So, what to do? Simply, you must use someones other hard work and thinking. People have already contemplated all possible variations, synonyms, they know how domain names are valued, know about keywords, type-in traffic etc. Every day tens of thousands domains names are expiring. Every single day. That is hell of a lot expired domains to pick from. The reasons why people "let" domains expire are various. Could be somethins as banal as forgeting to renew, could be as serious as physical death. Many let domains expire because they don't need them any more. But that is not your bussiness to think about.
Why does this matter? What's the big deal? Well, unfortunately, the vast majority of domains registered are eventually abandoned. For some reason or another, people just fail to re-register or renew their domain name and that domain name drops or becomes available to the public. Of course, the obvious reason is that these people simply did not make money off the website that they put up with that domain. Other bloggers and website owners simply don't have the time, so they just gave up on their online projects. Whatever the case may be, by simply registering these expired domains, you can resurrect the value they bring to the table. With the four situations that I outlined above, you can benefit from those situations by simply registering a drop domain.
This is not the case at GoDaddy Auctions, however. There, GoDaddy starts the auction before the domain names has fully expired and the registrant does have the ability to pay a one-time restoration fee to restore ownership. This is particularly frustrating to those bidding in the auction, as you may be the winning bidder and pay your winning bid price only to find out a few days later that it was restored. You then have to wait for a refund from GoDaddy.
If you buy a dropped domain from Snap or Namejet, the backlinks seem to be worthless for SEO. They are valuable for traffic if it's targeted to your site. Go ahead and 301 redirect into your site because it's the traffic from the back links that is worth something. I use the Google URL builder to redirect these names so you can see the domain the traffic is coming from.
For example: If the domain name DomainSherpa.com is registered with Moniker (the registrar) and the domain name reaches expired status, within a few days of expiring the domain name will be listed at SnapNames.com (auction house partner to Moniker). Domain names are exclusive to one auction service, as an auction cannot take place at two locations.