01 - Preheat oven to 350°F.
02 - In a saucepan, combine granulated sugar and water. Cook over medium heat without stirring until the sugar melts and turns a deep golden brown, approximately 8 to 10 minutes. Immediately pour the caramel into the bottom of a 9-inch round cake pan or flan mold, tilting to coat the bottom evenly.
03 - Add softened cream cheese, sweetened condensed milk, evaporated milk, eggs, and vanilla extract to a blender. Blend until the mixture is completely smooth and well combined.
04 - Pour the custard mixture gently over the set caramel in the prepared pan.
05 - Place the flan pan inside a larger baking dish. Carefully pour hot water into the outer dish until it reaches halfway up the sides of the flan pan, creating a bain-marie.
06 - Bake for 1 hour or until the center is just set and a knife inserted into the middle comes out clean.
07 - Allow the flan to cool to room temperature, then refrigerate for at least 3 hours or preferably overnight before unmolding.
08 - Run a thin knife around the edge of the pan. Place a serving plate over the top and invert to release the flan with the caramel sauce cascading over the top.