First of all, find a good keyword. When I say keyword, I mean a keyword with high demand (search volume) and low supply (competition). A good tool you can use for this is "Word Tracker", since it offers a free trial. But after you profit from selling your domain, you can upgrade to the paid version since free ones are very inaccurate.
Once you have a good keyword, try to get the domain with that exact same keyword. Always choose a dot com domain because they are more popular and are worth more money. Find a reliable web hosting company so you can host your web site containing your domain name. You have to do this because you need to drive some traffic to your domain so you can sell it at a very good price.
You might want to look for a hosting package that offers hosting, a web site builder, and a domain name. This will save you a lot of time and stress and you will not have to transfer anything later.
Before you buy your domain name, double check it is the same keyword you just found. If your selected keyword is not available as a domain name, make some alterations to it. For example, if your keyword is "candles" and it is not available, you can try "candles101" or some other alterations.
The next step is to build a website for you domain name. It is always better if you build a multi-page site (a site with more than one page) since these type of site are more attractive to search engines. Write a few articles related to the keyword and build site pages. Make sure all your content is unique. Sign up for an AdSense account and for some affiliate programs, this way you will be making money out of the website too.
Then focus on building traffic to your site. You can use some free methods to drive traffic such as article marketing, or some paid ones such as pay-per-click marketing. Also, get some links to your website.
If you are getting a decent amount of traffic to your site, you'll get an Alexa rating. If you thing your rating is good, then look for a domain name appraiser and see how much your domain can go for. By doing this you'll get an idea of how much your domain is worth. If the number appears to be too low, don't get disappointed. It can be because there are people who care more about the traffic your domain name is receiving over the SEO elements of it.
Whenever you are ready to sell or auction your domain, just do it and if you want to include your original website, you can do it too. Once you sell the domain you will need to transfer it to the new webmaster's account. You can contact your hosting company for more help about this.
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