Ideally, you'd want to start a bulking cycle when you’re very lean – single digit body fat. Working from an environment with less adipose tissue means less inflammation and usually a better hormonal profile – better nutrient partitioning due to insulin sensitivity and less estrogen (fat cells are highly estrogenic).
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But most people don't want to do that in the real world. Guys get a hint of upper abs first thing in the morning, swear they're at 9% body fat, and want to start "packing on the gainz!" Well, gear down there, big rig.
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Since most guys never truly get ripped, they often end up in Skinny-Fat Land. This is where the majority of confusion about whether to bulk or cut comes from. When you're skinny-fat, the scale usually says "runt" but the mirror says "doughnuts.” If you're a total newbie (or have less than a year of really intelligent training experience) and you're more than 18-20% body fat, then you're in luck. No really, you are. Because then you're in that rare period of time where you can lose fat while building a decent amount of muscle at the same time.
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Get into a minor caloric deficit and focus on banging out rep PR's on the big lifts. If you're skinny-fat but in the 12-15% body fat range, then focus on eating a maintenance intake of calories or a very slight surplus, and then bang out the rep PR’s.
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The common denominator? Getting stronger in the growth-producing rep ranges (8-20), and putting on more muscle. The underlying problem with looking skinny-fat really isn't the degree of body fat. It's the lack of muscle underneath it. A guy that's 16% body fat who has a lot of quality muscle underneath will look fairly jacked. And that's the difference between him and the guy suffering from skinny-fat disease who weighs 177 who's also 16% body fat. Muscle cures a lot of problems.