In a saucepan, combine sugar and water; cook over medium heat until the sugar is completely dissolved and turns a golden brown.
Pour caramel into 9-inch cake pan or divide into individual ramekins.
In a large bowl, mix eggs, nutmeg, and vanilla until all ingredients are well combined. Add in condensed milk, milk, and brandy or bourbon. Whisk together completely.
Pour mixture into the pan or ramekins over the caramel. Place pan on a baking sheet or deep baking dish and fill with hot tap water; water bath should reach about halfway up the outside of the flan dish.
Bake at 350 degrees for 35–40 minutes for a cake, about 25–30 for individual ramekins, or until mixture is set. There should be a slight jiggle. The firmness can be checked by inserting a knife or cake tester into the middle of the flan; it should come out clean.
Cool for 30 minutes. To unmold, loosen edges with a knife and place a plate upside down on the top of the flan, hold firmly and flip. Spoon any remaining caramel onto the top of the flan. Serve room temperature or chilled.