How do I mock Models when testing?

Your mocking approach generally looks good to me. The issue is that you aren’t using Factories for your instantiation. Instead of `return new UserModel();` you should get the shared instance from factories, e.g. with the helper method:
return model(self::class);

Factories is intended to be a central factory manager so having UserModel::factory() is a bit redundant. I would normally handle your original call like this:
$user = model(UserModel::class)->find($userID);

If you don’t like the helper method and would prefer to be explicit about the fact that this is a factory then you can use the class directly:
Factories::model(UserModel::class)