(I don’t have Unreal Engine 4 just yet, I am just wondering about model making, for people who make models from scratch)(I am not a model maker or anything but this is a question that answer will be useful for Model Makers out there)
In ue4 you cant create your own models, but you are able to put in some cubes and other polygonal objects for block out. For the modeling part you will need another software like blender which is open source and for free. But you can create some terrains with unreal engine without the need of a modeling software.
If you are not a modeler you can also buy or dowload some assets from the marketplace.
if you use bsp brushes you can actually change their geometry in the engine. this is helpful for blockout like you mentioned but you can also make the bsp brushes into static mesh objects which can be used a base to work from when modeling in a different program.
so basically as said above you can make basic shapes in unreal but to make more complex geometry your going to want to use a modeling program.