In a saucepan, combine 1 cup of sugar with 2 tablespoons of water and heat over medium heat.

Stir gently until the mixture melts and transforms into a golden caramel shade.

Immediately pour the hot caramel into your baking dish, swirling it around to evenly cover the bottom.

In a blender or bowl, combine sweetened condensed milk, evaporated milk, eggs, and vanilla extract. Mix or whip until it is uniform and completely combined.

Pour the flan mixture over the hardened caramel in the baking dish. Cover the dish tightly with aluminum foil.

Place the baking dish in a larger roasting pan. Pour hot water into the outer pan to form a water bath. Bake at 350°F (175°C) for approximately 1 hour, or until the center is firm yet a bit wobbly.

Remove from oven, let cool, then refrigerate for at least 4 hours or overnight. To serve, run a knife around the edges and invert onto a plate.