Carry a pen and notepad with you everywhere you go and write down any rap verses that pop into your head. Although this is not technically freestyling, getting into the habit of saving your rhymes will dramatically improve your skills.
Look up any words you come across that you are unfamiliar with. Write them down in your notebook and find ways to incorporate them into your daily vocabulary. A large vocabulary will expand the pool of words you can draw from when rhyming.
Download instrumental tracks of hip hop songs. Play the songs on a stereo, your MP3 player or computer. These basic versions of songs serve as the canvas for your freestyle rapping.
Begin rapping, focusing on making the last words of consecutive lines rhyme. Rap about whatever is happening around you, or even about objects you see around the house. Your sentences can be nonsensical; the goal is to get a feel for improvising sentences that rhyme and maintaining a steady flow in time with the music.
Move on to rapping with complete sentences, forming a story around a specific subject. Turn your grocery list into a story about the things you need to get from the market, again focusing on maintaining your flow. At this point, all of your lines do not need to rhyme; just keep a steady pace while rapping about your main topic.
Combine the exercises to build your skill at rapping about a particular subject with phrases that rhyme. Continue rapping through spaces where you drop your rhymes or can't come up with another phrase. Your skill will grow quickly as you practice regularly, and you will wind up surprising yourself by coming up with great rhymes off the top of your head. Use these "wow" moments to maintain momentum and enthusiasm for the skill of freestyling.