tons of examples of these models.

They're a great way to import models because they come with a full rigging, full textures, and full UVMaps. All you have to do is set it up for VRChat, which is what I cover in my guide.

Unfortunately, if you don't want to be an anime character, MMDs typically are anime-styled. You might want to look into importing a Source Filmmaker/GMOD model, or look at Models Resource[www.models-resource.com] for a huge repository of models ripped from games.

Where do I get MMDs?
A lot of people say to look on DeviantArt for models, but most of those are "kitbashes"-- in other words, someone put together a bunch of parts to make an original character. These might look good and unique, but they're often extremely high polycount. That's why I recommend the following two sites for finding MMDs:

Nicovideo[3d.nicovideo.jp] - A great resource for extremely high-quality models. Lots of Kancolle.

Bowlroll[bowlroll.net] - Also a great resource, but a bit harder to navigate.

Both of these sites are in Japanese, so I'd suggest using Google Chrome for automatic translation of the pages. Also, both sites require a login-- I just use my Twitter login for Bowlroll, and I made an account for Nicovideo.

VERY IMPORTANT - Respect the rules
Artists put a ton of blood, sweat, and tears into making their models. Oftentimes, they have a license for use with the models. Ensure that you read the license, and obey it to the greatest extent that you possibly can.

Although you will not get banned from VRChat for using a model outside of the licensing terms, it is possible that the artist will issue a DMCA takedown request to VRChat to remove the model. In this case, the model will be removed from the servers, and VRChat will likely notify you.

Oftentimes, if you message the creator on social networking tools and explain what you plan on using the model for, they will be okay with it. You aren't making money off the model, so sometimes artists are happy to let you "cosplay" as their character.

As an example, the model I use in VRChat is electrica2014's rendition of the Touhou character, Cirno. I messaged electrica2014 on Twitter using Google Translate (they do not know English), and explained the use. They were happy to let me use the model, since I asked.

As far as the Touhou licensing goes, ZUN's licensing on Touhou is very open-- it allows for the use (and sale of) fanworks. The closest thing that VRChat comes to in licensing is "cosplay" (in my opinion), so if the license mentions that cosplay is okay, you're probably fine.

Finally, violating the licensing rules of MMDs has a secondary effect-- if it becomes prevalent, MMD artists will be less prone to releasing their models publicly in the future. Obviously, we don't want that-- so just ask!

Tupper's Tutorials - Creating Custom Avatars from MMDs 
A Guide for VRChat
By: Tupper
This guide consists of a growing set of videos I've made on importing, optimizing, and setting up custom avatars from an MMD source.

(I copy-pasted this part rather than just linking to it because the rest of the guide is outdated)

Guide to free avatar models[gitlab.com]

Avatar base and accessory hunting[vrchat.fandom.com]

The process of frankensteining an avatar involves gathering all the parts you want, importing them into the same .blend file via CATS (don’t forget to click Fix Model!), posing them to where they overlap the base model, and merging them via CATS through the Custom Model Creation tab.

Apply decimate modifiers to objects with a high poly count. Before atlasing your textures, save a new file (increment easily in Blender Save As menu by clicking the +).

When making avatars in Blender, DON’T APPLY DESTRUCTIVE CHANGES UNTIL YOU ABSOLUTELY HAVE TO!

A destructive change is one that cannot be easily reverted without Ctrl+Z, like clicking apply on a modifier, or atlasing your textures.

Before you make destructive changes, SAVE AS A NEW FILE!!!

You can easily increment files in Blender's Save As menu by clicking the +.

This workflow allows for your avatar to be easily customized later while also being able to keep it optimized when you export to Unity.
Additionally, you also have multiple save points you can return to in case you made an accident along the way, rather than having to start over.

If that fails, Blender also saves auto-backups (File>Recover>Auto Save...).

Version control (like Git) can be a lifesaver here if spending significant time on a single avatar.
For more information, see the Version Control subsection under Worlds