In a medium saucepan, add the sugar and hot water and stir over high heat until sugar dissolves.
After the sugar has dissolved and starts to boil, quit stirring. For 5 minutes, cook on high while carefully swirling the pan on occasion, do not stir.
After its cooked for 5 minutes the mixture will turn a light golden color, you can stop now for a lighter caramel and it will be delicious. You can also choose to continue for about 30 seconds longer until it becomes a slightly deeper golden brown. It doesn't take long and will happen very quickly. Carefully watch it and smell the mixture for any faint smell of burning sugar. It only takes a quick second to go from dark to burnt. If it burns, you should start over.
Once it reaches the desired color, remove the sauce from the heat immediately and carefully whisk in the heavy cream. The sauce will start to bubble up as soon as the cream hits the hot liquid, so pour it in slowly.
Return the pan to medium heat and continue to cook for about 5 minutes, or until the mixture thickens slightly and the color deepens even more. This takes about 5 minutes.
Then remove the pan from the heat and stir in the bourbon, vanilla, and butter. If the sauce seems runny, don't worry, it will thicken as it cools
Once it's cooled, store in a glass jar in the refrigerator.