I wish I could tell you that expired domains are some sort of magic bullet solution to all your traffic problems and headaches. Unfortunately, if I were to say that to you, I would be lying. There are drawbacks. Just like with anything else in life, there are advantages and disadvantages. The problems with expired domains is that they are often hard to find on your own. You can take wild guesses and waste a lot of time, effort and energy, and end up with nothing. Also, if you were to try to scope out drop domains by trying to find them in the most common way, which is to use a drop domain exchange, expect to pay a lot of money. Why? Because of heavy competition. Keep in mind that you’re not the only person who knows that dropped domains can bring a lot of traffic to the table. There are many other online marketers out there that realize drop domains' traffic value.
NameJet is $69 or $79 per backorder, so there’s that. And they don’t have the best drop catching technology. If they’re an auction house partner, then they always get them but that’s because they’re partners not because their drop catching technology is great. Plus, when you put a backorder at NameJet that’s public information and other investors can see your domain name backorder with one bid.
Here's an old post on search engine roundtable that claims google's policy is to discount previous backlink juice when a domain changes ownership. I'm not convinced whether this is actually true or something Google says to discourage excessive domain buying / 301 redirecting for SEO benefit. The comments above seem to give varying opinions on this matter. Would be great to get to the bottom of that one!
Yes, I know, it seems backwards that you’d have to compete in an auction for a domain name that may never be caught. Other people feel the same way and many don’t compete as a result of that. But that’s the way the drop catching service was set up. Who knows, it may mean less competition for you since others do not like that model, which benefits the company rather than the user.
The better quality links (From Google, Wikipedia) that a website has the higher will be its domain authority. New websites start with a ranking of one, and as the number of links increase the domain authority rises. For example, a sports website that has links to sports newspapers and sports reporting sites will have a higher domain authority than a sports website that only has links to other sports and sports blogging sites.