Why Good Domains Expire
Thousands of domains expire every day, most of them perfectly good domains that seem to have been retired for basically no good reason. This might serve to make someone interested in an expired domain a bit suspicious, but the reason a domain expires can be almost anything. Sometimes the owner has just given up the venture as a lost cause. Sometimes it's negligence on the part of the owner- failing to renew the domain until it is too late. These things are not uncommon- they happen all the time as a matter of fact. On the other hand, some domains are abandoned completely on purpose. These domains, more often than not, have been briefly abused, lost their worth, and quickly discarded. How does one tell them apart, though?
The best thing that you can do is to investigate the history of the domain. Several services and tools are available to give a history of a domain, including backlinks, PageRank, and other items associated with SEO. This serves two functions. If a domain has expired for any reason that isn't obviously negative, it shouldn't have any activity that looks suspicious. Things to look for are entirely too many backlinks over a short period of time or a young age. If the domain has too many backlinks then it was probably used in linkspam and subsequently probably has a very low PageRank value. If the domain was used for spam purposes, it was probably only used for a few days, weeks, or maybe even months, before losing all value and being discarded. These, obviously, are not "perfectly good domains" and they did expire for a reason. You want to make it a point to avoid investing in these- there's a distinct possibility that the negative activity the domain was previously engaged in will have damaged the domain's credibility, perhaps forever. It can be nearly impossible to recover a domain from this sort of abuse, and taking on this challenge in a business aspect is probably a very unwise business maneuver.
Remember, domains expire for legitimate reasons every day. It is important to check and try to figure out why a domain was allowed to expire, but if you don't see anything suspicious then there may really not be anything to worry about. Try your best to avoid domains with overtly negative pasts- these will only bring you misery in the future.