You'll want to find the blacksmith heiji in sakai, just east of the port area. He's being held by some guards in a courtyard and you can spot them using your observe ability, makes it easier to plan your approach. Once you clear out the enemies around him (stealth works great here), talk to him and he'll join your cause.

After that its back to your hideout to set up the forge, nothing too complicated just need some basic resources like crops wood and minerals, not a huge amount. The forge is pretty crucial though since youll need it to keep your gear up to date as you level up. Something interesting i learned is that you can actually get your gear all the way up to level 60 once the forge is fully upgraded.

The fun part starts when you can visit heiji at the forge and start tinkering with your equipment. You can upgrade stuff, add these cool engravings for extra perks like boosting your critical damage, and even break down old gear you dont want anymore for materials. It costs some mon but trust me, keeping your gear upgraded makes a huge difference especially in the later parts of the game when things get tougher.