01 - Preheat oven to 350°F. Position the rack in the center of the oven.
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 a 9-inch round cake pan or flan mold, swirling to coat the bottom evenly.
03 - Combine softened cream cheese, sweetened condensed milk, evaporated milk, eggs, and vanilla extract in a blender. Blend on medium speed until the mixture is smooth and completely homogeneous.
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, filling it halfway up the sides of the flan pan to create 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, preferably overnight, before unmolding.
08 - Run a thin knife around the edge of the pan to loosen the flan. Place a serving plate over the pan and invert to release the flan with the caramel sauce flowing over the top.