Bogus rent number?

[Lisa Oliver]

I just bought a 4-plex. It's coming time to pay first rent with me as the new landlord. One of the tenants signed a new lease with the previous owner for Jan 1, 2023 - Dec 31, 2023 for 1,295. He's telling me he was paying the previous landlord $1,100 in cash for the last few years and that if I am going to charge $1,295 he will pay $1,100 this month and leave and I can keep his security deposit of $1,200. 

I'm not sure what to do. I am paying all of his utilities and this place at $1,295 is priced at market.