How do you keep things sounding real?

My fiance and I are both avid readers and wanna-be writers. We enjoy world building but something has nagged at me recently. How do you make up names for places but keep the names sounding plausible?

The thing is, most place names are arbitrary and only don't sound made up because we are accustomed to them. But sometimes names just sound ridiculous. At the same time we don't want them to sound overly derivative or a copy. So are there methods to find the blend of Lalagalusia and Londonland?