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Dissolve the sugar in the water, stirring over low heat in a saucepan.
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Increase the heat to medium high. DO NOT STIR. Allow the mixture to boil until caramel color begins to appear - usually 5 minutes or so. [Stirring introduces crystals into the solution which immediately seeds and causes the entire sugar syrup to crystallize into a very hot and solid mess - this from the voice of experience.]
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When the entire solution is a deep caramel color, remove from heat and pour into a 9" or 10" round baking pan.
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Quickly coat the bottom and sides of the pan with the caramel before it crystalizs.
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Set the pan aside to cool while preparing the custard.
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Whisk eggs in a large bowl. Then mix in vanilla and sweetened condensed milk.
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Stir in the milk.
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Pour the custard into the pan (the caramel will crack - not a problem) through a strainer.
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Set the pan in a water bath up to 1/2 or 3/4 of the pan height in an oven at 400 degrees F. (I usually place the flan on a large shallow baking pan in the oven and then pour the water in last - again, the voice of experience). Bake for one hour (I actually bake for 53-55 minutes).
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Cool the flan until room temperature (a couple of hours) and then refrigerate for 12 hours. Loosen the sides of the flan with a knife.
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Cover the top of the pan with the serving dish. Invert and carefully lift the pan up off of the serving plate.
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