First of all, you have to understand the mentality of a leader like Hitler. He was generally unconcerned with reality, and was more interested in making sure that his ideology was proven to be true, which was that the German people are the greatest people in the world, and are "ubermensch" or supermen, were other races are subhuman. He had an irrational hatred of Slavic people and one of his primary goals was the complete subjugation or annihilation of all slavs, including Poles, Russians etc. In his mind only the Jews were a worse people.

Second of all, Hitler's military was simply incapable of affecting a land invasion on Britain. The Kriegsmarine had few surface warships, and more importantly, no aircraft carriers or large landing ships capable of amphibious assault. This meant that it would be next to impossible to transport and supply an army in Britain, where the german forces would be outnumbered and fighting on the enemy's home turf who would be prepared with defenses and have a numerical superiority. Also, unless they were able to create or capture an airfield, all air support would have to come from the continent and take a long time to arrive. Not only that, but the British Royal Navy was a dangerous force to contend with, with significantly more ships at its disposal.

Former Chief of the General Staff of the Wermaht Franz Halder have written very comprehensive study for the US military soon after the war (was published several times, War Journal of Franz Halder look it up), and decision behind attacking the USSR (before finishing the war in the West) was explained by Hitler himself during military planning conference in Berghof on July 31st, 1940.

Pages from War Journal: 1, 2, 3.

TL:DR version: Hitler supposed that invasion of Britain will take place only if air offensive (later known as Battle of Britain) would be successful. In case it's not successful, landing operation either delayed till spring, or canceled and Germany starts quick campaign against Soviet Union instead, to disillusion Britain about positive outcome of this war. I.e. defeat of the Soviet Union would force Britain to accept "new world order" and seek the peace treaty with Germany.

Hitler never seriously have taken into account possibility of war on two fronts. Soviet Union had to be crushed within months.