I'm currently down to three lathes. The smallest is also my first - a Record lathe from about 1994. It's great for pens, but it's not sold anymore so that's not an option. It's heavy, solid, and runs true.
If you go cheap, you get what you pay for. I see someone recommended a HF "lathe" and in the same sentence mentioned how quickly they replaced the broken banjo six months in. What???? "He's a great doctor - the one time he accidentally cut off my arm, he was able to sew it right back on with almost no scar!"
Call me crazy, heck my shrink does, but when I buy a car, I don't want it to come with access to a great mechanic - I want it to be built so good I never need that mechanic. Same for my tools.
Put the $200 under your mattress until you can add a bit more to it. Keep searching Craigslist for someone who bought all the good stuff and then decided they just weren't into it, or that they wanted something bigger. But if you buy a lemon now, you will either get frustrated by it's limitations and quit turning, or you'll want to buy another and because you've already spent $200 you'll have to wait that much longer before you can do so.
Insert witty signature line here.